PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

EDWIN P. HARRISON,

Plaintiff-Appellant,

and

UNITED STATES OF AMERICA,

Party in Interest,

No. 98-1037

v.

WESTINGHOUSE SAVANNAH RIVER

COMPANY,

Defendant-Appellee.

Appeal from the United States District Court

for the District of South Carolina, at Aiken.

Charles E. Simons Jr., Senior District Judge.

(Ca-94-2332-1-6)

Argued: October 28, 1998

Decided: May 17, 1999

Before MURNAGHAN and WILLIAMS, Circuit Judges, and

BLAKE, United States District Judge for the

District of Maryland, sitting by designation.

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Affirmed in part, reversed in part, and remanded for proceedings consistent with this disposition by published opinion. Judge Murnaghan

wrote the opinion, in which Judge Williams and Judge Blake joined.

_________________________________________________________________

COUNSEL

ARGUED: Richard E. Miley, North Augusta, South Carolina, for

Appellant. Lawrence Graeme Bell, III, CROWELL & MORING,
L.L.P., Washington, D.C., for Appellee. ON BRIEF: Christopher M.

Farris, CROWELL & MORING, L.L.P., Washington, D.C., for

Appellee.

_________________________________________________________________

OPINION

MURNAGHAN, Circuit Judge:

Relator Harrison ("Harrison" or "Appellant") brought a claim under

the False Claims Act, 31 U.S.C.A. §§ 3729-3733 (West Supp. 1998),

against Westinghouse Savannah River Corp. ("WSRC") alleging that

WSRC made false and fraudulent statements to the government in

connection with claims for payment to a subcontractor hired by

WSRC for a Department of Energy ("DOE") contract. Harrison

alleged, inter alia, that WSRC misrepresented the cost and duration

of the proposed subcontract in order to get DOE approval for the subcontract, and that WSRC falsely certified that there was no conflict

of interest with the subcontractor. The district court granted WSRC's

motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),

finding that no false claim had been made, either because Harrison's

complaint amounted only to allegations of inefficiency, or because the

allegedly false statements were not made in connection with a "claim"

under the False Claims Act. We affirm in part and reverse in part.

I.

A.

Since 1989, WSRC has been the management and operations contractor for the United States Department of Energy at the Savannah

River Site ("SRS"), a nuclear facility near Aiken, South Carolina.

WSRC's contract with the government provides that WSRC is entitled to receive the allowable costs it incurs on the project in addition

to an award fee.

As a part of its contractual responsibilities, and pursuant to policy

and regulations, when WSRC decides to subcontract certain tasks

necessary for the operation and management of the SRS, WSRC pro-

 2
vides the technical requirements to the DOE for review before releasing a solicitation or request for proposals ("RFP") for that

subcontracting action. See Department of Energy Acquisition Regulation ("DEAR") § 970.7108, 48 C.F.R.§ 970.7108 (1988).1 Once the

technical review is complete, WSRC releases an RFP for the work

and selects the subcontractor in a manner consistent with the provisions of the RFP. WSRC then sends a "Procurement Under Review"

or "PUR" package to the DOE, which includes a copy of the technical

requirements, the solicitation, the Justification for Award, the

subcontractor-awardee's proposal, and the proposed subcontract. The

DOE reviews the information in the package and decides whether it

will approve the request to subcontract the work out. If the DOE

approves, WSRC enters into a subcontract with the selected subcontractor.

Count 1:2 False-Statements About Need for Subcontractor and Price

of Subcontract

In July 1992, WSRC identified a need for training related to in-tank

precipitation process operations, known as "ITP Training" (hereinafter "ITP Training Project"). As part of its standard practice, WSRC

included in the technical package that was sent to the DOE for review

a "Make or Buy Analysis" ("MBA"), which analyzed the costeffectiveness of buying the ITP Training services as opposed to providing those services in-house. (Amended Complaint at ¶ 24.) The

MBA stated that while WSRC had the capacity to provide the service,

WSRC did not have personnel available. The MBA stated further that

since the service was of a one-time variety and of a short-term nature

(1.5 years), it was not practical for WSRC to hire full-time staff to

meet the need.

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1 All references to the applicable procurement regulations are to those

that were in effect at the time that the WSRC-DOE contract became

effective.

2 The "Counts" detailed herein do not correspond exactly to the counts

as enumerated in Harrison's amended complaint; they are distilled. For

the district court's convenience reference is made to the corresponding

paragraphs in Harrison's First Amended Complaint.

 3
WSRC's MBA also represented to the government that in the

aggregate, WSRC estimated that the cost for WSRC to provide the

ITP Training would be $1,579,500, while the cost for a subcontractor

to perform the work would be substantially more-- $2,750,000. The

DOE reviewed and signed off on the technical package, including the

MBA. After receiving the DOE's approval, WSRC released a request

for proposals for the ITP Training Project and ultimately subcontracted the project to General Physics Corporation (hereinafter "GPC

subcontract").

Harrison alleges that WSRC made the following misrepresentations to the government as part of its "plan and scheme" to obtain

DOE approval for WSRC's use of a subcontractor rather than use of

WSRC's own personnel to develop and implement the ITP Training

Project:

a. That the project was "short term" such that subcontract

personnel would be needed for no more than 1.5 years;

WSRC knew that developing and implementing the ITP

Training Project would take at least several years,

(Amended Complaint ¶ 24(a));

b. That providing the ITP Training was not "a continuing

need" but rather was a "one time variety" project; WSRC

knew that the ITP Training Project would be a continuous

on-going need for many years, (Amended Complaint

¶ 24(b));

c. That there was no need to hire permanent staff to fulfill

the ITP Training requirement; WSRC knew that the ITP

Training Project would require qualified trainers for a

decade or more, (Amended Complaint ¶ 24(c);

d. That "Other Costs" for such things as computers, etc.,

would be zero; WSRC knew that the subcontractor would

need to purchase computers to perform the subcontract

work, (Amended Complaint ¶ 24(e)); (See also Amended

Complaint ¶ 33); and

 4
e. That the ITP Training services could be obtained on a

firm-fixed price basis at a "total cost" of $2,750,000; WSRC

intended to subcontract the ITP Training Project on a costplus-fixed-fee basis and knew that the training would cost

substantially more than $2,750,000, (Amended Complaint

¶¶ 24(d), 22(a)).

