Mr. McKnight and Ms. Kennedy have been involved in several ground-breaking False Claims Act cases, some of which are summarized below.
Network Appliance case
The Government Contracting Director for Network Appliances, approached Mr. McKnight and Ms. Kennedy in 2006. He advised the team that his company was not giving the United States government the best pricing. Non-government customers were receiving better discounts. Vendors who seek contracts with the United States, under the GSA, also must agree to offer the government “most favored customer” status. That is, the vendor must reveal the pricing and discounts that it is offering non-government customers during the negotiations with the government. This information allows the government to set its pricing. In addition, if the vendor offers better pricing after the government contract has been awarded, it must notify the government and give it the opportunity to revise its pricing. This case settled for $128 million in 2009—the largest GSA procurement fraud settlement in history.
Safina case
Ed Wilder, the vice president of Safina—a small office supplies company in Texas—read about the Totten case. He was impressed with the fact that Mr. McKnight and Ms. Kennedy had litigated the matter from the beginning to the end, and contacted the team about representation in a False Claims Act matter. Wilder’s company held a contract with the General Services Administration (GSA) to sell office supplies on the GSA schedule. The GSA is the government store, now website, through which government agencies procure everything from paper clips to automobiles. Contractors wishing to do business with the government must qualify to offer their products for sale on this website. If accepted, the products and prices appear on the GSA Advantage site, where any government agency may see and buy them. Over $35 billion dollars of products were purchased through this website last year.
Many rules and regulations apply to vendors who sell their items on the website. One is that vendors must certify that they will not sell any items to the government if they were not manufactured in a designated country as defined under the Trade Agreements Act (TAA). To be a designated country, the country must have a trade agreement with the United States. China does not currently have a trade agreement with the United States. While vendors may sell Chinese products to non-government customers, they are prohibited from selling these items to the United States Government. Mr. Wilder noticed that several companies, including Office Depot, Staples, Corporate Express, and others, were routinely violating this prohibition. Because his company was obeying, Mr. Wilder found himself at a competitive disadvantage. He came to Mr. McKnight and Ms. Kennedy and the team filed a False Claims Act on his behalf. In 2005 and 2006, these cases settled for the following amounts: Staples ($7.4 million), Corporate Express ($5.2 million), Office Depot ($4.7 million), and Caddo Design ($100,000).
More importantly, these cases were some of the largest Trade Agreement Act settlements on record. Because many vendors have been violating the TAA and have not been caught yet, this caused quite a buzz in the world of contracting. In addition, it established Mr. McKnight and Ms. Kennedy as experts in this field.
Totten case
Edward Totten, a management official at Amtrak, came to Mr. McKnight and Ms. Kennedy for assistance after he had been discharged from his employer. As the team listened to his story, it seemed to them that he had been fired primarily for complaining about irregularities in the contracting process associated with the procurement of services to design and build the Acela train. Amtrak was funded, in large part, by the Federal Government, so False Claims Act considerations were immediate. Mr. McKnight, Ms. Kennedy, and the client initiated a claim, and the matter was litigated vigorously, going to the DC Circuit twice. Ultimately, the Totten case was lost, primarily because of a tortured reading of the statute by then-Judge John Roberts. Judge Garland wrote a scathing dissent. This case is probably one of the most significant in the law under the False Claims Act. Indeed, Judge Roberts faced questioning about his decision in this case during his confirmation hearings to become a Supreme Court Justice. Moreover, President Obama signed the Fraud Enforcement and Recovery Act (FERA) that corrects the appeals court decision in Totten and adopts the position that Mr. McKnight and Ms. Kennedy advocated on behalf of Mr. Totten.