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U.S. EX REL. SCHWEDT v. PLANNING RESEARCH CORP.

March 11, 1999

UNITED STATES OF AMERICA, EX REL. MERVYN A. SCHWEDT, PLAINTIFF/RELATOR,
v.
PLANNING RESEARCH CORP., INC., DEFENDANT.



The opinion of the court was delivered by: Oberdorfer, District Judge.

ORDER

For the reasons stated in an accompanying Memorandum, it is this 11th day of March, 1999, hereby

ORDERED: that plaintiff/relator's motion for leave to file an amended complaint [188] is GRANTED; and it is further

ORDERED: that defendant's motion to strike plaintiff/relator's motion for summary judgment [207] is DENIED; and it is further

ORDERED: that defendant's motion to dismiss for lack of subject-matter jurisdiction [205] is GRANTED; and it is further

ORDERED: that defendant's motion to dismiss on constitutional grounds [202] is DENIED AS MOOT; and it is further

ORDERED: that the parties' cross-motions for summary judgment [203, 204] are DENIED AS MOOT.

MEMORANDUM

Mervyn Schwedt, former director of the Pension and Welfare Benefits Administration's ("PWBA") Office of Information Management,*fn1 filed this suit against Planning Research Corporation, Inc. ("PRC") on August 24, 1992. In his complaint, Schwedt alleged that PRC violated the False Claims Act, 31 U.S.C. § 3729-3733, in its performance of a government contract. That contract, which became effective September 22, 1989, called for PRC to develop the software subsystem for a Field Office Information System ("FOIS") for the PWBA. The contract stipulated that PRC would submit twenty specified deliverables during the course of the project, and that the government would remit a specified payment upon acceptance of each deliverable.

The government accepted and paid for sixteen of the specified deliverables. PRC submitted the other four deliverables together on both June 8, 1990 and December 7, 1990; the government rejected the entire set on both occasions. A third submission of the four deliverables came on May 17, 1991, after which the government accepted and paid for one of the four items. PRC resubmitted the remaining three items on September 13, 1991, prompting the government to reject them and to issue a stop work order. PRC has performed no work on the contract since the order, but has requested two "equitable adjustments" totaling $2.1 million. Schwedt, who was responsible for managing the FOIS contract, filed this suit alleging that PRC "knowingly on no less than four occasions present[ed] . . . non-functional and non-compliant software . . . while wrongfully and knowingly misrepresenting [in progress reports] that said software was compliant and functional." Compl. at ¶ 25. The United States Department of Justice conducted an investigation, but declined to intervene. 31 U.S.C. § 3730(b)(4)(B).

An Order of March 31, 1994 dismissed the complaint for failure to state certain claims with the requisite specificity, and for failure to state a claim that the United States suffered damages as a result of the allegedly false progress reports. United States ex rel. Schwedt v. Planning Research Corp., Inc., 1994 WL 118222 (D.D.C. Mar.31, 1994). The court of appeals remanded for consideration of whether the allegedly false progress reports indeed caused the government damage. United States ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196 (D.C.Cir. 1995). After discovery concluded, Schwedt filed a motion for leave to file a first amended complaint. The proposed amended complaint joins two individual defendants, and adds two substantive claims: that PRC made false claims by submitting inaccurate cover letters to accompany the incomplete software; and that PRC made false claims by requesting the equitable adjustments in 1991 and 1992. PRC opposes the motion for leave to file the amended complaint, arguing, inter alia, that it exceeds the scope of the court of appeals' mandate. While that motion was pending, PRC filed a motion to dismiss for lack of subject-matter jurisdiction, a motion to dismiss on constitutional grounds, and a motion for summary judgment. Schwedt also filed a motion for summary judgment, which PRC moves to strike because it is predicated on the proposed amended complaint, leave for which to file has not been granted. On December 14, 1998, the United States filed an amicus brief in response to the parties' dispositive motions. The parties filed responses to the government's brief on January 19, 1999, and a hearing was held on February 10. For purposes of this memorandum, the amended complaint will be treated as having been filed.

I.

PRC first moves to dismiss on jurisdictional grounds, arguing that Schwedt's suit fails to satisfy the False Claims Act's so-called public disclosure provision. That provision, which was part of the 1986 amendments to the Act, establishes that courts lack subject-matter jurisdiction for qui tam suits that are

  based upon the public disclosure of allegations or
  transactions in a criminal, civil, or administrative
  hearing, in a congressional, administrative, or
  Government Accounting Office report, hearing, audit,
  or investigation, or from the news media, unless the
  action is brought by the Attorney General or ...

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