Court Opinion

ID: 4102800
Source: CourtListenerOpinion
Date Created: 2016-11-29 16:01:33.850169+00
Date Added: 2024-06-11T14:50:22.865954
License: Public Domain

UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF COLUMBIA

______________________________
                              )
UNITED STATES OF AMERICA,     )
ex rel. KEAVENEY, et al.      )
                              )
               Plaintiffs,    )
                              )
                              )
               v.             )       Civil Action No. 13-855 (EGS)
                              )
SRA INTERNATIONAL, INC.,      )
et al.                        )
                              )
                              )
               Defendants.    )
______________________________)

                       MEMORANDUM OPINION

     Qui Tam Relators Kevin Keaveney and Margot Brennan

(collectively “Relators”) allege violations of the False Claims

Act (“FCA”), 31 U.S.C. § 3729-3733, against Defendants SRA

International, Systems Research and Applications Corporation

(collectively “SRA”) and Triton Services (collectively

“Defendants”). Am. Compl., ECF No. 32 at 71-79. Relators allege

that, to secure a Department of Defense (“DOD”) contract,

Defendants made numerous false statements to the government. Id.

Defendants SRA and Triton move to dismiss Relators’ Complaint

for failure to state a claim under Federal Rule of Civil

Procedure 12(b)(6) and for failure to plead with particularity

                                  1
as required under Federal Rule of Civil Procedure 9(b). SRA Mot.

Dismiss, ECF No. 35; Triton Mot. Dismiss, ECF No. 38. Upon

review of Defendants’ motions, the responses and replies

thereto, and for the reasons discussed below, Defendants’

Motions to Dismiss are GRANTED in part and DENIED in part.

       I.   BACKGROUND

       A. Procedural History

     On June 7, 2013, Relators filed their Complaint, Compl.,

ECF No. 1, and on February 23, 2015, the United States filed a

Notice of Election to Decline Intervention. ECF No. 14.

Defendants were served with the Amended Complaint on August 19,

2015, and on October 16, 2015, Defendants filed the two motions

to dismiss pursuant to Rules 12(b)(6) and 9(b) that are now

before this Court. SRA Mot. Dismiss, ECF No. 35; Triton Mot.

Dismiss, ECF No. 38.

     In the Amended Complaint, Relators allege that Defendants

engaged in a wide array of conduct that ultimately led to the

submission of false claims to the government, including that

Defendants: (1) made misrepresentations and concealed key

information from their proposals to fraudulently induce the

government to enter into the contract (Count I); (2) charged

excessive pass-through fees for subcontractor labor (Count II);

(3) made misrepresentations in monthly status reports and other

                                2
submissions to the government (Counts III and IV); (4) inflated

invoices and charged the government for services that were never

rendered (Count V); and (5) implemented a kickback scheme

wherein Defendants shared the proceeds of their allegedly

fraudulent conduct amongst themselves (Count VI). Am. Compl.,

ECF No. 32 ¶¶ 121-150.

       B. Relationship Between the Parties

     Relator Kevin Keaveney is the President of K2 Global

Solutions, Inc. (“K2GS”), a defense contracting company that

supplies a variety of services to federal entities, including

strategic planning, risk analysis, predictive modeling, defense

readiness systems and data analysis. Id. ¶ 4. Mr. Keaveney has

extensive experience in the national security sector and has

developed a range of products and strategic management systems

that have been widely adopted by the United States military. Id.

¶¶ 12-16. These products include, inter alia, the Army Reserve

Expeditionary Force (“AREF”), a doctrinal and strategic

management system used by the Army Reserve, and an automated

version of AREF known as the Army Reserve Pool Based Sourcing

(“ARPBS”). Id. ¶¶ 12-14. Relator Margot Brennan is an officer of

K2GS. Id. ¶ 5.

     Defendant Systems Research and Applications Corporation is

a wholly-owned subsidiary of Defendant SRA International, Inc.

                                3
and serves as SRA’s primary contract vehicle with the U.S.

government. Id. ¶ 6. In 2007, SRA entered into a joint venture

named “Project Galaxy” with Defendant Triton Services, Inc.

(“Triton”), a subcontractor. Id. ¶ 8. To perform the contract,

Triton engaged various second-tier subcontractors, including

K2GS, Tiber Creek Consulting, Inc. (“Tiber Creek”), Concurrent

Technologies Corporation (“CTC”), and an individual named Jim

Song.

     From June to October 2005, Mr. Keaveney worked as a

contractor for the DOD reporting to Joseph Angello, the Director

of the Office of the Undersecretary of Defense, Personnel and

Readiness, Readiness, Programming and Assessments. Id. ¶ 15. In

February 2007, after Mr. Keaveney’s contract expired, Mr.

Angello requested Mr. Keaveney’s assistance to continue the

ARPBS and other military projects Mr. Keaveney had developed.

Because Mr. Angello required Mr. Keaveney to procure his own

contract vehicle, Mr. Keaveney approached Triton, a pre-approved

subcontractor for various Department of Defense prime

contractors. Id. ¶ 18. Triton’s Chief Executive Officer, Larry

Stack, informed Mr. Keaveney that Triton would use one of its

existing prime contracting relationships, ultimately its

relationship with SRA, to obtain the requisite contract vehicle.

Id. ¶ 18.

                                4
       C. Defendants’ Contracts with the U.S. Department of
          Defense
     In 2003, the Department of Defense awarded Galaxy

Scientific Corporation (“Galaxy”), a future subsidiary of SRA, a

contract to provide analytic services and software. Id. ¶ 19.

Galaxy teamed with Triton in early 2007 to become the prime

contractor for an additional contract anticipated to be let in

May 2007. Id. In March 2007, Mr. Angello met with Triton, Mr.

Keaveney and another DOD representative to discuss the

anticipated contract. Id. ¶ 20. At this meeting, the

participants discussed Mr. Keaveney’s future role, the structure

of the prospective contract, limits on Triton’s pass-through

rates, and the roles of second-tier subcontractors. Id.

     On June 13, 2007, Triton and SRA submitted a proposal,

called a Task Execution Plan (“TEP” or “task proposal”), to the

DOD outlining their anticipated work on the contract. Id. ¶ 23.

The TEP highlighted Mr. Keaveney’s role as “Technical Team

Leader” and detailed the six discrete tasks to be performed. Id.

Defendants’ proposal was ultimately successful and SRA and

Triton secured the task order. Id. ¶ 24. On May 6, 2008,

Defendants submitted a “follow-on” TEP to the DOD to request

additional funds for the second half of the contract’s base year

and the following two option years. Id. ¶ 35. The 2008 TEP was

largely similar to the 2007 TEP. Id. To keep the government

                                5
apprised of their progress under the contract, Defendants

submitted Monthly Status Reports (“MSRs”). Id. ¶ 59. In late

2008, Defendants removed Mr. Keaveney, K2GS and Tiber Creek from

the contract and replaced them with Triton employees. Id. ¶¶ 39-

42; 138.

       II.   STANDARD OF REVIEW

             A. Federal Rule of Civil Procedure 12(b)(6)

     A motion to dismiss under Rule 12(b)(6) tests the legal

sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235,

242 (D.C. Cir. 2002). The pleading must contain a “short and

plain statement of the claim showing that the pleader is

entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78

(2009). The pleading standard does not require detailed factual

allegations, but should be “more than an unadorned, the-

defendant-unlawfully-harmed-me accusation.” Id. at 678. Naked

assertions without factual enhancements or formulaic recitations

of the elements of a cause of action will not suffice. Id.

Rather, to survive a motion to dismiss, a complaint “must

contain sufficient factual matter . . . to ‘state a claim to

relief that is plausible on its face.’” Id. Plausibility entails

that the plaintiff has pled factual content that is not merely

consistent with liability but allows the Court to draw a

reasonable inference that the defendant is liable for the

alleged misconduct. Id.
                                  6
     In considering a 12(b)(6) motion, the Court should

liberally view the complaint in the plaintiff’s favor, accepting

all factual allegations as true, and giving the plaintiff the

benefit of all inferences that can be drawn therefrom. Redding

v. Edwards, 569 F. Supp. 2d 129, 131 (D.D.C. 2008) (citing Kowal

v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994)).

            A. Federal Rule of Civil Procedure 9(b)

     Rule 9(b) requires that when alleging fraud, “the

circumstances constituting fraud or mistake... be stated with

particularity.” Fed. R. Civ. P. 9(b). Complaints brought under

the False Claims Act are subject to Rule 9(b)’s heightened

pleading requirements. See U.S. ex rel. Totten v. Bombardier,

286 F.3d 542, 551-52(D.C. Cir. 2002)(“Every circuit to consider

the issue has held that, because the False Claims Act is self-

evidently an anti-fraud statute, complaints brought under it

must comply with Rule 9(b).”). That said, a plaintiff “need not

allege the existence of a request for payment with

particularity...Rule 9(b) requires particularity only with

respect to the circumstances constituting fraud[.]” U.S. ex rel.

