352 F.3d 908 (4th Cir. 2003), 02-2020, U.S. ex rel. Harrison v. Westinghouse Savannah River Co.

Docket Nº:02-2020
Citation:352 F.3d 908
Party Name:U.S. ex rel. Harrison v. Westinghouse Savannah River Co.
Case Date:December 19, 2003
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

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352 F.3d 908 (4th Cir. 2003)

US Ex Rel. Edwin P. HARRISON, Plaintiff-Appellee,



United States of America, Amicus Supporting Appellee.

US Ex Rel. Edwin P. Harrison, Plaintiff-Appellant,


Westinghouse Savannah River Company, Defendant-Appellee.

United States of America, Amicus Supporting Appellant.

Nos. 02-2020, 02-0292.

United States Court of Appeals, Fourth Circuit

December 19, 2003

Argued: Sept. 25, 2003.

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[Copyrighted Material Omitted]

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Daniel J. Westbrook, Nelson, Mullins, Riley & Scarborough, L.L.P., Columbia, South Carolina, for Appellant.

Michael David Granston, Appellate Staff, Civil Division, United States Department of Justice, Washington, D.C., for Amicus Curiae.

Richard E. Miley, North Augusta, South Carolina, for Appellee.

Jeffrey S. Patterson, Nelson, Mullins, Riley & Scarborough, L.L.P., Columbia, South Carolina, for Appellant.

Robert D. McCallum, Jr., Assistant Attorney General, J. Strom Thurmond, Jr., United States Attorney, Douglas N. Letter, Sambhav N. Sankar, Appellate Staff, Civil Division, United States Department of Justice, Washington, D.C., for Amicus Curiae.

Before WILLIAMS and SHEDD, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Affirmed by published opinion. Judge SHEDD wrote the opinion, in which Judge WILLIAMS and Senior Judge HAMILTON joined.


SHEDD, Circuit Judge.

In this False Claims Act case, Edwin Harrison, the qui tam relator, alleged that Westinghouse Savannah River Company (Westinghouse or WSRC) falsely certified to the Department of Energy (DOE) that no organizational conflicts of interest

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(OCI) existed between Westinghouse and General Physics Corporation (GPC) relating to a proposed $2.75 million government subcontract. After a combined jury and bench trial, the district court entered judgment in favor of Harrison. Westinghouse appeals, and Harrison cross-appeals. We affirm.


Westinghouse is the management and operations contractor for many of DOE's activities at the Savannah River Site near Aiken, South Carolina.1 In the 1980s and 1990s, Westinghouse attempted to develop a $500 million In-Tank Precipitation (ITP) facility to store radioactive waste at the Savannah River Site. As part of this project, Westinghouse began developing a training program for the employees who would eventually operate the ITP facility. By 1992, the training program was behind schedule. James Smith, an experienced Westinghouse manager, was put in charge of developing a Recovery Plan to get the training program back on schedule. Before Westinghouse could subcontract the work, however, it had to obtain approval from DOE.

Smith had several people working for him in developing the Recovery Plan. One of these individuals, Michael Kirkpatrick, was a GPC employee who was working at Westinghouse under a contractual agreement known as a Basic Ordering Agreement (BOA). Westinghouse relied heavily on BOAs from GPC and other off-site firms in developing the Recovery Plan. Ultimately, Smith's team decided that Westinghouse should hire a subcontractor to design and implement the training program even though cost estimates showed that Westinghouse could have done the work in-house for less money than it would cost to hire a subcontractor.

Kirkpatrick, in particular, helped prepare some of the briefing papers that Smith used to convince DOE to allow Westinghouse to subcontract the training program. Kirkpatrick was Smith's "righthand man." J.A. 563. Mitchell Frank, a Westinghouse employee, expressed concern to Smith that Kirkpatrick was intimately involved in preparing procurement sensitive documents. Frank also told Smith that he was concerned that any subcontractor with access to such information would have an unfair advantage over other subcontractors bidding for the training subcontract.

Westinghouse submitted the subcontracting proposal to DOE for approval. Westinghouse estimated that the subcontract would be short term and would cost $2.75 million. DOE approved Westinghouse's proposal to subcontract the training program.