Count 2: False Certification of No Conflict of Interest

General Physics Corporation ("GPC"), a subcontractor company

doing business with WSRC at SRS, employed Relator Harrison as

one of its vice-presidents. He worked for GPC in Aiken, directing

some of GPC's subcontract work with WSRC at SRS. On August 12,

1992, GPC received from WSRC a RFP for the ITP Training Project.

During the next several weeks, Harrison alleges that he became

aware that GPC personnel developing GPC's proposal were requesting and improperly receiving insider information from WSRC's Subcontract Technical Representative ("STR"). Harrison allegedly found

that WSRC's STR, who would later participate in the technical evaluation of the bids on the ITP Training Project, was supplying insider

information not available to other bidders. He also alleges that he

learned that WSRC's STR had permitted GPC employees to participate in preparation of portions of the RFP.3 (Amended Complaint

¶ 28.) WSRC awarded the ITP Training subcontract to GPC.

(a) In its proposal, GPC represented that it had no conflicts of interest related to the ITP Training subcontract. This certification was submitted to the DOE by WSRC as part of the "Justification for Award"

in the PUR package. Harrison alleges that (1) the contacts between

WSRC and GPC violated DEAR conflict of interest regulations, (2)

WSRC was obliged to comply with these regulations and to certify

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3 Harrison alleges that he confronted GPC's President and Chief Executive Officer and its Senior Vice President in September, 1992 concerning

these allegedly illegal activities. As a result, Harrison alleges that GPC

removed Harrison as an officer, banned him from GPC's offices, and terminated his employment contract. Harrison asserts that he prevailed in

a civil action against GPC and several of its officers arising from this discharge.

 5
such compliance, and (3) WSRC falsely certified to the DOE that it

had complied with these regulations. Harrison asserts that this false

certification caused all claims for DOE reimbursement on the GPC

subcontract to be "false claims."4 

(b) Harrison also alleges that WSRC had an affirmative obligation

to report undisclosed conflicts of interest with its subcontractors when

a subcontract was significantly increased. WSRC's failure to alert the

DOE to these conflicts, even after Harrison had given notice to

WSRC about the conflicts, allegedly makes all claims submitted

under several expansions of the GPC subcontract fraudulent.

(Amended Complaint ¶¶ 27 (first sentence), 36.)

Count 3: Misrepresentation of Subcontract Terms 

(a) Harrison alleges that after the GPC subcontract was approved,

WSRC misrepresented the scope of work for the ITP Training Project. According to Harrison, the subcontract did not set forth any

requirement for subcontractor personnel to perform procedure development. Less than three months into the ITP Training subcontract,

however, WSRC knowingly misrepresented to the DOE that the existing ITP Training subcontract in fact provided for procedure revision

and upgrade not to exceed 5% of the total scope of work. Based upon

WSRC's misrepresentation, the DOE approved WSRC's request for

adding work to the subcontract on a "sole-source" basis at a cost of

$880,000. (Exhibit C to Amended Complaint; Amended Complaint

¶ 22(b) and (c).)

(b) Separately, Harrison alleges that before this $880,000 procedure development cost was approved, WSRC had directed GPC to

perform procedure development activities. Since at that time, these

activities were allegedly not approved costs under the contract, Harrison alleges that WSRC's payment requests incorporating these activities were fraudulent. (Amended Complaint ¶ 34.)

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4 Although Harrison asserts five separate variations on this theme, (see

Amended Complaint ¶¶ 25(g), 26, 28, 29, 30), these paragraphs of the

complaint essentially boil down to one claim dealing with the initial conflict of interest certification, and will be treated as such in this opinion.

 6
Count 4: False Signature

Harrison alleges that a purchase requisition form submitted to the

DOE contained "fraudulent and/or unauthorized signatures" and

WSRC knew that at least one of these was fraudulent. (Amended

Complaint ¶ 23.)

Count 5: Breach of Fiduciary Duty

Harrison alleges that WSRC held itself out as being experienced

and qualified to maintain a nuclear facility and had contractual and

fiduciary duties to act in the DOE's best interest. WSRC supposedly

violated these duties by engaging "in a scheme and plan to increase

the cost of performance and its fees under its contract, acting with

actual knowledge or with reckless disregard for the truth or with

deliberate ignorance." (Amended Complaint ¶ 25(a)-(g).)

Count 6: Knowing Misrepresentation of Costs of Subcontract

In addition to the allegations under Count 1, Harrison asserts that

WSRC knowingly under-estimated the cost of the GPC subcontract

by allowing GPC to understate its overhead costs for GPC's ITP

Training Project bid. The under-estimated costs were submitted to the

DOE as part of the PUR package. This was done in an effort to get

the DOE to approve subcontracting. (Amended Complaint ¶ 31.)

Count 7: Increased Labor Costs

Harrison alleges that GPC changed the personnel on the GPC subcontract bid in order to raise the labor costs in that bid. GPC then

assigned personnel with lower salaries than those on the bid to perform under the GPC subcontract. (Amended Complaint¶ 32.)

Count 8: Over-Charging Via "Other Direct Costs" Account

Harrison alleges that WSRC directed GPC and other subcontractors

to purchase supplies and charge them to "Other Direct Costs," when

WSRC "had a duty to acquire them through its own procurement system at lower costs." (Amended Complaint ¶ 33.) By this practice

 7
WSRC was allegedly able to circumvent DOE approval for purchasing certain items and to inflate its operating costs base to the DOE.

Count 9: Lack of Management Controls

Harrison alleges that WSRC by contract and regulation was

required to maintain effective systems of management to safeguard

against theft, fraud, and waste and did not do so. (Amended Complaint ¶ 38.)

Count 10: Conspiracy

Though not clearly pled in his Amended Complaint, Harrison

asserts in his brief that once the ITP Training subcontract was

awarded, WSRC and GPC then engaged in a conspiracy to routinely

"sole source" modifications of the ITP Training Project, increasing

the subcontract cost from $2,461,161 to more than $9.3 million without allowing any competition for the provision of the services represented by the additional $6.9 million. (Appellant's Br. at 10.) (Cf. also

Amended Complaint ¶¶ 27, 37.)

B.

