Trade Agreement Act
Congress passed a law prohibiting contractors to sell goods or supplies through the General Service Administration (GSA) to governmental agencies if they are imported products from countries, such as China and Taiwan, that don't have reciprocal trade agreements with the United States. In 2005, there were two whistleblower actions involving national office supply companies that violated this law. The whistleblowers received $ 700,000 and $ 1.5 million in these cases. The government is beefing up its efforts in this area of fraud.
If your company or a competitor is supplying goods to the federal government that are made in China or Taiwan, and you can prove it, you stand to gain a sizeable reward. This applies to direct contracts with the military or any agency, as well as listing products on the GSA website.
GSA Best Price Fraud
Frequently, GSA or other agencies also require a contractor or supplier to provide the government with the best price it charges to other customers. This obligation even requires companies to tell the GSA if it later gives a discount to another company at a lower than the price the GSA pays. Because this fraud is hard to detect by GSA, it is rarely caught without the help of an insider. Thus, GSA Best Price Fraud is ripe for reporting fraud and getting a reward.
Buy America Act Fraud
Many government agencies also include "Buy America" clauses in contracts. Unless this is waived by the agency for a particular contract and reason, these clauses are enforceable and the government pays rewards to those who report when goods are made overseas. Buy America Act fraud is not limited to the countries discussed under the Trade Agreement Act listed above, but applies to all things made overseas, such as electronics.
News Release:
Competitor receives $ 160,000 reward for turning in company for supplying government with goods made in China
The Department of Justice is paying a whistleblower $ 160,000 for reporting that a competing company was selling to the military, Coast Guard, and General Services Administration (GSA) goods made in China.
The Trade Agreements Act (“TAA”) provides that a contractor may not supply goods made in a country that has not signed the TAA, such as China. In other words, if a country does not sign this agreement, a government contractor may not use goods or services from that country.
The General Service Administration (GSA) generally follows both the TAA and the Buy America Act. The GSA purchases large quantities of products for the various federal agencies. It also has a program and website allowing federal agencies to buy products directly from pre-approved vendors that have certified that they comply with the TAA and Buy America Act.
If a company supplies the federal government with goods made in China, it commits fraud and is liable under the Under the False Claims Act to pay up to three times the value of the goods. As an incentive to report fraud against the federal government, the law also gives the whistleblower a reward of between 15% and 25% percent of the amount it collects.
In this case, a private individual stepped forward to report that a competitor was providing the U.S. Government with electronics made in China. The whistleblower was a competitor who was losing business. He figured out why. The company was able to underbid prices because they made the electronics in China.
The whistleblower hired Joel Hesch, a former Department of Justice Attorney who specializes in representing whistleblowers collect rewards, to file the required “qui tam” lawsuit to obtain a reward. Based on the qui tam complaint, the government determined that approximately $ 350,000 in electronic goods was made in China. The company was required to pay $ 695,000 for allegedly violating the False Claims Act by supplying the Chinese products. The whistleblower received 23% of the amount, or $ 160,000, as his reward.