Westinghouse next prepared a Request for Proposal (RFP) and sought bids from fourteen firms. Only four firms returned bids on time, one of which was GPC. Kirkpatrick helped GPC prepare its bid. As part of its proposal, GPC submitted a certification to Westinghouse attesting that it had no OCIs in connection with the potential award of the subcontract. An OCI is, in part, a relationship or situation in which an entity bidding on a government subcontract receives an unfair competitive advantage relating to the work to be performed.

Smith was one of three Westinghouse employees who reviewed the four bids. Based on this review, Westinghouse selected GPC to receive the training subcontract even though another bidder submitted a

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lower bid. Before awarding the subcontract to GPC, however, Westinghouse was required to obtain approval from DOE.

William Bowers, a Westinghouse procurement specialist, was responsible for submitting the Procurement Under Review (PUR) package to DOE recommending that DOE approve subcontracting the training program to GPC. Bowers included in the PUR package GPC's bid and certifications, including GPC's certification that no OCIs existed between GPC and Westinghouse.

In September 1992, DOE approved awarding the training subcontract to GPC. The original purchase order was approved for just under $2.5 million. DOE thereafter approved twenty-five additional invoices submitted by Westinghouse. Ultimately, DOE paid more than $9 million for the work performed by GPC on the ITP training program.


Harrison, formerly a vice president at GPC, brought this qui tam action against Westinghouse alleging several violations of the Federal Civil False Claims Act (FCA), 31 U.S.C. §§ 3729-33. The government investigated Harrison's claims but declined to intervene.2

Harrison's original complaint alleged at least ten different claims. He alleged that Westinghouse falsely proposed to DOE that it would be prudent to subcontract the training program rather than do it inhouse; falsely certified that GPC had no OCIs; understated the original scope of the work; affixed a false signature on a purchase requisition form; breached its fiduciary duty; allowed GPC to understate its overhead costs; allowed GPC to inflate labor costs; directed GPC to circumvent normal procurement systems to inflate the cost of supplies; failed to effectively manage the subcontract to safeguard against theft, fraud, and waste; and conspired with GPC to defraud the government.

The district court dismissed the complaint in its entirety. It ruled that no false claim had been made either because Harrison's complaint constituted allegations of inefficiency rather than fraud or because the alleged false statements did not relate to a "claim" as contemplated under the FCA.

On appeal, we affirmed in part, reversed in part, and remanded. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir. 1999) (Harrison I). We affirmed the dismissal of all but two of Harrison's claims: (1) Westinghouse knowingly understated the cost of subcontracting the training program (the low-ball claim) and (2) Westinghouse falsely stated that GPC had no OCIs relating to the subcontract (the false OCI certification claim).

On remand, this case was tried before a jury. The district court granted judgment as a matter of law to Westinghouse as to Harrison's low-ball claim. Harrison does not appeal this ruling.

As for the false OCI certification claim, the district court submitted two interrogatories to the jury:

(1) Has Harrison proven by a preponderance of the evidence that the certification of General Physics regarding organizational conflicts of interest was false under the applicable regulatory standard? and

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(2) Has Harrison proven by a preponderance of the evidence that at the time WSRC passed the certification on to the government, WSRC had knowledge of the falsity of the certification under the knowing standard applicable in this case?

J.A. 1072. The jury answered both interrogatories in the affirmative. After ruling that the issue of materiality was for the court, rather than the jury, to decide, the district court found that the no-OCI certification that Westinghouse submitted to DOE was material.

The district court also ruled that Harrison failed to prove any actual damages. However, after considering aggravating and mitigating circumstances, the district court assessed a penalty against Westinghouse, finding that the false certification negatively affected the integrity of the bidding process. In determining the amount of the penalty, the court found that Westinghouse had submitted twenty-six funding requests for the training program subcontract--the initial subcontract proposal that contained the false OCI certification and twenty-five subsequent invoices. The district court assessed a penalty of $7,500 (from a possible range of $5,000 to $10,000) as to each of these twenty-six funding requests, for a total penalty of $195,000. Of this amount, the district court awarded $58,000 to Harrison, representing the maximum percentage allowed (30%) to a qui tam relator under the FCA. See 31 U.S.C. § 3730(d)(2).


In its appeal, Westinghouse contends that the district court erred by finding that the OCI certification was material. It also argues that it lacked the requisite scienter under the FCA. Last, Westinghouse asserts that the false claims Harrison attempted to prove at trial were not alleged with the necessary specificity in his complaint.

The FCA provides, in pertinent part:


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