The district court granted WSRC's motion to dismiss under Rule

12(b)(6). The district court had two bases for its order. First, the district court found that at best Harrison's complaints amounted to allegations that WSRC handled the DOE contract with waste and

inefficiency and the FCA does not reach such claims. The district

court also found that, even if Harrison had proved false statements

and fraud, as a matter of law there was no false claim under the False

Claims Act because the false statements and fraud"were not made in

connection with the presentation of a claim." (J.A. at 56.) The district

court reasoned that the False Claims Act does not reach false statements in submissions to the Government to gain approval for subcontracting decisions. In the district court's view, the False Claims Act

reaches only situations in which a "claim [i.e., the demand for payment from the government] . . . is itself false or fraudulent." (J.A. at

57.)

 8
II.

This Court reviews de novo a district court's dismissal for failure

to state a claim upon which relief may be granted under Federal Rule

of Civil Procedure 12(b)(6). Cavallo v. Star Enterprise, 100 F.3d

1150, 1153 (4th Cir. 1996). In its review of Rule 12(b)(6) dismissals,

this Court must accept as true all of the Appellant's allegations and

must construe factual allegations in the light most favorable to the

plaintiff. Mylan Laboratories, Inc. v. Matkari , 7 F.3d 1130, 1134 (4th

Cir. 1993).

A. Pleading Fraud with Particularity5

Since Appellant in this case alleges fraud, his claim is subject to

Federal Rule of Civil Procedure 9(b), which requires that claimants

plead fraud with particularity.6 According to two noted scholars, the

"circumstances" required to be pled with particularity under Rule 9(b)

are "the time, place, and contents of the false representations, as well

as the identity of the person making the misrepresentation and what

he obtained thereby." 5 Charles Alan Wright and Arthur R. Miller,

Federal Practice and Procedure: Civil § 1297, at 590 (2d ed. 1990).

See also Lasercomb America, Inc. v. Reynolds, 911 F.2d 970, 980

(4th Cir. 1990); In re Cryomedical Sciences, Inc. Securities

Litigation, 884 F. Supp. 1001, 1012-13 (D. Md. 1995); In re Medimmune, Inc. Securities Litigation, 873 F. Supp. 953, 964-69 (D. Md.

1995). Mere allegations of "fraud by hindsight" will not satisfy the

requirements of Rule 9(b). Hillson Partners Ltd. Partnership v.

Adage, Inc., 42 F.3d 204, 209 (4th Cir. 1994). The second sentence

_________________________________________________________________

5 Although the district court did not dismiss Harrison's complaint under

Rule 9(b), lack of compliance with Rule 9(b)'s pleading requirements is

treated as a failure to state a claim under Rule 12(b)(6). See United States

ex rel. Thompson v. Columbia/HCA Healthcare Corp. , 125 F.3d 899, 901

(5th Cir. 1997). Also, both parties presented arguments under Rule 9(b)

to the court below, and in their briefs here. So it is appropriate for us to

address the validity of Harrison's pleadings under Rule 9(b).

6 Fed. R. Civ. P. 9(b) states:"In all averments of fraud or mistake, the

circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person

may be averred generally."

 9
of Rule 9(b) allows conclusory allegations of defendant's knowledge

as to the true facts and of defendant's intent to deceive. See 5 Wright

and Miller § 1297, at 612.

Rule 9(b) has four purposes:

First, the rule ensures that the defendant has sufficient information to formulate a defense by putting it on notice of the

conduct complained of. ... Second, Rule 9(b) exists to protect defendants from frivolous suits. A third reason for the

rule is to eliminate fraud actions in which all the facts are

learned after discovery. Finally, Rule 9(b) protects defendants from harm to their goodwill and reputation.

United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v.

Blue Cross Blue Shield of Georgia, Inc., 755 F. Supp. 1055, 1056-57

(S.D. Ga. 1990). A court should hesitate to dismiss a complaint under

Rule 9(b) if the court is satisfied (1) that the defendant has been made

aware of the particular circumstances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery evidence of those facts.

B. The False Claims Act

Originally passed during the Civil War in response to overcharges

and other abuses by defense contractors, Congress intended that the

False Claims Act, 31 U.S.C.A. §§ 3729-3733 (West Supp. 1998), and

its qui tam action would help the government uncover fraud and

abuse by unleashing a "posse of ad hoc deputies to uncover and prosecute frauds against the government." United States ex rel. Milam v.

Univ. of Tex. M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.

1992). The first substantial amendments to the False Claims Act came

in 1986. See S. Rep. No. 99-345, at 2 (1986), reprinted in 1986

U.S.C.C.A.N. 5266. In the 1986 amendments, Congress sought to

broaden the availability of the False Claims Act to"enhance the Government's ability to recover losses sustained as a result of fraud

against the Government." Id. Congress was acting, in part, in response

to judicial decisions taking a restrictive approach to the False Claims

Act. See id. at 4, reprinted in 1986 U.S.C.C.A.N. at 5269.

 10
The False Claims Act allows private litigants to bring actions on

behalf of the government against anyone who, inter alia:

 (1) knowingly presents, or causes to be presented, [to the

government] a false or fraudulent claim for payment or

approval;

 (2) knowingly makes, uses, or causes to be made or used,

a false record or statement to get a false or fraudulent claim

paid or approved by the Government; or

 (3) conspires to defraud the Government by getting a

false or fraudulent claim allowed or paid.

31 U.S.C.A. § 3729(a); 31 U.S.C.A. § 3730(b).

The term "knowingly" has a special meaning within the context of

the False Claims Act:

"knowing" and "knowingly" mean that a person, with

respect to information--

 (1) has actual knowledge of the information;

 (2) acts in deliberate ignorance of the truth or falsity of

the information; or

 (3) acts in reckless disregard of the truth or falsity of the

information,

 and no proof of specific intent to defraud is required.

31 U.S.C.A. § 3729(b).

Liability under each of the provisions of the False Claims Act is

subject to the further, judicially-imposed, requirement that the false

statement or claim be material.7 Materiality depends on "whether the

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7 Some courts have asserted that there is an additional element that the

United States must have suffered some damages as a result of the false

 11
false statement has a natural tendency to influence agency action or

is capable of influencing agency action." United States ex rel. Berge

v. Bd. of Trustees of Univ. of Ala., 104 F.3d 1453, 1459 (4th Cir.),

cert. denied, ___ U.S. ___, 118 S. Ct. 301 (1997) (quoting United

States v. Norris, 749 F.2d 1116, 1122 (4th Cir. 1984)). Materiality is

a mixed question of law and fact. See id. at 1460.