Folliard v. CDW Tech. Servs., Inc., 722 F. Supp. 2d 20, 27

(D.D.C. 2010) (emphasis in original).

     To meet this threshold, plaintiffs must “state the time,

place and content of the false misrepresentations, the fact

                                7
misrepresented and what was retained or given up as a

consequence of the fraud.” U.S. ex rel. Williams v. Martin-Baker

Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004) (internal

citations omitted). Pleaders must also identify the individuals

allegedly involved in the fraud. Id. The particularity

requirement discourages nuisance suits, safeguards defendants

from frivolous accusations, and guarantees that defendants

receive sufficient information to allow them to prepare a

response. U.S. ex rel. Joseph v. Cannon, 642 F.2d 1373, 1385

(D.C. Cir. 1981).

     Courts “must not rigidly apply the requirements of Rule

9(b), but rather should analyze the Rule on a case by case

basis.” U.S. ex rel. Head v. Kane Co., 798 F. Supp. 2d 186, 193

(D.D.C. 2011). Courts 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.”

U.S. ex rel. Barrett v. Columbia/HCA Healthcare Corp., 251 F.

Supp. 2d 28, 34 (D.D.C. 2003). A complaint “can pass muster

under the Rule 12(b)(6) threshold yet fail to comply with the

strictures of Rule 9(b).” Anderson v. USAA Cas. Ins. Co., 221

F.R.D. 250, 252 n.3 (D.D.C. 2004). Thus Courts consider first

whether the relator has pled the relevant claim, and then turn
                                8
to whether the relator has “pled the circumstances of the fraud

with particularity.” Folliard, 722 F. Supp. 2d at 28.

               B. False Claims Act

      The FCA, 31 U.S.C. §§ 3729–3733, imposes a civil penalty

and treble damages on any individual who “knowingly presents, or

causes to be presented, to an officer or employee of the United

States Government...a false or fraudulent claim for payment or

approval” or “a false record or statement to get a false or

fraudulent claim paid or approved by the Government.” 31 U.S.C.

§ 3729(a). 1 The FCA defines “claims” to include “any request or

demand, whether under a contract or otherwise, for money or

property[.]” 31 U.S.C. § 3729(c). Under the statute, a private

party, commonly called a “relator,” is empowered to bring a qui

tam action on behalf of the government. The Government may elect

to intervene in qui tam actions, but where it declines to do so

(as in this case), the Relators may proceed and, if successful,

collect a large portion of any recovery. Martin v. Arc of Dist.

of Columbia, 541 F. Supp. 2d 77, 81 (D.D.C. 2008) (citing U.S.

1 On May 20, 2009, Congress amended the FCA in the Fraud Enforcement and

Recovery Act of 2009 (“FERA”). The 2009 amendment, among other things,
slightly alters the language in the presentment provision. According to
Congress, the amendment took “effect on the date of enactment of th[e] Act
and shall apply to conduct on or after the date of enactment[.]” P.L. 111-21,
§ 4 at 1625. Since the alleged conduct in this action occurred before May
2009, the provision as amended by FERA does not apply here. See United States
v. Toyobo Co., 811 F. Supp. 2d 37, 45 n.2 (D.D.C. 2011). All references in
this opinion to § 3729(a) are to the pre-amendment version of the statute.

                                      9
ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251,

1254 (D.C. Cir. 2004)). False Claims may take a variety of

forms, including: (1) presentment claims; (2) fraudulent

inducement claims; and (3) false certification claims. Head, 798

F. Supp. 2d at 195. A subcontractor may be liable under the

statute “even when it did not itself present any false claims to

the government if it engaged in a fraudulent scheme that induced

the government to pay claims submitted by the contractor.”

Toyobo, 811 F. Supp. 2d at 45.

       III. ANALYSIS

     Defendants make several arguments in support of their

Motions to Dismiss: (1) Relators’ Amended Complaint is barred by

the statute of limitations; (2) Relators’ Amended Complaint

failed to comply with FCA pre-filing requirements; (3) Relators

fail to state a claim for fraudulent inducement; (4) Relators

fail to state a presentment claim for various phantom expenses,

pass-through fees and purported kickback scheme; and (5)

Relators fail to state a material false statement claim. Each

argument will be addressed in turn.

          A. Relators claims in the Amended Complaint relate back
             to original complaint and thus are not barred by the
             statute of limitations.

  Defendants first argue that the claims alleged in Relators’

Amended Complaint are barred by the FCA’s six year statute of

limitations because the Relators’ Amended Complaint “advances
                                 10
several new alleged false claims or false statements, i.e.

theories of liability, that are not encompassed within the

original Complaint.” SRA Mot. Dismiss, ECF No. 35 at 8(citing to

a purported eleven alleged new claims); Triton Mot. Dismiss, ECF

No. 38 at 7-8. Relators maintain that the six Counts in the

Amended Complaint “relate back to the original complaint, since

the legal claims and the basic factual allegations are

substantively identical to the original complaint . . . .”

Relators’ Opp’n, ECF No. 42 at 41.

  The FCA precludes civil actions filed “more than 6 years after

the date on which the violation . . . is committed.” 31 U.S.C. §

3731(b)(1). The alleged violations in this case occurred between

June 2007 and November 2008, while the Amended Complaint was

filed more than six years later on August 19, 2015. See Am.

Compl., ECF No. 32. However, under Rule 15(c)(1)(B), “an

amendment to a pleading relates back to the date of the original

pleading when . . . the amendment asserts a claim or defense

that arose out of the conduct, transaction or occurrence set out

– or attempted to be set out – in the original pleading.” Fed.

R. Civ. P. 15(c)(1)(B). The Court of Appeals for the District of

Columbia Circuit (“Court of Appeals”) has held that, in making

the determination of whether an amendment relates back to the

date of the original complaint, courts should consider whether

the allegations in the amended complaint relate to the same
                               11
contract at issue in the original complaint. U.S. ex rel. Miller

v. Bill Harbert Int’l Constr., Inc., 608 F.3d 871, 882, 908

(D.C. Cir. 2010) (per curiam) (holding that amended claims

related to two distinct contracts were not “fairly

encompass[ed]” by the claims in original complaint, which were

based on a third contract, were “unique and no two involved the

same ‘conduct, transaction[], or occurrence.’”); see also J.B.

Helmer, False Claims Act: Whistleblower Litigation at 618 (6th

ed. 2012) (noting that a relator must often rush to file the

initial complaint and that amendment provides the “opportunity

to craft the allegations of the complaint more carefully” and

should be construed to relate back under Rule 15 as long as the

amended allegations “arise out of the conduct or occurrences set

forth or attempted to be set forth in the initial complaint.”).

  A review of the Amended Complaint confirms that the same six

counts pled in the Amended Complaint are also pled in the

original complaint. See Comparison of Amended Complaint against

Original Complaint, ECF No. 35-3. Moreover, the changes reflect

Relators’ effort to enhance the level of factual detail. See id.

Relying on Miller, Defendants argue that the mere fact Relators’

complaints concern the same underlying contract is insufficient

to invoke the relation back doctrine. SRA Mot. Dismiss, ECF No.

35 at 9. However, Defendants’ argument is not persuasive. In

Miller, the Court of Appeals considered whether claims based on

                               12
two separate contracts properly related back to the claims

initially pled that arose from a third contract. 608 F.3d at

882. The Court of Appeals noted that the three contracts at

issue were “similar only in that each was funded” by the same

source and concerned work related to sewer systems, ultimately

concluding that the “differences among [the contracts] are

significant.” Id. at 881. By contrast, both the amended and

original complaints here clearly address the same underlying

contract and arise out of the same conduct. See SRA Mot.

Dismiss, ECF No. 35 at 9 (conceding that “the connection to the

subject task order” is a “commonality” between Relators’

complaints). Further, Defendants’ argument that the Amended

Complaint advances several new “theoretical” bases of liability

is inaccurate in light of the fact that the six counts provided

in the original complaint remain the same. See id.; Am. Compl.,

¶ 121-150. The Court finds that Relators’ Amended Complaint

“expand[s] upon or clarif[ies] facts previously alleged” and

thus properly relates back to the original complaint. United

States v. Hicks, 283 F.3d 380, 388 (D.C. Cir. 2002)(citing 6A

CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE   AND   PROCEDURE §

1504, at 84 (2d ed. 1990)). Because the Amended Complaint

relates back to the original complaint, it was timely filed

under Rule 15.

