The Whistleblower Blog

As to defendants, this decision includes a discussion of the “government knowledge” defense. This defense—often used by defendants—is based on the theory that, if the government is aware of the allegedly wrongful conduct, the conduct is not a basis for False Claims Act liability. Specifically, in addition to the false-bidding claim discussed above, the relator in this case also alleged that Lockheed improperly used “freeware” software and improperly conducted required testing under the contract. Lockheed, however, produced evidence that it fully disclosed the fact that it was using the freeware to the government contracting officer, and the contracting officer herself stated that the use of such freeware was not prohibited under the contract and, in fact, she approved its use. The Ninth Circuit affirmed the district court’s grant of summary judgment to Lockheed on this claim because “Lockheed submitted overwhelming evidence that it shared with the Air Force…the use of [the freeware] and also disclosed…its testing procedures.” This holding provides support for the viability of the government knowledge defense and should encourage defendants to avert False Claims Act liability by fully disclosing their acts to government officials and obtaining their approval.