The Supreme Court has cautioned that the False Claims Act was

not designed to punish every type of fraud committed upon the government. See United States v. McNinch, 356 U.S. 595, 599 (1958). In

order for a false statement to be actionable under the False Claims Act

it must constitute a "false or fraudulent claim." "[T]he statute attaches

liability, not to the underlying fraudulent activity or to the government's wrongful payment, but to the `claim for payment.'" United

States v. Rivera, 55 F.3d 703, 709 (1st Cir. 1995). Therefore, a central

question in False Claims Act cases is whether the defendant ever

presented a "false or fraudulent claim" to the government.

Interpreting the last word of the phrase is fairly easy. The False

Claims Act states that a claim "includes any request or demand ... for

money or property" where the government provides any portion of the

money or property requested. 31 U.S.C.A. § 3729(c). In other words,

the False Claims Act at least requires the presence of a claim -- a call

upon the government fisc -- for liability to attach.

Taking the phrase "false or fraudulent claim" in its entirety, though,

is more complicated, because the phrase has become a term of art.

_________________________________________________________________

or fraudulent claim. See, e.g., Blusal Meats, Inc. v. United States, 638

F. Supp. 824, 827 (S.D.N.Y. 1986), aff'd, 817 F.2d 1007 (2nd Cir. 1987).

In fact, there is no requirement that the government have suffered damages as a result of the fraud. See United States ex rel. Joslin v. Community Home Health of Maryland, Inc., 984 F. Supp. 374, 383 (D. Md.

1997) (citing United States ex rel. Pogue v. American Healthcorp., Inc.,

914 F. Supp. 1507, 1508-09 (M.D. Tenn. 1996)); S. Rep. No. 345, 99th

Cong., 2d Sess. 8, reprinted in 1986 U.S.C.C.A.N. at 5273. Cf. United

States ex rel. Marcus v. Hess, 317 U.S. 537 (1943) (affirming, without

addressing, district court's determination that no damages need be

incurred). But cf. United States ex rel. Berge v. Bd. of Trustees of Univ.

of Ala., 104 F.3d 1453, 1458 (4th Cir.), cert. denied, ___ U.S. ___, 118

S. Ct. 301 (1997) (government must suffer an injury in fact for there to

be standing).

 12
The district court would only find a false claim where a demand for

payment is itself false or fraudulent (presumably for services not performed or for an incorrect amount). The district court flatly rejected

the possibility that False Claims Act liability could rest on false statements submitted to the government to gain approval for a subcontract.

The district court relied on two cases for this approach, United States

v. McNinch, 356 U.S. 595 (1958), and United States ex rel. Thompson

v. Columbia/HCA Healthcare Corp., 938 F. Supp. 399 (S.D. Tex.

1996) (additional history below).

The district court's narrow interpretation of the phrase "false or

fraudulent claim" is incorrect. First, there are problems with the cases

relied upon by the district court. McNinch was decided under a criminal version of the False Claims Act and the Court explicitly relied on

a rule of lenity-type analysis in reaching its interpretation of the statute. McNinch, 356 U.S. at 598. The current statute is not criminal, and

so a rule of lenity approach is no longer appropriate. Also, McNinch

was a very narrow holding reflecting the facts of that case. No request

for payment from the government had yet been made when McNinch

was decided, and the Court left open the question whether the False

Claims Act would apply if and when a claim on the government fisc

was made. Id. at 599 n.6. Subsequent cases confirm that the act which

did not violate the False Claims Act in the factual context of McNinch

does lead to False Claims Act liability when the government fisc is

finally called upon. See United States v. Rivera , 55 F.3d at 707, and

cases cited therein. The second case relied upon by the district court,

Thompson, had already been vacated when the district court relied

upon it. See United States ex rel. Thompson v. Columbia/HCA

Healthcare Corp., 125 F.3d 899 (5th Cir. 1997), aff'g in part and

vacating in part 938 F. Supp. 399 (S.D. Tex. 1996).

Second, and more importantly, the district court's approach is in

contradiction to the legislative history of the statute and to many

courts, including the Supreme Court, that have addressed the issue.

According to Congress, after the 1986 amendments the False

Claims Act should be broadly construed:

each and every claim submitted under a contract, loan guarantee, or other agreement which was originally obtained by

 13
means of false statements or other corrupt or fraudulent conduct, or in violation of any statute or applicable regulation,

constitutes a false claim.

S. Rep. No. 99-345, at 9, reprinted in 1986 U.S.C.C.A.N. at 5274

(emphases added). The courts have implemented the principles

embodied in the above-quoted passage in a variety of ways.

1. False Certification Cases

A number of courts in a variety of contexts have found violations

of the False Claims Act when a government contract or program

required compliance with certain conditions as a prerequisite to a government benefit, payment, or program; the defendant failed to comply

with those conditions; and the defendant falsely certified that it had

complied with the conditions in order to induce the government benefit. Courts have allowed False Claims Act claims to go forward based

on false certifications with respect to compliance with environmental

standards, see United States ex rel. Fallon v. Accudyne Corp., 880

F. Supp. 636, 638 (W.D. Wis. 1995); false certifications of compliance with the non-discrimination requirements of the Fair Housing

Act and with an affirmative action plan, see United States v. Incorporated Village of Island Park, 888 F. Supp. 419, 434-36, 440-41

(E.D.N.Y. 1995); false certifications of compliance with the Medicare

anti-kickback and anti-self-referral statutes, see United States ex rel.

Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902;

United States ex rel. Pogue v. American Healthcorp., Inc., 914

F. Supp. 1507, 1509 & 1513 (M.D. Tenn. 1996); and false certifications of compliance with rules for continuing adherence to the

requirements of a Small Business Administration minority contracting

program, see Ab-Tech Construction, Inc. v. United States, 31 Fed. Cl.

429 (1994), aff'd, 57 F.3d 1084 (Fed. Cir. 1995).8 The courts in these

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8 These last two cases involved implied certifications rather than actual

certifications made by the defendants. That is, plaintiffs contended that

the submission of invoices and reimbursement forms constituted implied

certifications of compliance with the terms of the particular government

program. Ab-Tech, 31 Fed. Cl. at 433-434; Pogue, 914 F. Supp. at 1509.

