The district court dismissed multiple allegations of FCA violations against AECOM, finding that the relator failed to show that the alleged misconduct was material to the government’s decision to pay invoices. The relator cited to multiple documents identifying issues with AECOM’s billing for personnel hours and its reporting of man-hour utilization rates, but the court noted the government continued to pay AECOM’s invoices and even extended its contract, which undercut the relator’s case for materiality. The court found no support for the relators’ complaints about an alleged crony relationship between AECOM and a vendor or about the defendants’ failure to return excess government property. The court also concluded that allegations about travel policy related to individual employee conduct, not fraud committed by the defendants.
Defendant AECOM and its affiliated companies moved to dismiss a qui tam case alleging they submitted false claims to the government through a contract with the Department of Defense in Afghanistan.
Relator Hassan Foreman alleged that AECOM, AECOM Government Services Inc., AC First LLC, and AECOM/GSS Ltd. violated their obligations under the Army’s Maintenance and Operational Support contract. Under the contract, AECOM provides vehicle and equipment maintenance, and is required to maintain systems and procedures for tracking labor hours, property, and other assets. The contract reimburses AECOM for its costs and pays an additional negotiated fixed fee. Foreman was employed by AECOM as a finance analyst and supervisor.
Foreman alleged that AECOM: (1) engaged in improper labor billing, (2) inflated reports of man-hour utilization rate, (3) engaged in improper purchasing, tracking, and returning of government property, (4) entered into a “crony” contract with Bluefish, a payroll processing company, and (5) committed travel violations.
First, Foreman alleged AECOM submitted inaccurate labor timesheets to the government for payment. The timesheets listed incorrect hour totals, did not include employee numbers, and did not contain the supervisor’s printed name, making it difficult to confirm who signed the timesheets. Instead of on-site supervisors, office-based employees who could not validate the number of hours worked signed the timesheets. AECOM employees submitted and signed timesheets before the two-week pay period was over, reporting work that had not yet been performed.
Foreman alleged that employees billed for full eleven-hour days despite sleeping on the job or engaging in personal activities during those periods, and that AECOM billed the government for 154 hours per each two-week period regardless of the actual number of hours worked. AECOM also billed for labor of untrained and uncertified employees when it was required to employ qualified and certified operators to properly track materials and inventory.
Second, Foreman explained that the contract required AECOM to monitor and report on a monthly basis its man-hour utilization rate, which is calculated by dividing the number of actual labor hours worked by the number of labor hours available. AECOM is required to have an MHU rate of 85 percent or greater, but Foreman alleged its rate was consistently and significantly below 85 percent. To cover up this fact, AECOM provided its own non-standard MHU reports instead of reports automatically generated from data in the “SAMS-E” system, which essentially allowed made-up labor to be counted.
Next, Foreman alleged that AECOM employed untrained and uncertified personnel who failed to properly account for and process property. Employees ordered items through unauthorized “parts only” work orders, which were not tied to particular equipment, and resulted in orders for excess and unused parts. Further, employees purchased the same items twice by ordering parts through the government supply system as well as on the commercial market, and requested reimbursement from the government for those duplicative work orders. Finally, Foreman alleged AECOM failed to report and return to the Army excess or unused parts and recoverable items.
Fourth, Foreman alleged that AECOM entered into a crony relationship with a payroll services provider. According to Foreman, the owner of Bluefish Global Payroll Systems has a prior business relationship with AECOM’s president and general manager. Due to complaints about high fees from its employees, AECOM increased hourly pay, which inflated costs to the government.
Finally, Foreman alleged AECOM employees violated federal regulations when booking airfare that was not the lowest-priced available and that employees who traveled failed to report back for duty as required. After reporting this final issue and notifying his superiors that he would report the issue outside the company, Foreman’s position was terminated, even though he had recently received a positive performance review.
Foreman filed this complaint and the government declined to intervene. The defendants moved to dismiss. The defendants argued that the complaint should be dismissed because (1) claims related to labor billing, MHU, and property violations are barred by the FCA’s “public disclosure bar,” (2) claims related to labor billing, MHU, and property violations do not allege materiality, (3) claims related to the Bluefish contract do not allege how the contract was a violation, (4) claims related to a failure to return property do not allege an obligation to return property or any specific property defendants failed to return, and (5) the retaliation claim does not allege that Foreman engaged in protected activity or that defendants were aware of any protected activity.
