Administrative False Claims Act Allows Federal Agencies to Pursue False Claims
The Program Fraud Civil Remedies Act of 1986 is now called the Administrative False Claims Act (AFCA), 31 USC 3801 through 3812: https://www.congress.gov/bill/118th-congress/senate-bill/659. Recently revised, the AFCA grants federal agencies enhanced power to investigate and resolve false claims cases made by government contractors and other entities dealing with federal programs. This is a change from past practices where the False Claims Act, 31 U.S.C. § 3729 (FCA) was enforced by the Department of Justice. The FCA is the primary tool used to combat fraud in federally funded programs and contracts and recover taxpayer money lost due to fraud. The FCA imposes liability (civil or criminal) upon anyone who knowingly submits or makes materially false claims to the government for approval or payment. Government contractors that enter contracts to provide goods and services to the government are often the subject of false claims act cases.
The AFCA allows for administrative resolution of certain false claims up to $1 million. The Program Fraud Civil Remedies Act only allowed claims up to $150,000. It permits the agency to impose civil penalties, damages and assessments without court intervention. The AFCA does not include a whistleblower provision. The ability of agencies to investigate and resolve cases without resort to litigation could lead to increased enforcement activity.
The revisions indicate a desire on the part of the Trump Administration to use false claims as a tool to find waste, fraud, and abuse in government contracting. For contractors it is a heightened compliance risk that can be mitigated through an effective, compliance program which calls for regular audits and employee training. Of course, with the threat of increased enforcement activity contractors should be prepared by implementing policies and procedures that ensure accurate reporting and require documentation.
A proposed rule establishing procedural regulations for the Administrative False Claims Act at the Federal Labor Relations Authority, 5 CFR Part 2419. Written comments are being solicited and must be received before September 8, 2025.
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