At least one district court in this Circuit has expressed some reservations

about the concept of an implied certification. See United States ex rel.

 14
cases will not find liability merely for non-compliance with a statute

or regulation. See, e.g., Thompson, 125 F.3d at 902. The Fifth Circuit

has emphasized that liability for a false certification will lie only if

compliance with the statutes or regulations was a prerequisite to gaining a benefit, and the defendant affirmatively certified such compliance: "where the government has conditioned payment of a claim

upon a claimant's certification of compliance with ... a statute or regulation, a claimant submits a false or fraudulent claim when he or she

falsely certifies compliance with that statute or regulation."

Thompson, 125 F.3d at 902. Accord United States ex rel. Joslin v.

Community Home Health of Md., Inc., 984 F. Supp. 374, 383-84 (D.

Md. 1997).9

2. Fraud-in-the-Inducement Cases

Another set of cases involves False Claims Act liability for claims

that would not be false under the district court's interpretation of the

statute -- the fraud-in-the-inducement10 cases. In these cases, courts,

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Joslin v. Community Home Health of Maryland, Inc. , 984 F. Supp. 374,

384-385 (D. Md. 1997). Our decision in Berge, 104 F.3d at 1461, holding, in part, that there can be no False Claims Act liability for an omission without an obligation to disclose, also makes questionable an

implied certification claim in the Fourth Circuit. We need not address the

validity and problems of an implied certification theory of liability here.

9 Several cases, although not rejecting the fraudulent certification theory, involve facts under which such a theory was not successful. See

United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266-67 (9th Cir.

1996), cert. denied, ___ U.S. ___, 117 S. Ct. 958 (1997) (specifically

accepting fraudulent certification theory, but finding that certification

was not prerequisite to funding, and was not false, in any event; involved

federal special education funding); Joslin, 984 F. Supp. at 383-384

(accepting fraudulent certification theory, but finding no falsity; involved

Medicare reimbursement); United States v. Shaw , 725 F. Supp. 896, 900

(S.D. Miss. 1989) (rejecting implied certification theory, finding that no

certification was made; involved bribes to get loans); United States ex

rel. Weinberger v. Equifax, 557 F.2d 456, 461 (5th Cir. 1977) (finding

no certification was made and none was required; involved alleged violation of Anti-Pinkerton Act).

10 The phrase "fraud-in-the-inducement" in the False Claims Act context was coined by the court in United States ex rel. Schwedt v. Planning

Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995).

 15
including the Supreme Court, found False Claims Act liability for

each claim submitted to the government under a contract, when the

contract or extension of government benefit was obtained originally

through false statements or fraudulent conduct. The most prominent

of these cases is United States ex rel. Marcus v. Hess, 317 U.S. 537

(1943). In that case, the Supreme Court found contractors liable under

the False Claims Act for claims submitted under government contracts which the defendants obtained via collusive bidding. Id. at 542.11

The Court found that each claim submitted under the contracts constituted a false or fraudulent claim:

This fraud did not spend itself with the execution of the contract. Its taint entered into every swollen estimate which was

the basic cause for payment of every dollar paid by the

[government] . . . . The initial fraudulent action and every

step thereafter taken, pressed ever to the ultimate goal--

payment of government money to persons who had caused

it to be defrauded.

Id. at 543-44. Based on this language, courts have found False Claims

Act violations in other bid-rigging situations, see, e.g., United States

v. CFW Construction Co., Inc., 649 F. Supp. 616, 618 (D.S.C. 1986),

dismissed on other grounds, 819 F.2d 1139 (4th Cir. 1987); when a

contract was originally obtained based on false information or fraudulent pricing, see United States ex rel. Hagood v. Sonoma County

Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991); United States ex

rel. Windsor v. Dyncorp, Inc., 895 F. Supp. 844, 850-51 (E.D. Va.

1995); United States v. General Dynamics Corp. , 19 F.3d 770, 772

& 775 (2d Cir. 1994) (defendant liable for submitting inflated cost

estimates in subcontract submitted for approval to government); or

when a contract was obtained by a false representation about the ability to perform the contract, cf. United States ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (court did not

reach the question, but suggested it would have upheld such a theory

had it been properly presented). But see United States v. Shaw, 725

_________________________________________________________________

11 This case could also be seen as a false certification case because the

Court noted that the defendants had certified that their bids "were genuine and not sham or collusive." Hess, 317 U.S. at 543.

 16
F. Supp. 896 (S.D. Miss. 1989) (no False Claims Act liability for

loans obtained through bribes).

Contrary to the district court's decision, in many of the cases cited

above the claims that were submitted were not in and of themselves

false. In each of the false certification cases the actual "claim" submitted was not false. In Island Village the HUD housing was actually

constructed at fair cost and HUD-qualified purchasers actually moved

in; and in Thompson and Pogue the medical services were actually

necessary and provided at fair costs. In Marcus , CFW, and Dyncorp,

the work contracted for was actually performed to specifications at

the price agreed. False Claims Act liability attached, however,

because of the fraud surrounding the efforts to obtain the contract or

benefit status, or the payments thereunder.

As the above cases illustrate, the district court's interpretation of

the phrase "false or fraudulent claim" was erroneous. The phrase

"false or fraudulent claim" in the False Claims Act should be construed broadly. The False Claims Act is "intended to reach all types

of fraud, without qualification, that might result in financial loss to

the Government. ... [T]he Court has consistently refused to accept a

rigid, restrictive reading ...." United States v. Neifert-White Co., 390

U.S. 228, 232 (1968) (citation and footnotes omitted). The False

Claims Act "reaches beyond `claims' which might be legally

enforced, to all fraudulent attempts to cause the Government to pay

out sums of money." Id. at 233. Thus, any time a false statement is

made in a transaction involving a call on the U.S. fisc, False Claims

Act liability may attach. The test for False Claims Act liability distilled from the statute and the sources discussed above is (1) whether

there was a false statement or fraudulent course of conduct; (2) made

or carried out with the requisite scienter; (3) that was material; and

(4) that caused the government to pay out money or to forfeit moneys

due (i.e., that involved a "claim").

III.