                                     13
          B. Relators Amended Complaint complies with FCA pre-
             filing procedures.

     Defendants also argue that the Amended Complaint should be

dismissed for failure to comply with 31 U.S.C. § 3730(b)(2),

which requires all FCA complaints to be filed under seal. SRA

Mot. Dismiss, ECF No. 35 at 9; Triton Mot. Dismiss, ECF No. 38

at 7-8. Relators respond that the statutory requirement to file

the Complaint under seal applies only to the original complaint,

not the Amended Complaint. Relators’ Opp’n, ECF No. 42 at 42.

     Section 3730(b)(2) of the False Claims Act requires:

          A copy of the complaint and written disclosure
          of substantially all material evidence and
          information the person possesses shall be
          served on the Government pursuant to Rule
          4(d)(4) of   the   Federal   Rules  of   Civil
          Procedure. The complaint shall be filed in
          camera, shall remain under seal for at least
          60 days, and shall not be served on the
          defendant until the court so orders. The
          Government may elect to intervene and proceed
          with the action within 60 days after it
          receives both the complaint and the material
          evidence and information.

31 U.S.C. § 3730(b)(2) (emphasis added). The purpose of the

sealing requirement is “designed to provide the government with

an opportunity to ensure that a qui tam action [does] not

inadvertently ‘tip off’ a defendant who was already the subject

of a ‘sensitive’ criminal investigation.” Helmer, False Claims

Act: Whistleblower Litigation at 619.

                               14
     Here, Relators properly filed the original complaint under

seal. Compl., ECF No. 1. After the Court granted four extensions

of time for the government to decide whether to intervene, it

declined to do so. See Notice of Election to Decline

Intervention, ECF No. 14. After the government declined to

intervene, the original complaint was unsealed. See Order to

Unseal Complaint, ECF No. 15. In its order to unseal the

original complaint, the Court also ordered that “[a]ll other

matters occurring in this action...be filed publicly”. Id. Under

these circumstances, the purpose of the sealing requirement was

met. The cases cited by Defendants are inapposite because they

involve situations where the original complaint was not filed

under seal. See, e.g., Taitz v. Obama, 707 F. Supp. 2d 1, 4

(D.D.C. 2010) (motion to dismiss FCA claims granted for failure

to file original complaint under seal); Segelstrom v. Citibank,

76 F. Supp. 3d 1, 14 (D.D.C. 2014) (same). Further, because the

Court granted Relators leave to amend the original complaint

after it had been unsealed, it would be unnecessary for the

Amended Complaint to be filed under seal. See also U.S. ex rel.

Ubl v. IIF Data Solutions, No. 06-cv-0641, 2009 WL 1254704, at

*4 (E.D. Va. May 5, 2009) (“In general, where the court already

has unsealed the case and granted the relator leave to amend the

complaint, the policy arguments supporting dismissal for failure

                               15
to comply with the filing and service requirements no longer

hold.”).

           C. Relators’ Fraudulent Inducement Claims

     Fraudulent inducement actions arise out of “claim[s]

submitted to the Government under a contract which was procured

by fraud[.]” U.S. ex rel. Bettis v. Odebrecht Contractors of

Cal., Inc., 393 F.3d 1321, 1326 (D.C. Cir. 2005). Contrary to

presentment claims which rest on false demands for payment,

“fraudulent inducement and false certification claims do not

depend on the existence of such explicitly false payment

requests.” Head, 798 F. Supp. 2d at 196. Instead, fraudulent

inducement claims simply require an initial false representation

to the government. See Bettis, 393 F.3d at 1328.

     To state a claim for fraudulent inducement, a plaintiff may

allege that the defendant “made an initial misrepresentation

about its capability to perform the contract in order to induce

the government to enter into the contract[,] and...this original

misrepresentation tainted every subsequent claim made in

relation to the contract[.]” U.S. ex rel. Schwedt v. Planning

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

that the government would not have entered into the contract

absent a defendant’s false statements may also state a claim for

fraudulent inducement under the FCA. United States v. Honeywell

Int'l Inc., 798 F. Supp. 2d 12, 22 (D.D.C. 2011).
                                16
      Relators raise fraudulent inducement claims in Counts I and

IV of the Amended Complaint. In Count I, Relators allege that

Defendants engaged in a “bait and switch” in an effort to induce

the government to enter into the contract. In particular,

Relators allege that Defendants omitted key information from

task proposals– i.e., the “bait” — only to later “substitute[]

their own unqualified personnel to complete the remaining tasks

under the contract” – i.e., the “switch”. Am. Compl., ECF No. 32

¶ 2. Although a bait and switch is not a cognizable cause of

action for purposes of the FCA, it is “well established that

prong (a)(1)(B) of section 3729”, under which Relators bring

their bait and switch claims, “encompasses a cause of action

based on a theory of fraudulent inducement.” United States ex

rel. Tran v. Computer Scis. Corp., 53 F. Supp. 3d 104, 117

(D.D.C. 2014). In Count IV(a), 2 Relators allege that Defendants

knowingly concealed Triton’s insolvency in order to influence

the government’s decision to award the contract to Defendants.

Am. Compl., ECF No. 32 ¶ 139. Defendants contend, among other

things, that Relators do not adequately allege a

misrepresentation in the task proposals and fail to identify

disclosure requirements regarding Triton’s financial status. SRA

2 Count IV of the Amended Complaint, in effect, alleges claims for fraudulent

inducement (pertaining to the disclosure of Triton’s insolvency) and material
misrepresentation (relating to APRBS projections). For clarity, the Court has
separated the claims into Count IV(a) and IV(b) respectively.

                                     17
Mot. Dismiss, ECF No. 35 at 10-16, 42-43; Triton Mot. Dismiss,

ECF No. 38 at 10-13, 29. Defendants challenge Relators’

allegations for failing to state a claim under Rule 12(b)(6) and

for failure to plead with the requisite level of particularity

under Rule 9(b). SRA Mot. Dismiss, ECF No. 35 at 10-20; Triton

Reply, ECF No. 43 at 1-3. For the reasons stated below, Counts I

and IV(a) will be DISMISSED.

      1. Task Execution Proposals (Count I)

      In Count I, Relators contend that Defendants’ task

proposals “falsely stated or implied that [SRA and Triton] were

the only two contractors attached to the subject contract, that

Keaveney and K2GS’s credentials were their own, and that

Keaveney was a Triton employee” which “enabled [SRA and Triton]

to procure the subject contract[.]” Am. Compl., ECF No. 32 ¶ 26.

To support their allegations, Relators provide a number of

details explaining how Defendants fraudulently induced the

government to enter into the contract. Most relevant to their

claim for fraudulent inducement, Relators allege, inter alia,

that Defendants: (1) attempted to pass off Relators experience

as their own in the 2007 and 2008 TEPs, even though Mr. Keaveney

was an independent subcontractor; and (2) failed to notify the

government that they were using subcontractors. 3 Id. ¶ 122.

3 In Count I, Relators also allege that Defendants failed to notify the
government when they terminated Mr. Keaveney and K2GS and deliberately failed

                                     18
      Relators allege that in order to initially secure the

contract, Defendants intentionally omitted from their 2007

proposal the identities of the subcontractors who were slated to

complete “the vast majority of the work” yet “cit[ed] all their

credentials.” Id. ¶ 24. Defendants also allegedly

“misrepresented Keaveney as a Triton employee” to “take credit

for, and control of, the entire contract[.]” Id. According to

Relators, Defendants employed such tactics in order to “falsely

represent themselves...as the ‘only’ subject matter experts” so

that Defendants could qualify as the government’s “single

source” provider and obtain exclusive rights to future contracts

within the same specialized field. Id. ¶ 26(g). To substantiate

their allegations, Relators point to specific provisions of the

2007 proposal which seemingly attribute Relators’ relevant

subject-matter expertise to “Team Galaxy”, the group name for

SRA and Triton, rather than to Mr. Keaveney himself. Id. ¶ 30

(listing authored books on the contract’s subject matter as

examples of “Team Galaxy’s Extensive Experience”); ¶ 31

(alleging that the experience cited in pages 5-20 of the

proposal “was devoted entirely to Keaveney’s experience, with

two minor exceptions”). Relators allege that Defendants made

to submit subcontractor projections after the contract’s base year. See Am.
Compl., ECF No. 32 ¶ 122. Since both of these alleged failures would have
occurred after performance on the contract began, it is not clear how these
allegations are relevant to Relators’ claim that Defendants fraudulently
induced the government to initially enter into the contract.

