Allison Engine Co. v. United Statesex rel. Sanders, 553 U.S. 662 (2008)

In 1985, the United States Navy entered into contracts with two shipbuilders, Bath Iron Works and Ingalls Shipbuilding, to construct a fleet of Arleigh Burke class guided missile destroyers. Each destroyer required three generator sets (Gen-Sets) for electrical power, leading the shipyards to subcontract with Allison Engine Company, which was responsible for manufacturing 90 Gen-Sets for over 50 destroyers. Allison Engine further subcontracted the assembly of these Gen-Sets to General Tool Company (GTC), which in turn subcontracted the manufacturing of bases and enclosures to Southern Ohio Fabricators, Inc. (SOFCO). The Navy paid the shipyards a total of approximately $1 billion per destroyer, with Allison Engine receiving about $3 million per Gen-Set, GTC around $800,000, and SOFCO over $100,000, all funded by the Federal Treasury. The contracts mandated compliance with the Navy's specifications and required certificates of conformance (COCs) for each Gen-Set. In 1995, Roger L. Sanders and Roger L. Thacker, former employees of GTC, initiated a qui tam lawsuit in the District Court for the Southern District of Ohio under the False Claims Act (FCA). They alleged that the petitioners knowingly presented false claims for payment by failing to adhere to the Navy's specifications and standards, thereby defrauding the government. The case progressed through the judicial system, ultimately reaching the United States Court of Appeals for the Sixth Circuit, which ruled in favor of the respondents. The Supreme Court granted certiorari to address the necessary elements a plaintiff must prove under the FCA regarding the relationship between false statements and government payment or approval of claims. The Supreme Court's review focused on clarifying the requirements for establishing liability under the FCA, specifically whether a plaintiff must demonstrate that the false record or statement was material to the government's decision to pay or approve the claim. This case highlighted the complexities of subcontracting in government contracts and the implications of compliance with federal standards and regulations.

Whether a plaintiff asserting a claim under the False Claims Act must prove that the defendant intended the false record or statement to be material to the Government’s decision to pay or approve the false claim.

The judgment is vacated and the case is remanded for further proceedings consistent with this opinion.