Count 3: In Count 3(a), Harrison alleges that WSRC lied about the

scope of the GPC subcontract in order to get the DOE to approve a

sole-source extension of the subcontract for $880,000. In Count 3(b),

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Harrison alleges that WSRC submitted claims for work that was

beyond the scope of the contract.

WSRC challenges these claims on several bases. First, WSRC

notes that the DOE was in possession of a copy of the GPC contract

when WSRC submitted the claims in Count 3(b) and the contract

extension proposal in Count 3(a) and was thus fully capable of agreeing or disagreeing with WSRC's interpretation of the contract terms.

WSRC also argues that these misstatements do not meet Berge's

materiality requirement.

A close reading of the materials relied upon by Harrison leads to

the conclusion that all of Count 3 must be dismissed. The DOE's

approval statement indicates that even if WSRC had lied, this was

immaterial to the DOE's sole-source extension. The DOE granted a

sole source extension of $880,000 for procedure development because

it was convinced that changes in the "expectations and regulatory

requirements" forced a "complete upgrade of the ITP procedure system." (J.A. at 48.) The DOE did cite to the allegedly false inclusion

of 5% procedure development in the GPC subcontract when it

approved the $880,000 sole-source extension. (J.A. at 49). But its

approval was for much more than a 5% extension; the DOE was specifically altering the original scope of work to meet the changed circumstances. Whether the original GPC subcontract had contained a

provision for zero or 5% procedure development was simply immaterial to the DOE's decision.

As for Count 3(b), WSRC's argument is persuasive. The DOE was

aware of the terms of the contract -- it could have objected to the

inclusion of procedure development costs if it had believed that such

work was not authorized. Harrison does not allege that WSRC tried

to conceal the nature of the work. Thus, Counts 3(a) and (b) do not

involve any material falsity, if any falsity at all.

Count 4 was properly dismissed. Harrison does not state which signature was fraudulent or unauthorized, nor who perpetrated the fraud,

nor how the signature was fraudulent. He thus fails Rule 9(b)'s pleading requirements.

Also, even if Harrison had pled fraud with the requisite particularity, a falsified signature on a form, not itself a claim for payment, not

 18
apparently required for payment, and not connected to substantive

conditions required for payment, is not material under Berge.

Count 5 was properly dismissed. The allegations of breaches of

contractual and fiduciary duty amount to no more than allegations of

poor and inefficient management of contractual duties. The district

court was correct in holding that poor, or to use Harrison's term,

"non-cost-effective," (Amended Complaint ¶ 25(f)), management is

not actionable under the False Claims Act. Moreover, Harrison does

not describe with particularity who made misrepresentations, when

they made them, nor the manner in which they were made. These are

general allegations and fail Rule 9(b)'s heightened pleading requirements.

Count 7 was properly dismissed. Count 7, read in the most charitable light, alleges that WSRC and GPC conspired to replace two lower

salaried workers with two higher salaried workers so that they could

charge the DOE more money for the subcontract. Count 7 fails for a

number of reasons. First, Count 7 does not plead an intent to defraud

-- nowhere does Harrison assert that WSRC and GPC originally

intended to use the removed lower-salaried workers on the subcontract; Harrison alleges merely that they were in fact used. Staffing

changes are common, and we should be very hesitant to allow such

a claim to stand lest we impose unnecessary regimentation on government contractor staffing decisions. Second, Harrison in fact pleads no

facts that could amount to fraud -- the higher salaried workers used

for the bid proposal were actually staffed on the GPC subcontract.

Count 8 was properly dismissed. Count 8 utterly fails Rule 9(b)'s

demand for particularity. Count 8 does not say or even hint who

ordered the subcontractors to purchase items, which subcontractors

were so ordered, when they were ordered, nor what they were ordered

to purchase. Harrison tries to cover up this deficiency by using an

illustrative example (fully-furnished double-wide trailers), which he

does not even allege was one of the items at issue in the allegations.

(Amended Complaint ¶ 33.) The "clear intent of Rule 9(b) is to eliminate fraud actions in which all the facts are learned through discovery

after the complaint is filed." United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Georgia, Inc.,

755 F. Supp. 1040, 1052 (S.D. Ga. 1990), on reconsideration Stinson,

 19
Lyons, 755 F. Supp. 1055 (internal quotation omitted). Harrison

appears to be on a fishing expedition with this claim.

Count 9 was properly dismissed. This allegation simply does not

state a violation of the False Claims Act. Nowhere does it state that

a claim of any sort was presented to the DOE or that payments were

made contingent upon representations by the Defendant or upon compliance with the "conditions" in the regulation cited by Harrison.

Again, this count amounts to no more than an allegation of poor management, which, as the district court noted, is not cognizable under

the False Claims Act.

Count 10 was also properly dismissed. Count 10 alleges a conspiracy to routinely "sole source" modifications of the ITP Training Project contract, in violation of the DOE regulations requiring competitive

bidding. First, Harrison raises this claim only in his brief. Harrison

argues that the claim was always there in the documents filed with the

complaint and that a court can consider these documents. See

Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir.

1996); United States ex rel. McCoy v. California Medical Review,

Inc., 723 F. Supp. 1363, 1367 (N.D. Cal. 1989). Even so, a court cannot be expected to parse through 1400 pages of documents, as Harrison submitted to the district court below, in order to invent a claim

whole cloth for the plaintiff. Second, to the extent that an allegation

of a conspiracy to fraudulently sole source can be gleaned from his

complaint (cf. Amended Complaint ¶¶ 27, 37), this allegation fails

Rule 9(b)'s requirements since Harrison did not plead how solesourcing was accomplished in a fraudulent way, what false statements

were made to induce sole-sourcing, when they were made, by whom,

etc. Therefore, insofar as Count 10 alleges a conspiracy to extend the

ITP Training Contract by fraudulently-induced approvals for solesourcing, we refuse to consider this newly-raised and vaguely pled

allegation.

The remaining claims need a closer analysis.

Count 1 and Count 6 will be treated together since they revolve

around the same issues.12 Counts 1 and 6 basically allege that WSRC

_________________________________________________________________

12 Count 1(e) must be dismissed. Count 1(e) asserts that WSRC misrepresented that it would offer the ITP Training subcontract on a firm-fixed-

 20
submitted false information to the DOE so that the DOE would allow

WSRC to subcontract the ITP Training Project. This false information

included representations that (1) the need for the job was one-time

and short-term, so it did not make sense for WSRC to use its own

employees, even though they were cheaper; (2) the subcontractor

would incur zero "Other Direct Costs"; and (3) the subcontractor's

overhead costs would be a certain amount, when WSRC knew that

these would be substantially higher.13 WSRC submitted all of these

misrepresentations to the DOE in either the "Make or Buy Analysis"

or the PUR package, both of which were used by the DOE to evaluate

whether or not to approve subcontracting and the particular subcontractor.