First, the defendants argued that their labor billing, MHU, and property violations were publicly disclosed in various government documents and communications that are referred to throughout the complaint. They cite to audits and reports completed by the Defense Contract Audit Agency; corrective action requests, corrective action plans, and reports issued by the Defense Contract Management Agency; a report written by the Department of Defense Inspector General; corrective action requests written by the Army; discussions between AECOM and the DCMA; and discussions between AECOM and the Army.
The court found that the DoD OIG report was the only document or communication that had been publicly disclosed, as it was published on DoD’s website. The report identified issues with AECOM’s material property management. However, the court noted the report mentioned lost or missing equipment but did not disclose the material elements of the property-related fraud alleged in the TAC, which include the defendants’ parts-only work orders, duplicative orders, and failure to return excess parts and recoverable items to the government. Further, Foreman did not cite to the report as evidence of his allegations, but only to show that AECOM had been cited for serious issues. Thus, the court held that the information was not substantially the same as what Foreman alleged.
The court also agreed with Foreman that the other documents were not publicly disclosed because they were not provided to anyone outside government. The court agreed that disclosure only within the government did not meet the standard for a public disclosure. In fact, the DCMA corrective action regarding AECOM’s low MHU rate was marked Confidential, while other documents were labeled Confidential or FOIA-Exempt.
The defendants argued the documents were disclosed outside the government to AECOM employees like Foreman, who learned of the alleged fraud from the government’s disclosure of these documents. The defendants also argued that because Foreman could access the documents, they were potentially accessible to others who were similarly situated.
However, the court could not determine whether Foreman was a “stranger to the fraud” such that the public disclosure bar would apply. The court could not say how or when Foreman accessed the government reports, and there was no evidence that he lacked prior knowledge of the alleged fraud. Rather, the complaint alleged that he personally observed multiple wasted hours and that timesheets were submitted prior to the end of the payroll period. The court also found no evidence that other AECOM employees had access to the reports.
Turning to the merits of the case, the court next examined Foreman’s allegation that AECOM falsely certified to the government in invoices and requests for reimbursement that they complied with requirements under the MOSC contract. Foreman argued that compliance was material to the government’s payment decisions because the government required AECOM to comply with these requirements in order to invoice its labor costs, emphasized the importance of such requirements in the DCAA Auditor’s Manual, and had previously enforced timesheet requirements against another company in a separate action. Foreman also noted that AECOM’s internal documents and public filings showed they tried to address violations.
The defendants argued that their false certifications of compliance with respect to labor billing and timesheets, MHU rate, and government property were not material to the government’s payment decision because the government was aware of those violations but continued to pay defendants and extend the MOSC contract. The court agreed, finding no indication the government declined to pay AECOM or demanded repayment, despite the volume of correction actions and audits identifying the issues. The court held that Foreman’s claims regarding the defendants’ false certifications of compliance with labor billing, MHU, and property requirements were not material and therefore not actionable under the FCA.
The court also rejected the claims based on the Bluefish contract, noting that Foreman did not allege that Bluefish was not selected on a competitive basis, other than to make conclusory statements, and did not describe how the contract was a “crony” contract, other than to identify the prior business relationship between the principals of AECOM and Bluefish. The court found this insufficient and dismissed the claim.
Next, the court addressed the allegation that AECOM failed to return property to the government in violation of the FCA’s conversion provision. Generally, the complaint alleged that AECOM failed to account for and return excess parts and recoverable items. However, despite citing to internal reports, the complaint did not identify any specific excess or recoverable item or other property that defendants possessed but failed to deliver to the government. Accordingly, the FCA conversion claim was dismissed.
The court also rejected Foreman’s count of reverse false claims, as it was based on the same facts as his allegation of the submission of false claims, which failed due to a lack of materiality. The court also found the complaint failed on its own merits, as Foreman did not assert an obligation to pay the government. The court explained that the FCA, though sometimes broad, does not allow for a failure to return funds gained by a false claim to also be the subject of a count of reverse false claims.
Finally, the court dismissed Foreman’s allegation that he was terminated in retaliation for reporting AECOM employees’ two travel violations and the Bluefish contract. With respect to the travel violations, the court held that Foreman did not engage in protected conduct because the complaints he made about the employees’ air travel request and failure to return from leave or report in for duty were not reasonably directed at exposing a fraud upon the government. Those complaints discussed employee violations of a federal regulation and AECOM policy; they were not complaints that the employer, AECOM, engaged in fraudulent conduct actionable under the FCA.
With respect to the Bluefish contract, Foreman complained to the Inspector General’s office, but he does not allege that anyone at AECOM knew about that complaint. Thus, the court found no evidence that AECOM was aware of any protected activity.