                                     19
similar misrepresentations in their 2008 task proposal. Id. ¶

35. Relators also allege that the government would not have

entered into the contract absent Defendants’ false statements.

Id. ¶ 124(alleging that Defendants used misrepresentations “in

order to obtain the contract”); ¶ 24 (alleging that Defendants’

citation of the subcontractors’ credentials in the 2007 TEP was

“critical to securing the subject contract”); ¶ 26(c) (alleging

that Defendants’ false statements “enabled Defendants to procure

the subject contract, as well as any and all related and future

contracts and task orders”); ¶ 125 (alleging that the statements

regarding Mr. Keaveney’s role in Defendants’ TEPs and MSRs

“would have had a natural tendency to influence DoD’s funding

decisions, and thus were material”).

     Defendants argue that Relators’ fraudulent inducement

claims fail for a number of reasons, including because: (1) Mr.

Keaveney and K2GS’s participation was clearly disclosed in the

proposals; and (2) Relators rely on FAR clauses requiring

subcontractor disclosure that were not in existence during the

performance of the contract. SRA Mot. Dismiss, ECF No. 35 at 11-

18; Triton Mot. Dismiss, ECF No. 38 at 11-18. Triton separately

argues that Relators have also impermissibly grouped Triton (the

subcontractor) together with SRA (the prime contractor) and

failed to allege that Triton’s actions meet the requirements for

subcontractor liability under the FCA. Triton Mot. Dismiss, ECF

                               20
No. 38 at 10. Relators do not, as Defendants point out, directly

respond to Defendants’ arguments but instead offer excerpts from

cases addressing the implied certification theory for FCA

claims. 4 See Relators’ Opp’n, ECF No. 42 at 18-20; SRA Reply, ECF

No. 44 at 6 (“There is a glaring silence on these points in

Plaintiffs’ Opposition”).

      The Court finds that Relators’ fraudulent inducement claims

fail for a number of reasons. First, Relators have failed to

adequately plead the misrepresentation component of a fraudulent

inducement claim. See Schwedt, 59 F.3d at 199 (reasoning that

“an initial misrepresentation about [the defendant’s] capability

to perform the contract” is an element of a fraudulent

inducement claim). Relators’ claim that Defendants concealed the

existence of Relators in the task proposals is directly

contradicted by the proposals themselves, which Relators

attached to their Amended Complaint. ECF No. 32-2. 5 As

highlighted by Defendants, Mr. Keaveney is “featured prominently

4 The Court finds Relators’ recitation of implied certification cases to be

inapposite for the purposes of their fraudulent inducement claims. While an
implied certification theory of FCA liability rests on allegations that a
“contractor withheld information about its noncompliance with material
contractual requirements” – see Toyobo, 811 F. Supp. 2d at 45 - Relators here
have not identified any relevant contractual requirements pertinent to
Defendants. Further, implied certification cases generally concern an
analysis of whether a “claim” is legally false, see id., but the task
proposals at the center of Relators’ fraudulent inducement allegations are
not “claims” for purposes of the FCA because they are not a “request or
demand...for money or property[.]” 31 U.S.C. § 3729(c).
5 In determining whether a complaint fails to state a claim, courts “may

consider...documents either attached to or incorporated in the complaint[.]”
E.E.O.C. v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir.
1997).

                                     21
in the proposal.” SRA Mot. Dismiss, ECF No. 35 at 14. In the

2007 proposal, for example, Defendants note that “Technical Team

Leader, Kevin Keaveney” will serve “as the primary point of

contact for execution.” Task Execution Plan, ECF No. 32-2 at 32.

The proposals further note that “Keaveney, adds the value to

[Defendants’] approach” and laud Mr. Keaveney’s “forward

thinking” as an attribute that will “shape[]...[Keaveney’s]

performance of these tasks[.]” Id. at 58. Indeed, the proposals

are replete with descriptions of the tasks that “Technical Team

Leader”, meaning Mr. Keaveney, will perform. See, e.g., id. at

32 (“provide project oversight to both Project Lead and the

Program Manager”); 35 (“use his SSTR experience to evaluate DoD

progress”); 36 (“use [his] network of SSTR Subject Matter

Experts (SMEs) to identify and evaluate each new task”), 39

(“create and present a SSTR briefing to the DoD”). Even the

Amended Complaint acknowledges that “the TEP set forth

Keaveney’s role as the Technical Team Leader and Client

Interface on all six discrete tasks...[and] also included all of

Keaveney’s qualifications and specialized knowledge[.]” Am.

Compl., ECF No. 32 ¶ 23. Relators allege that Defendants co-

opted Mr. Keaveney’s subject matter expertise and passed it off

as their own, but have appended to their complaint proposals

which provide detailed information of Mr. Keaveney’s

qualifications and expertise. In light of the extensive

                               22
references to Mr. Keaveney’s expertise and anticipated

involvement in the 2007 and 2008 proposals, the Court finds

Relators’ claims that Defendants made misrepresentations to the

government by taking credit for Mr. Keaveney’s experience in the

proposals to be implausible. See Iqbal, 556 U.S. at 677-78.

     Second, Relators repeatedly state, in conclusory fashion,

that Defendants impermissibly characterized Mr. Keaveney as a

Triton employee in the 2007 and 2008 task proposals. See, e.g.,

Am. Compl., ECF No. 32 ¶¶ 2, 24, 26(g), 35, 46, 57, 122.

Relators, however, do not cite specific provisions in the

proposals that support their claim. See generally id. SRA

correctly notes that the term “employee” appears but once in the

2007 proposal and does not refer to Mr. Keaveney as an employee.

SRA Mot. Dismiss, ECF No. 35 at 13; Task Execution Plan, ECF No.

32-2 at 54. Relators fail to allege any other facts that might

support their claim that Defendants impermissibly held Mr.

Keaveney out as an official employee. See generally Am. Compl.,

ECF No. 32. To the extent that Relators’ argument is that, by

not explicitly referring to Mr. Keaveney as an independent

subcontractor in the task proposals, Defendants implied that Mr.

Keaveney was a Triton employee, Relators have failed to allege

how this distinction fraudulently induced the government to

enter into the contract. See Honeywell, 798 F. Supp. 2d at 22

(reasoning that allegations that the government would not have

                               23
entered into the contract absent a defendant’s false statements

state a claim for fraudulent inducement under the FCA). As a

result, the Court does not find Relators’ claim that Defendants

fraudulently held out Mr. Keaveney as a Triton employee in order

to induce the government to enter into the contract to be

plausible. See Iqbal, 556 U.S. at 677-78.

      Third, Relators have failed to allege how Defendants’

alleged failure to notify the government of the existence of the

subcontractors induced the government to enter into the

contract. Relators, citing Federal Acquisition Regulations

(“FAR”) 52.215-22 and 52.215-23.2, argue that subcontractor

disclosure was required. 6 See Am. Compl., ECF No. 32 ¶ 27.

Defendants argue that these provisions were not enacted until

2009, subsequent to the execution of the underlying contract in

2003 and do not apply retroactively. SRA Mot. Dismiss, ECF No.

35 at 15; see also 48 C.F.R. § 1.108(d)(“FAR changes apply to

solicitations issued on or after the effective date of the

change.”). Setting aside the issue of applicability of these FAR

provisions, Relators here have failed to allege how Defendants’

alleged omission of the subcontractors’ identities induced the

government to initially enter into the contract. See Honeywell,

798 F. Supp. 2d at 22 (reasoning that allegations that the

6 FAR 52.215-22 (48 C.F.R. § 52.215-22) and FAR 52.215-23.2 (48 C.F.R. §

52.215-23) govern disclosure and notification requirements for subcontractor
labor.

                                      24
government would not have entered into the contract absent a

defendant’s false statements state a claim for fraudulent

inducement). Absent such allegations, Relators’ claims cannot

survive.

     For all of these reasons, the Court finds that the Amended

Complaint does not state a FCA claim for fraudulent inducement

in Count I pursuant to Rule 12(b)(6). Because Relators have

failed to state a claim for fraudulent inducement under Rule

12(b)(6), the Court does not need to reach whether they pled the

circumstances of the fraud with the particularity required by

Rule 9(b). Folliard, 722 F. Supp. 2d at 28. Further, since the

Court concludes that Relators have failed to state a fraudulent

inducement claim, there is no need to resolve Triton’s

contention that Relators inappropriately grouped Triton with

SRA. Accordingly, Count I is hereby DISMISSED as to both

Defendants.