Relying on a mixture of false certification and fraud-in-theinducement cases discussed in section II(B), supra, Harrison asserts

that because of these fraudulent misrepresentations to the DOE,

WSRC obtained a "fraudulent approval" for the subcontract and therefore all demands for payments made under the subcontract were false

claims. Stated in its strongest form, Harrison alleges that WSRC misrepresented the need for and costs of subcontracting in order to convince the DOE to approve funding for a subcontractor, and this

funding was in excess of what the government would have legitimately incurred if WSRC had not made the misrepresentations. Harri-

_________________________________________________________________

fee basis when in fact the contract was offered on a cost-plus basis. First,

WSRC never represented that it would offer the subcontract on a firmfixed-fee basis, only that it could. Second, this fact was clearly not material to the DOE's funding decision since the DOE continued with the

funding fully aware that the subcontract was let on a cost-plus basis.

13 In order for liability for representations (2) and (3) to attach, Harrison

must prove that WSRC would not have incurred these"other direct

costs" or these additional overhead costs had WSRC undertaken the ITP

Training Project on its own. If the ITP Training Project was necessary

under WSRC's contract with the DOE, and if the "other direct costs" and

higher overhead were necessary to the ITP Training Project, regardless

of whether WSRC or a subcontractor performed the work, then these

alleged falsities could not have been material to the DOE's funding decision. No matter what these costs were, the DOE would have been

required to pay them as necessary under the contract.

 21
son points out that DOE approval was necessary before WSRC could

subcontract out the project.

Under the test developed in section II(B), supra , these alleged falsities are sufficient grounds for a False Claims Act claim to survive a

Rule 12(b)(6) motion.

1) False statement. Given that we are reviewing a decision to grant

a Rule 12(b)(6) motion, we must take Harrison's allegations as true

and accept that the need for ITP Training was more than just "onetime" and "short-term" of no more than 1.5 years, and that the overhead and "Other Direct Cost" cost-estimates were under-estimated.

Thus, Harrison submitted false statements to the DOE.

2) Requisite scienter. Again, we must take Harrison's allegations

as true, that WSRC in fact knew that the above statements were false.

3) Materiality. Harrison argues that WSRC's false statements meet

Berge's test for materiality in that they would have a "natural tendency to influence" the DOE's decision whether to approve the subcontract. See Berge, 104 F.3d at 1549.

WSRC argues that the allegedly false statements in Counts 1 and

6 were immaterial to the DOE's decision to pay for the ITP Training

Project. First, WSRC argues that (1) Harrison's own allegations show

that ITP Training was necessary to WSRC's contract with the DOE;

(2) the DOE was bound by the contract to pay WSRC's costs in performing tasks necessary to that contract; therefore (3) the allegedly

false statements could not have been material to the DOE's decision

to pay. This argument by WSRC misconstrues Harrison's complaint,

however. Harrison does not argue that any claim submitted by WSRC

for ITP Training would be a false claim. Harrison argues that when

a contractor knowingly makes a misrepresentation to the government

about the need to hire, and the cost of hiring, a subcontractor to perform a particular service, and the government is induced by these misrepresentations ultimately to pay more than it otherwise would have

for the service, then the claims for payment to the subcontractor are

false claims. Under this theory, the false statements were material to

the government's decision to pay a higher price for a subcontractor

than it would have had to pay to WSRC.

 22
WSRC's second materiality argument also fails. WSRC argues that

there was no material connection between the DOE's approval and

the allegedly false statements because the DOE knew that subcontracting would be more expensive than performing the ITP Training

Project in-house. WSRC's own estimates submitted to the DOE stated

that subcontracting would be more expensive than"making" the ITP

Training Project in-house; nonetheless the DOE approved WSRC's

request to subcontract. Thus, says WSRC, the DOE's approval was

based only on the lack of in-house personnel at WSRC, not statements

about the cost or duration of the project.

The above argument by WSRC misses its mark. Even if the DOE's

decision to allow subcontracting was only predicated on WSRC's

alleged lack of personnel, and even if WSRC actually lacked personnel (Harrison never alleges otherwise), Harrison has still alleged

material falsities. WSRC submitted to the DOE that, even though subcontracting was more expensive than performing the task in-house,

WSRC did not currently have the personnel. To make its request more

persuasive, WSRC allegedly low-balled the cost of hiring a subcontractor. WSRC stated to the DOE that subcontracting rather than hiring more staff (which would have been cheaper) was necessary for

two reasons: (1) because of the short-term nature of the ITP Training

Project, permanent staff should not be hired, and (2) in order to prevent interruptions in training. The only rational reason why the DOE

would have approved paying a higher price to a subcontractor is that

it believed at least one of the two reasons offered by WSRC.

Harrison has alleged only that the first of these two reasons was

false. Berge indicates that questions of materiality "partak[e] of the

character of a mixed question of fact and law." 104 F.3d at 1460. On

the pleadings, it is difficult to say whether or not WSRC's allegedly

false statement was material to the DOE's funding decision, since

there was another potential basis for the DOE to rely upon in making

its decision. At the very least, however, at this 12(b)(6) stage we can

say that WSRC's allegedly false statement with respect to the shortterm nature of the project was "capable of influencing agency action."

See id. at 1459.

Finally WSRC argues that WSRC's statements cannot create False

Claims Act liability because they were only estimates. Expressions of

 23
opinion are not actionable as fraud; fraud may only be found in

expressions of fact which "(1) admit[ ] of being adjudged true or false

in a way that (2) admit[ ] of empirical verification." Presidio Enters.,

Inc. v. Warner Bros. Distributing Corp., 784 F.2d 674, 679 (5th Cir.

