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David Robbins and Jason Crawford of Crowell & Moring examine the potential impact of United States ex rel Scollick v. Narula on the potential FCA risks that sureties can face when issuing Miller Act bonds to construction contractors that have fraudulently claimed eligibility for set-aside awards through the federal small business contracting programs.

“At its core, the Scollick ruling demonstrates that the underwriting process itself can expose sureties to FCA risk when bonding federal construction projects whether or not the underwriters or the surety itself understood the particulars of relevant government procurement laws and regulations that the principal was supposed to follow,” they warn. “This is because an underwriter’s normal diligence and documenting of the file might create evidence that would lead a regulator to decide that the principal had failed to comply with government contracting requirements.”

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