     2. Triton’s Solvency (Count IV(a))

     In further support of their fraudulent inducement claim,

Relators allege that Defendants made false statements to the

government by “knowingly concealing Triton’s insolvency and

numerous outstanding debts and creditors” and by “assert[ing]

that Triton was fully qualified to perform on the contract[.]”

Am. Compl., ECF No. 32 ¶ 139. According to Relators, this

misrepresentation “le[d] the government to award the contract to

                               25
Defendants[.]” Id. Relators cite a provision in the TEPs touting

Defendants’ collective “financial stability” as direct evidence

of the misrepresentation. Id. ¶¶ 112-114. Relators seem to

suggest that Defendants had a duty to report Triton’s financial

condition under (1) the Department of Defense National

Industrial Security Program Operating Manual (“DSS NISPOM”), and

(2) a provision in the subcontract between Triton and K2GS. Id.

¶ 111-12.

     Assuming Relators’ claims regarding Triton’s financial

status to be true, the analysis turns on whether the alleged

omission of Triton’s insolvency constitutes a

“misrepresentation” for purposes of a fraudulent inducement

claim. The Court finds that Relators have not adequately alleged

a misrepresentation here. Rather than allege that the contract

between the government and Defendants required the disclosure of

subcontractors’ financial status, Relators conclusively state

that disclosure was “required by DSS NISSPOM”. Am. Compl., ECF

No. 32 ¶ 112. Relators do not explain why DSS NISSPOM requires

the disclosure of subcontractors’ financial status, and, as

highlighted by SRA, DSS NISSPOM is seemingly limited to

classified contracts and inapplicable here. SRA Mot. Dismiss,

ECF No. 35 at 42-43. Relators’ allegation amounts to a legal

conclusion that the Court need not accept as true. Kowal v. MCI

Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994) (“Nor must

                               26
the court accept legal conclusions cast in the form of factual

allegations” at the motion-to-dismiss stage). Furthermore,

Relators fail to explain how an alleged violation of a provision

in the contract between the first and second-tier subcontractors

(i.e., Triton and K2GS) concerning disclosure forms the basis of

a misrepresentation (allegedly made by SRA and Triton to the

government) for purposes of a fraudulent inducement claim.

     Relators provide a single example of an affirmative

misrepresentation allegedly made by the Defendants concerning

Triton’s solvency. According to Relators, a provision in

Defendants’ task proposal stating that the “team was carefully

brought together to provide the corporate size, proven technical

capabilities, and financial stability required for the program

duration and the breadth and depth of skills for qualified

staffing” evidences a misrepresentation. Am. Compl., ECF No. 32

¶ 144 (emphasis added). The Court is not persuaded that this

broad statement in Defendants’ joint task proposal is synonymous

with an express misrepresentation of Triton’s solvency. In any

event, Relators also fail to explain how this statement induced

the government to enter into the contract. See Schwedt, 59 F.3d

at 199 (reasoning that to state a fraudulent inducement claim, a

plaintiff must plead that the defendant’s initial

misrepresentation was made to induce the government to enter

into the contract).

                               27
      Because Defendants have failed to adequately allege that

Defendants made a misrepresentation concerning Triton’s

insolvency under Rule 12(b)(6), Count IV(a) is DISMISSED. 7 Since

Relators’ claims do not pass muster under Rule 12(b)(6), a Rule

9(b) particularity analysis is unnecessary. See Folliard, 722 F.

Supp. 2d at 28.

            D. Relators’ Presentment Claims

      To survive a motion to dismiss on a presentment claim, a

plaintiff must allege that “(1) the defendant submitted a claim

to the government, (2) the claim was false, and (3) the

defendant knew the claim was false.” Folliard, 722 F. Supp. 2d

at 26. Under the FCA, a claim may be considered false if it is

either factually or legally false. United States v. Sci.

Applications Int’l Corp., 555 F. Supp. 2d 40, 49 (D.D.C. 2008).

“A claim can be factually false if it invoices for services that

were not rendered or incorrectly describes goods or services

provided.” Toyobo, 811 F. Supp. 2d at 45 (internal quotations

omitted). By contrast, a claim may be legally false if it

falsely certifies “compliance with a particular statute,

regulation, or contractual terms, where compliance is a

prerequisite for payment.” Id. Such certification may be express

or implied. Id. For the reasons provided below, the Court finds

7 As explained infra, Count IV(b) will also be dismissed for failure to state
a claim for material false misrepresentation.

                                      28
that certain of Relators’ claims survive Defendants’ motions to

dismiss, while others warrant dismissal.

      1. Overtime Pay and Other Claims (Count V)

      Relators allege that Defendants: (1) submitted false

invoices to the government which falsely represented the amount

of overtime worked by various subcontractors; (2) submitted

false invoices for travel expenses allegedly incurred by

Defendants but in fact incurred by K2GS and other

subcontractors; and (3) submitted false invoices for direct

labor charges allegedly incurred by Defendants but that in fact

were incurred by K2GS and other subcontractors. Am. Compl., ECF

No. 32 ¶¶ 143-44. Defendants challenge Relators’ allegations for

failing to state a claim under Rule 12(b)(6) and for failure to

plead with the requisite level of particularity under Rule 9(b).

SRA Mot. Dismiss, ECF No. 35 at 28-31; Triton Mot. Dismiss, ECF

No. 38 at 32-36.

      (a)   Overtime Expenses

      Relators claim that Defendants billed the government for

inflated overtime hours that two individuals——Mr. Song, an

independent subcontractor and Ms. Baker, 8 a Triton employee——did

8 Relators do not provide identifying information for Ms. Baker. The Amended

Complaint does not offer Ms. Baker’s first name and refers to her only as “a
salaried Triton employee.” Am. Compl., ECF No. 32 ¶ 143.

                                     29
not perform. Am. Compl., ECF No. 32 ¶ 65. According to Relators,

over a five-month period of time, Defendants allegedly billed

the government for “92.2 percent over and above what Mr. Song

actually invoiced.” Id. ¶ 66. Defendants “simultaneously billed

the government for unauthorized, unperformed overtime or

inflated hours” for Ms. Baker “from November 14, 2007 through

March 31, 2008.” Id. ¶ 65. While Relators state that they only

have access to invoices during this time period, they suspect

that Defendants also “billed the government for fictitious

overtime, inflated hours, or fictitious employees during the

remaining months” of the two-year contract. Id. ¶ 66.

     Defendants argue that Relators have pled a breach of

contract claim, rather than a false claim pursuant to the FCA.

SRA Mot. Dismiss, ECF No. 35 at 28; Triton Mot. Dismiss, ECF No.

38 at 32. While it is axiomatic that qui tam plaintiffs have no

standing to bring breach of contract claims under the FCA, see

U.S. ex rel. Bender v. N. Am. Telecomms., Inc., 750 F. Supp. 2d

1, 10 (D.D.C. 2010), aff'd, 499 F. App'x 44 (D.C. Cir. 2013),

Relators’ claims do not sound exclusively in contract. Rather

than argue that certain labor was performed yet improperly

categorized as “overtime”, Relators allege that Defendants

presented false invoices containing plainly fictitious or

artificially inflated labor. Am. Compl., ECF No. 32 ¶¶ 65-66.

Such allegations fall squarely within the ambit of the FCA. See
                               30
Head, 798 F. Supp. 2d at 197 n.13 (“Relator's allegation that

the Government was billed for employee work that was not

performed...are, in fact, paradigmatic FCA claims.”).

Defendants’ reliance on Bender for the proposition that the

submission of unauthorized overtime bills present a breach of

contract dispute, see SRA Mot. Dismiss, ECF No. 28-29, is

misplaced because in that case, the defendants allegedly billed

the government for labor that was actually performed but did not

qualify for “overtime status” under the terms of the underlying

contract. See Bender, 750 F. Supp. 2d at 10. By contrast,

Relators here allege that Defendants fraudulently billed the

government for labor the subcontractors never worked. Am.

Compl., ECF No. 32 ¶ 65.

     Defendants further contend that Relators’ allegations are

not plausible because a reading of the Amended Complaint

“supports a more obvious explanation”, namely that “Triton’s

invoices include total hours by labor category, not by

individual.” SRA Mot. Dismiss, ECF No. 35 at 29 (emphasis in

original); see also Triton Mot. Dismiss, ECF No. 38 at 32. In

other words, Defendants assert that Mr. Song and Ms. Baker may

have been billed under the same “Engineer Systems, Senior” labor

category on Triton’s invoices and thus the hours billed

represent a combined total of the hours worked by both

individuals. SRA Mot. Dismiss, ECF No. 35 at 29-30. Discovery
                               31
may yet reveal which interpretation of Triton’s invoices is

correct, however; at this stage, Relators have adequately

alleged a discrepancy between the overtime hours purportedly

worked by the subcontractors and the hours ultimately invoiced

by Triton to support a plausible basis for their claims.