1986). See also Boisjoly v. Morton Thiokol, Inc. , 706 F. Supp. 795,

810 (D. Utah 1988) (no False Claims Act liability for statement

"clearly not a statement of fact that can be said to be either true or

false"). The fact that cost figures are clearly marked as estimates

might affect their ability to influence agency decision-making under

the Berge materiality standard. However, an opinion or estimate carries with it "an implied assertion, not only that the speaker knows no

facts which would preclude such an opinion, but that he does know

facts which justify it." W. Page Keeton, et al., Prosser & Keeton on

the Law of Torts § 109, at 760 (5th ed. 1984). Harrison has alleged

that WSRC knew each of these statements was false. The DOE could

have been influenced by each of them under the legally reasonable

belief that WSRC did not know its own estimates were false.

4) Involved a claim. WSRC submitted numerous invoices for reimbursement of the amounts it paid out to the subcontractor for the ITP

Training Project, each of which constitutes a "claim" under the False

Claims Act. The fraud-in-the-inducement cases discussed in section

II(B), supra, provide sufficient legal precedent for Harrison's complaint in Counts 1(a)-(d) and 6 to survive the Rule 12(b)(6) motion.

WSRC argues that the fraud-in-the-inducement cases may be distinguished because in those cases the defendant was the recipient and

beneficiary of the contract that was fraudulently obtained.14 WSRC is

correct in portraying the facts of each of the fraud-in-the-inducement

cases. WSRC does not explain why this fact was relevant to those

decisions, however. In none of those cases did the courts indicate that

False Claims Act liability was contingent upon the defendant's status

as recipient and beneficiary of the contract. More importantly, the language of the False Claims Act statute does not anywhere state that

False Claims Act liability depends upon a defendant's status as a

recipient or beneficiary of the fraudulently induced contract. All that

_________________________________________________________________

14 Although Harrison argues that WSRC benefitted by increasing its

costs under its contract with the DOE, WSRC challenges this assertion,

arguing that WSRC received no benefit from increasing its costs under

its contract with the DOE.

 24
is required is the submission of a false claim. In this case, similar to

the facts in, e.g., United States ex rel. Marcus v. Hess, 317 U.S. 537,

United States v. General Dynamics Corp., 19 F.3d 770, and United

States ex rel. Hagood v. Sonoma County Water Agency , 929 F.2d

1416, defendant WSRC allegedly made misrepresentations to the

government about a matter material to the award of a contract and

therefore:

[the] fraud did not spend itself with the execution of the

contract. Its taint entered into every swollen estimate which

was the basic cause for payment of every dollar paid by the

[government].

United States ex rel. Marcus v. Hess, 317 U.S. at 543. Therefore, the

district court's decision with respect to Counts 1(a)-(d) and 6 must be

reversed and the case remanded for further proceedings on these

claims.

Count 2. We dispose of Count 2(b) first. In Count 2(b), Harrison

asserts essentially that WSRC was under a continuing duty to report

undisclosed conflicts of interest to the DOE when the GPC subcontract was expanded. WSRC argues that there was no duty, particularly

in the absence of a request from the DOE. We affirm the district

court's dismissal of Count 2(b). Harrison has not alleged that the

DOE made any requests for further certifications or that WSRC actually made such certifications. Nor has Harrison alleged that the DOE

conditioned approval of later extensions of the GPC subcontract, or

payments thereunder, upon continuing conflicts disclosures. To the

extent that Harrison is asserting an implied certification by silence,

see note 8, supra, Harrison's claim fails on the pleadings because he

has never asserted that such implied certifications were in any way

related to, let alone prerequisites for, receiving continued funding. See

Thompson, 125 F.3d at 902; Joslin, 984 F. Supp. at 383-84.

In Count 2(a), Harrison asserts that WSRC falsely certified that

there were no conflicts of interest between GPC and WSRC. This

claim fits squarely into the false certification cases discussed in section II(B), supra, and will be discussed further below.

1) False Statement. Taking Harrison's allegations as true, there

was a false statement made to the DOE about a lack of conflicts of

 25
interest. Complicating the matter, though, this statement was made

directly by GPC to WSRC, not by WSRC to the DOE. WSRC argues

that GPC's allegedly false certification cannot be attributed to WSRC

because the statement was made by GPC to WSRC about a contract

separate from WSRC's contract with the DOE. WSRC merely passed

along GPC's false certification to the DOE. In this situation, where

the prime contractor allegedly knows that a material certification by

a subcontractor was false, we find as a matter of law that the prime

contractor has adopted the subcontractor's certification by submitting

it to the government. Therefore, we hold that, if Harrison's complaint

is accurate, WSRC was responsible for GPC's false certification.

2) Requisite Scienter. Taking Harrison's allegations as true, when

WSRC adopted GPC's certification, this act was undertaken with the

requisite scienter.

3) Materiality. The prerequisite standard in the false certification

cases is essentially a heightened materiality requirement: the government must have conditioned payment of the claim upon certification

of compliance with the provision of the statute, regulation, or contract

at issue. See Thompson, 125 F.3d at 902; Joslin, 984 F. Supp. at 383-

384. Fairly read in the light most favorable to Harrison, see Mylan

Laboratories, Inc., 7 F.3d at 1134, Harrison's complaint asserts that

WSRC was required to certify that there was no conflict of interest

in order to obtain the DOE's approval for the GPC subcontract. On

review of the district court's Rule 12(b)(6) disposition, we must

accept Harrison's pleadings as true. See id.

4) Involved a Claim. If Harrison's allegations in Count 2(a) are

true, then WSRC could face False Claims Act liability for each claim

submitted as a result of the false certification. The logic, a combination of the false certification and fraud in the inducement theories,

would be as follows: This false certification was a pre-requisite to

approval of the subcontract. Each claim for payment under the contract was therefore submitted under a contract which was fraudulently

approved. So, WSRC could face False Claims Act liability for each

claim for payment under the GPC subcontract.

CONCLUSION

Although Harrison may ultimately lack the ability to prevail on the

evidence, we do think he has stated potential claims under Counts

 26
1(a)-(d), 6, and 2(a). Harrison has alleged more than just waste and

mismanagement. He has alleged that WSRC made intentional misrepresentations to the government, and that WSRC submitted a certification known to be false, about matters material to the government's

decision to grant a subcontract. These false statements caused the

government to pay "claims" at a higher cost than it would have paid

absent the fraud. These allegations are sufficient to state claims under

the False Claims Act.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED

FOR PROCEEDINGS CONSISTENT WITH THIS DISPOSITION

 27