Relators, then, have alleged all of the required elements of a

presentment claim: that Triton submitted a claim, the invoice

was false, and that Triton knew the claim was false. Am. Compl.,

ECF No. 32 ¶¶ 65-67 (describing “Triton’s fraud”), 143;

Folliard, 722 F. Supp. at 26. Moreover, the Court finds that by

identifying specific time periods during which the alleged fraud

occurred and describing specific invoices containing the alleged

misrepresentations, Relators have pled their allegations with

sufficient particularity. Williams, 389 F.3d at 1256 (reasoning

that pleaders must state the time, place, and content of the

false misrepresentations to meet Rule 9(b)’s particularity

requirement). Accordingly, Defendant Triton’s motion to dismiss

Relators’ claims pertaining to overtime charges is DENIED.

     Defendant SRA argues that Relators have failed to state a

claim against SRA because Relators have not alleged that SRA, as

opposed to Triton (the subcontractor), had knowledge that the

claims were false. SRA Mot. Dismiss, ECF No. 35 at 40. The Court

agrees. Relators admit that their allegations are derived from a

comparison “of invoices prepared by the subcontractors...and
                               32
Triton’s available invoices.” Am. Compl., ECF No. 32 ¶ 65. It

logically follows that any purported inflation or fraudulent

overbilling would have occurred at the subcontractor level, in

other words, by Triton. At no point do Relators allege any

improper actions taken by SRA with regard to billing for

overtime charges. See, e.g., id. ¶ 67 (characterizing the

overbilling scheme as “Triton’s fraud”). To survive a motion to

dismiss, Relators must allege that SRA was aware of the claims’

falsity or acted in “deliberate ignorance or reckless disregard

of the truth[.]” Folliard, 722 F. Supp. 2d at 33. Because

Relators have failed to do so here, their claims against SRA

concerning false overtime charges are hereby DISMISSED.

     (b)   Travel Expenses

     Relators allege that Defendants “knowingly billed the

government for business trips that were not taken

by...authorized contractors.” Am. Compl., ECF No. 32 ¶ 86.

Relators claim that Defendants themselves were not authorized to

charge for travel expenses because, under the June 2007 TEPs,

only certain subcontractors (K2GS, Jim Song and Tiber Creek)

were authorized to make such charges. Id. SRA argues that: (1)

Relators fail to allege that SRA submitted a claim for travel

that SRA knew or should have known to be false as required to

state a presentment claim; (2) a contractor’s proposal for

                               33
travel under a time and materials contract, such as the one at

issue here, “is merely an estimate of the charges likely to be

incurred[;]” and (3) an allegation that any travel taken was

“unauthorized” presents a breach of contract claim which is not

actionable under the FCA. SRA Mot. Dismiss, ECF No. 35 at 35.

Triton likewise argues that Relators: (1) fail to assert that

Triton, as the subcontractor, caused SRA to submit the

purportedly fraudulent claims; (2) impermissibly assume that

travel cost estimates were actually invoiced; and (3) fail to

allege with particularity any false claim made by either

Defendant. Triton Mot. Dismiss, ECF No. 38 at 35. In response,

Relators do not address Defendants’ arguments, instead summarily

alleging that Defendants “billed the government for travel for

time periods in which none of the second-tier subcontractors had

done any travel” and “falsely claimed to the government that all

the travel funds for K2GS had been expended[.]” Relators’ Opp’n,

ECF No. 42 at 10. In its Reply, SRA highlights Relators’ failure

to respond to Defendants’ arguments. SRA Reply, ECF No. 44 at 7-

8 (“Plaintiffs have not responded how, even if true, these

allegations rise above a standard breach of contract claim); id.

(“Plaintiffs further fail to respond to SRA’s claim that the

Complaint never alleges it was ever aware of billed but untaken

travel by subcontractors[.]”); id. at 8 (“The Opposition

provides no response.”).

                               34
     Considering Relators’ claims against SRA and Triton, the

Court finds that Relators have not met their burden under either

Rule 12(b)(6) or Rule 9(b). Even assuming that the alleged

invoicing of travel presents an FCA claim rather than a breach

of contract dispute, Relators have not alleged that either SRA

or Triton had knowledge that the invoices they allegedly

submitted were false. See Am. Compl., ECF No. 32 ¶¶ 86-87;

Folliard, 722 F. Supp. 2d at 26 (identifying knowledge as an

element of an FCA presentment claim). As such, Relators’ claims

fail to state a claim under Rule 12(b)(6).

     Even if Relators’ claims could be construed as stating a

claim under Rule 12(b)(6), their claim that Defendants

misrepresented to the government that travel funds pertaining to

K2GS had been expended would fail under Rule 9(b). Am. Compl.,

ECF No. 32 ¶ 87. Relators do not allege when the purported

misrepresentations were made, who made the misrepresentation,

and whether Triton or SRA, or both, were involved. See Williams,

389 F.3d at 1256 (reasoning that Rule 9(b) requires to “state

the time, place and content of the false misrepresentations, the

fact misrepresented” and those allegedly involved in the fraud).

As pointed out by SRA, Relators “have not identified a single

instance in which SRA [or Triton] billed the government for the

difference between the travel ceiling and K2GS’s incurred travel

costs.” SRA Mot. Dismiss, ECF No. 35 at 36. Accordingly,
                               35
Relators’ claims pertaining to unauthorized travel are hereby

DISMISSED.

     (c)   Direct Labor Charges

     Relators also make a number of claims regarding Defendants’

alleged misrepresentation of direct labor charges submitted to

the government. Am. Compl., ECF No. 32 ¶¶ 68-76, 144.

Specifically, Relators allege that Defendants “falsely claimed

[direct] labor as ‘materials’ or other non-labor support,

instead of as labor, or [that Defendants] claimed it as their

own direct labor.” Id. ¶ 144. Relators further allege that

Defendants failed to sufficiently describe direct labor charges

on their invoices, which “made it impossible for the government

to determine the tasks for which SRA actually provided direct

labor.” Id. ¶¶ 72-76. SRA counters that the task proposal, which

expressly included direct labor charge estimates, authorized SRA

to charge for direct labor under the contract. SRA Mot. Dismiss,

ECF No. 35 at 31-32. According to SRA, SRA “cannot be ‘illegally

charging’ the government when it is providing the very services

it proposed.” Id. Triton contends that “direct labor” is a term

of art in government contracts that distinguishes between direct

and indirect costs, and does not necessarily mean that the

invoicing contractor was the entity that performed the labor.

Triton Mot. Dismiss, ECF No. 38 at 33. Likewise, Triton argues,

                                  36
the task proposals explicitly identified to the government that

subcontractor labor costs would be invoiced to the government as

direct costs. Id. Finally, both Defendants argue that Relators

fail to provide any contractual, regulatory or statutory

authority imposing obligations on a prime or subcontractor to

provide a minimum level of detail on invoices. SRA Mot. Dismiss,

ECF No. 35 at 32; Triton Mot. Dismiss, ECF No. 38 at 33.

Relators do not respond to Defendants’ arguments. See generally

Relators’ Opp’n, ECF No. 42 at 23-28; see also SRA Reply, ECF

No. 44 at 7 (“Plaintiffs similarly fail to respond how SRA’s

billing for work it was proposed to perform on a direct labor

basis amounts to a false claim.”)

     The Court finds that Relators fail to state a claim against

SRA under the FCA because Relators fail to explain how the

supposed sparsity of detail in SRA’s invoices constitutes a

false claim. In light of Defendants’ assertion that the task

proposals specifically identified and authorized the charging of

subcontractor labor as a direct cost, a claim Relators do not

rebut, see generally Relators’ Opp’n, ECF No. 42 at 23-28,

Relators do not explain how SRA’s alleged billing in accordance

with the proposal amounts to a misrepresentation for purposes of

the FCA. See Toyobo, 811 F. Supp. 2d at 45 (defining falsity to

include “invoic[ing] for services that were not rendered”). The

Court recognizes that a plaintiff may also demonstrate falsity
                               37
by alleging that a claim “falsely certifies compliance with a

particular statute, regulation or contractual terms, where

compliance is a prerequisite for payment.” Id. However, as

Defendants have pointed out, Relators have not identified any

contractual, statutory or regulatory authority that require the

level of detail Relators contend was necessary. Because Relators

have not adequately alleged falsity under the FCA, the

allegations against SRA regarding direct labor charges are

hereby DISMISSED under Rule 12(b)(6). As such, the Court need

not reach the question of particularity under Rule 9(b).

Folliard, 722 F. Supp. 2d at 28.

     Relators’ claims against Triton must also be DISMISSED

because, in addition to the pleading defects already identified,

the Amended Complaint fails to allege Triton’s role in the

alleged scheme to misrepresent direct labor charges submitted to

the government. Relators only detail misrepresentations and

omissions allegedly made by SRA, and, in conclusory fashion,

insist that the scheme was conducted “in collusion with Triton.”

See Am. Compl, ¶¶ 68-74. Such vague and conclusory allegations

are not sufficient to state a claim under Rule 12(b)(6). Iqbal,

556 U.S. at 678 (reasoning that “naked assertions devoid of

further factual enhancement” are insufficient to state a claim

for relief).

                               38
     2. Excessive Pass-Through Fees (Count II)

     In Count II, Relators allege that Triton routinely charged

the government excessive pass-through fees for work performed by

its subcontractors. Am. Compl., ECF No. 32 ¶ 51. Relators allege

that Triton agreed with Mr. Angello, a DOD representative, “to

limit [Triton’s] pass-through fee[s] to 0.95 percent” of its

subcontractors’ invoices, but that Triton actually charged the

government 9.95 percent in pass-through fees for K2GS, “6.35

percent in pass-through fees for Mr. Song, 3.89 percent to 6.73

percent in pass-through fees for Tiber Creek, and 4.71 percent

in pass-through fees for subcontractor travel.” Id. ¶¶ 20(3),

51-52. Relators further allege that by not disclosing the

identity of the subcontractors in Defendants’ TEPs and MSRs,

Triton concealed the inflated pass-through fees and SRA charged

pass-through fees “on 100 percent of all subcontractor labor,

rather than just Triton’s work product alone.” Id. ¶ 52. As a

result, Relators allege that both Triton and SRA “ma[de] a false

claim on each of its invoices, and in virtually every entry on

its invoices in which it sought reimbursement for work performed

by [the subcontractors].” Id. ¶ 53.

     SRA and Triton argue that the FAR provisions cited by

Relators that seemingly limit excessive pass-through charges are

inapplicable because: (1) the provisions were not enacted at the

                               39
time the contract was executed in 2003; (2) even if the FAR

provisions had been enacted, they would not apply to Triton

because Triton’s intended subcontracting did not exceed the pre-

defined threshold; and (3) the alleged agreement with Mr.

Angello is unenforceable. SRA Mot. Dismiss, ECF No. 35 at 21-24;

Triton Mot. Dismiss, ECF No. 38 at 18-21. Triton further

contends that Relators’ allegations based “upon information and

belief” fail Rule 9(b)’s particularity requirement and that any

obligations concerning pass-through fees “apply only to SRA as

the entity with contractual privity with the government.” Triton

Mot. Dismiss, ECF No. 38 at 18-19. Without responding to any of

Defendants’ other arguments, Relators reply that Congress

expressly stipulated that the FAR regulations proscribing

excessive pass-through fees would become effective three months

before the 2007 task order in this case was let to Mr. Keaveney.

Relators’ Opp’n, ECF No. 42 at 29-30.

     Here, the Court finds that Relators have not stated a claim

under Rule 12(b)(6). To state a presentment claim, Relators must

allege, inter alia, that the claims submitted by Defendants were

false. Folliard, 722 F. Supp. 2d at 26. Relators base their

falsity allegations on FAR provisions that Relators readily

concede weren’t promulgated until October 2009, after

performance on the task orders had been completed. See Relators’

Opp’n, ECF No. 42 at 29. In an effort to surmount this obstacle,
                               40
Relators argue that Congress put DOD contractors on notice in

October 2006——eight months before Relators joined the task

order——that the DOD would at some future point in time issue

regulations concerning excessive pass-through fees that would

apply to DOD contracts “awarded on or after May 1, 2007”. Id. at

30. Ultimately, the regulations were not issued until October

2009. Id.

     As highlighted by SRA and conceded by Relators, the

underlying contract at issue in this case was awarded in 2003,

four years before the effective date of the regulations

governing pass-through fees that Relators contend should apply.

See Am. Compl., ECF No. 32 ¶ 19 (“In 2003, the DoD awarded

Galaxy Scientific Corporation (“Galaxy”) the DoD contract

DAAB07-03-D-B011...to provide analytic services and software.”);

SRA Reply, ECF No. 44 at 9. Not only does the Amended Complaint

allege that DOD awarded contract DAAB07-03-D-B011 to Defendants

in 2003, but the 2007 and 2008 task proposals also clearly list

the same contract number as the applicable one. See 2007 and

2008 Task Execution Proposals, ECF No. 32-2 at 24, 60

(identifying the applicable contract number as DAAB07-03-D-

B011); Am. Compl., ECF No. 32 ¶ 19. It stands to reason that

Defendants could not have violated a law that did not exist at

the time the contract was awarded. Therefore, the Court finds

that Relators have failed to state a claim pursuant to Rule
                               41
12(b)(6) because Relators’ claim that the pass-through fees

submitted by Defendants were false is based on a DOD regulation

that did not exist at the time the underlying contract was

awarded. Because the regulation did not exist, the Court is

unable to infer that the Defendants violated the FCA. 9 See Iqbal,

556 U.S. at 678 (“[T]he tenet that a court must accept as true

all of the allegations contained in a complaint is inapplicable

to legal conclusions.”). 10 Accordingly, Count II of the Amended

Complaint is hereby DISMISSED.

      3. Kickback Payments (Count VI)

      As best the Court can discern, Relators attempt to allege a

kickback scheme. See generally Am. Compl., ECF No. 32 97-106.

According to Relators, Defendants “misallocat[ed] funds so that

charges actually incurred by a [second-tier] subcontractor...

were instead recorded as charges incurred by Triton.” Id. ¶ 148.

9 Relators’ argument that the charged pass-through fees violated the alleged

oral agreement between Mr. Angello and Triton, see Am. Compl., ECF No. 32 ¶
51, presents a breach-of-contract dispute over which Relators have no
standing. Bender, 750 F. Supp. 2d at 10. Nonetheless, even assuming that were
not the case, Relators have failed to allege that SRA was a party to that
agreement, was aware of its existence, or that the oral agreement was
incorporated into the ultimate contract between Defendants and the
government. In the absence of these allegations, Relators cannot demonstrate
falsity as required to state a claim under the FCA. Folliard, 722 F. Supp. 2d
at 26.
10 The Court can also dismiss Relators’ pass-through claims for failing to

respond to any of Defendants’ arguments for why, even if the FAR provisions
were enacted prior to the underlying contract, they do not apply to the
instant case. Stephenson v. Cox, 223 F. Supp. 2d 119, 121 (D.D.C.
2002)(“[W]hen a plaintiff files a response to a motion to dismiss but fails
to address certain arguments made by the defendant, the court may treat those
arguments as conceded, even when the result is dismissal of the entire
case.”).

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SRA then presented those charges to the government and once

paid, Defendants “ke[pt] the funds through a kick-back scheme

among themselves[.]” Id. Relators allege that Defendants, among

other things, used a “particular coding system” in its invoices

which “mea[nt] nothing to the government” to “give the

appearance that all the labor had been performed by Triton”

rather than by the second-tier subcontractors. Id. ¶ 97.

Defendants argue that Relators: (1) have not alleged how the

supposed kickback scheme resulted in the submission of false

claims or statements; and (2) fail to adequately plead a

violation under the Anti-Kickback Act. SRA Mot. Dismiss, ECF No.

35 at 40-41; Triton Mot. Dismiss, ECF No. 38 at 36-38. Relators

make no attempt to respond to Defendants’ arguments. See

generally Relators’ Opp’n, ECF No. 42 (making no mention of

Relators’ kickback allegations).

     As an initial matter, this Court may dismiss Relators’

kickback claim because Relators fail to respond to Defendants’

arguments. “[W]hen a plaintiff files a response to a motion to

dismiss but fails to address certain arguments made by the

defendant, the court may treat those arguments as conceded, even

when the result is dismissal of the entire case.” Stephenson v.

Cox, 223 F. Supp. 2d 119, 121 (D.D.C. 2002). In any event,

Relators’ kickback claim also fails under Rule 12(b)(6). As

stated supra, to state a presentment claim, a plaintiff must
                               43
allege that the defendant submitted a claim, the claim was

false, and the defendant knew the claim was false. Folliard, 722

F. Supp. 2d at 26. While the Amended Complaint broadly alleges

the existence of a kickback scheme, at no point do Relators

identify any underlying false claims for payment that were

allegedly submitted by Defendants. See generally Am. Compl., ECF

No. 32 ¶¶ 97-106. Moreover, Relators fail to demonstrate how the

coding system allegedly implemented by Defendants rendered any

invoices “false” for purposes of the FCA. Rather than allege

that the Relators “incorrectly describe[d] goods or services

provided”, see Toyobo, 811 F. Supp. 2d at 45, Relators concede

that the coding was logically consistent. See Am. Compl., ECF

No. 32 ¶ 97 (alleging that Defendants used “K2GS” for K2 Global

Solutions and “TC” for Tiber Creek). The Amended Complaint

therefore fails to “contain[] sufficient factual matter” from

which the Court could “draw the reasonable inference” that

Defendants violated the FCA. Iqbal, 556 U.S. at 678.

Accordingly, Count VI is hereby DISMISSED.

          A. Relators’ Material False Statement Claims

     In addition to their presentment claims, Relators allege

that Defendants submitted false statements to the government in

furtherance of their false claims scheme and in violation of 31

U.S.C § 3729(a)(1)(B). To state a material false statement claim

under the FCA, “a plaintiff must allege that (1) the defendant
                               44
made or used a ‘record or statement;’ (2) the record or

statement was false; (3) the defendant knew it was false; and

(4) the record or statement was ‘material’ to a false or

fraudulent claim.” U.S. ex rel. Hood v. Satory Global, Inc., 946

F. Supp. 2d 69, 85 (D.D.C. 2013); see also U.S. ex rel. Ervin &

Assocs., Inc. v. Hamilton Sec. Grp., Inc., 370 F. Supp. 2d 18,

36 (D.D.C. 2005) (“The great weight of case law holds that the

materiality of a false record or statement is an element of

False Claims Act liability.”). “Material” means “having a

natural tendency to influence, or be capable of influencing, the

payment or receipt of money or property.” Tran, 53 F. Supp. 3d

at 123. As explained below, the Court finds that Count III

states a claim for relief but DISMISSES Count IV(b).

     1. Monthly Status Reports (Count III)

     In Count III, Relators allege that Defendants routinely

created false MSRs in order to obscure their fraudulent scheme.

Am. Compl., ECF No. 32 ¶ 134. Defendants did so “to ensure that

their MSRs were consistent with their TEPs and invoices,...pass

government audit,...and to procure all related and subsequent

contract proposals.” Id. Specifically, Relators allege that

Defendants: (1) failed to disclose the actual status for task

orders; (2) mislabeled expenditures as direct costs; (3) failed

to identify and disclose labor costs, rates, and hours for its

                               45
subcontractors; (4) declined to identify certain direct costs in

its schedules; and (5) failed to identify the total small

business participation on the contract. Id. ¶ 134.

     Defendants point to a select few of the alleged false

statements, asserting that they are not, in fact, false. See,

e.g., SRA Mot. Dismiss, ECF No. 35 at 25; Triton Mot. Dismiss,

ECF No. 38 at 23-24. Defendants also argue that the MSRs do not

qualify as “claims” under the FCA and therefore liability cannot

attach for any alleged inaccuracies contained therein. SRA

Reply, ECF No. 44 at 7; Triton Mot. Dismiss, ECF No. 38 at 27.

Relators do not respond to Defendants’ arguments. See Relators’

Opp’n, ECF No. 42 at 18-23.

     Here, Count III survives Defendants’ challenges because the

Amended Complaint alleges each element of a material false

statement claim with particularity that Defendants made false

statements to the government in the form of its MSR submissions.

Relators append to the Amended Complaint specific MSRs submitted

by Defendants in June and July 2008 and identify a litany of

purported misrepresentations and omissions made by Defendants,

including, inter alia, “removing newly identified risks and

other critical remarks[,]...continuing to bill the government

for tasks after they were completed[,]...billing the government

for employees on tasks for which they performed no

                               46
work[,]...replacing subcontractor names with those of

Defendants’ employees[, and]... routinely falsifying and/or

omitting K2GS contributions, disclaimers, risks and

authorship[.]” Am. Compl., ECF No. 32 ¶ 60. Relators further

allege that Defendants, to avoid detection, knowingly created

the false MSRs to mirror the fraudulent task proposals and

inflated invoices. Id. ¶59. Relators also allege that the

misrepresentations were material. Id. ¶ 60. Thus, Relators have

alleged each element of their material misrepresentation claim

and satisfied the requirements of Rule 12(b)(6). Moreover, the

Court considers Relators’ citation to specific invoices and

detailed recitation of the alleged misrepresentations in

Defendants’ MSRs sufficient to meet their burden under Rule 9(b)

to allege their claims with particularity.

     Defendants’ arguments to the contrary are not persuasive.

First, Defendant’s assertion that the information contained in

the status reports are not truly false, presents a question of

fact more appropriately resolved after discovery closes. Such

“factual issues will not be resolved at the motion to dismiss

stage of the litigation, where the plaintiff's factual

allegations are accepted as true.” Toyobo, 811 F. Supp. 2d at

48. Further, Defendants’ argument that MSRs are not “claims” for

purpose of the FCA is misplaced. While the MSRs are, as their

name suggests, “status reports” and not claims on the public
                               47
fisc, the FCA clearly provides for liability for the submission

of false statements material to a false or fraudulent claim.

Ervin, 370 F. Supp. 2d at 36 (discussing the elements of a

material false statements claim).

     The Court finds that Relators have sufficiently alleged

that the false statements in the MSRs were material to the

claims submitted by Defendants under the contract. Am. Compl.,

ECF No. 32 ¶ 60. As such, Relators’ allegations state a material

false statement claim under Rule 12(b)(6). Further, the Court

finds that by identifying specific MSRs and describing, in

detail, the misrepresentations contained therein, Relators have

pled their allegations with sufficient particularity. Williams,

389 F.3d at 1256 (reasoning that plaintiffs must plead the time,

place, and content of the false misrepresentations to satisfy

Rule 9(b)’s particularity requirement). Defendants’ motions to

dismiss with regard to Count III of the Amended Complaint are

hereby DENIED.

     2. ARPBS Projections (Count IV(b))

     In Count IV(b), Relators allege that Defendants’ ARPBS

projections to the government “falsely stated the identity of

the personnel who were to work on the contract.” Am. Compl., ECF

No. 32 ¶ 138. According to Relators, Defendants “initially

identif[ied] Triton employees as [subcontractor] employees” and

                               48
then “subsequently remov[ed] the subcontractors (other than

Triton), and list[ed] unqualified Triton employees in their

place[.]” Id. Relators allege that “all prime contracts have a

provision regarding ‘Personnel and Performance’” which mandates,

inter alia, that subcontractors notify prime contractors of any

need to substitute personnel. Id. ¶ 110. Defendants argue that

Relators have not alleged how the alleged omission of the

subcontractor employees was material to the government’s

decision to make payments under the contract. SRA Mot. Dismiss,

ECF No. 35 at 42; Triton Mot. Dismiss, ECF No. 38 at 30.

Relators do not directly respond to Defendants arguments but

rather restate allegations from Amended Complaint that

Defendants “misled DOD through removing information about the

identity and work of the subcontractors.” Relators’ Opp’n, ECF

No. 42 at 6.

     The Court finds that Relators fail to state a material

false statement claim relating to the ARPBS projections for two

reasons: First, Relators concede that the replacement of

personnel presents a breach of contract dispute, over which

Relators have no standing. See Am. Compl., ECF No. 32 ¶ 110

(“Defendants’ ‘bait-and-switch’ scheme regarding the ‘Personnel

and Performance’ provision created an irreparable, material

breach with the prime contract, as well as all subcontractors”);

Bender, 750 F. Supp. 2d at 10. However, even assuming Relators
                               49
did allege a false claim, they——as Defendants highlight——have

failed to allege that the removal of subcontractor names from

the ARPBS projections was material to the government’s decision

to pay. See Ervin, 370 F. Supp. 2d at 36 (recognizing that the

materiality of a false record or statement is an element of

False Claims Act liability). As a result, Count IV(b) is hereby

DISMISSED under Rule 12(b)(6). Because the Court has determined

that Relators have failed to state a claim under Rule 12(b)(6),

further analysis for particularity under Rule 9(b) is

unnecessary.

       IV.     CONCLUSION

     For the foregoing reasons, Defendants’ Motions to Dismiss

are GRANTED in part and DENIED in part. Count III against both

Defendants shall proceed. Count V’s claim pertaining to alleged

overtime charges shall also proceed but only against Triton. All

remaining claims are DISMISSED. An appropriate Order accompanies

this Memorandum Opinion, filed this same day.

SO ORDERED.

Emmet G. Sullivan
United States District Court
November 29, 2016.

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