Since 1986, the little brother to the civil False Claims Act, known as the Program Fraud Civil Remedies Act of 1986 (“PFCRA”), has seen very little use.  Section 5203 of the Fiscal Year 2025 National Defense Authorization Act (“NDAA”) seeks to breathe new life into the law by renaming it the “Administrative False Claims Act of 2023” (“AFCA”) and by making several substantive enhancements.  What is unclear is whether Congress’s attempts to revitalize the PFCRA will ultimately be thwarted by the Supreme Court’s decision in SEC v. JarkesyThe AFCA complements the more widely known and widely used civil False Claims Act by providing an administrative process by which federal executive branch agencies can address relatively small dollar value false claims that might not warrant the attention of the Department of Justice.  The liability provisions of the AFCA remain closely modeled on those in the False Claims Act.  The principal differences between the False Claims Act and the AFCA are that the AFCA does not include a qui tam enforcement mechanism, covers false written statements even in the absence of a claim, and provides for administrative rather than judicial resolution.

NDAA Changes

The principal changes introduced in the NDAA are as follows.

  • The AFCA raises the original $150,000 PFCRA ceiling on claims that may be handled administratively to $1 million, and provides for periodic adjustment of this cap for inflation in the same manner that civil monetary penalties are increased under the civil False Claims Act. 
  • The AFCA seeks to provide a concrete incentive for agencies to bring administrative claims, by specifying that amounts recovered under the law will be credited first to reimburse the agency for its costs of investigating and prosecuting these small false claims, including court or hearing costs, with additional amounts deposited as miscellaneous receipts in the U.S. Treasury. 
  • The AFCA expands the lists of officials to whom AFCA cases can be referred for administrative hearings, to include members of the board of contract appeals for any agency that does not employ administrative law judges.
  • The AFCA amends the PFCRA’s 6-year statute of limitations to mirror the limitations provision in the civil False Claims Act, by adding an alternate limitations period of up to 10 years if an action is filed within 3 years of the date that material facts “were known or reasonably should have been known by the authority head.”
  • The AFCA amends a number of provisions to align the AFCA with the civil False Claims Act, for example by conforming the definitions of “materiality” and “obligation” to match those in the civil False Claims Act and specifying that materiality should be determined in the same manner as under the civil False Claims Act.

Agencies and board of contract appeals are directed to update existing regulations and procedures to comply with these NDAA legislative changes.

Possible Constitutional Infirmity

The AFCA, like other administrative proceedings, may be vulnerable to the Supreme Court’s June 2024 decision in SEC v. Jarkesy.  In that case, the Supreme Court held that when the SEC seeks civil monetary penalties from a defendant for securities fraud, the Seventh Amendment entitles the defendant to trial by jury.  The Supreme Court based its conclusion in part on: (1) the “close relationship between federal security fraud and common law fraud,” (2) the fact that civil monetary penalties designed to punish offenders are a type of relief traditionally meted out under courts of law as opposed to courts of equity, and (3) its conclusion that the “public rights exception” to Article III court jurisdiction did not apply.  While the Supreme Court’s holding in Jarkesy only applies to securities fraud, the AFCA—much of which is rooted in common law fraud, and provides for civil penalties of up to $5,000 per claim, in addition to an assessment of damages of not more than twice the amount of the claim—may be susceptible to the Supreme Court’s reasoning in Jarkesy.

Time will tell whether the AFCA will be revitalized as intended by the NDAA, or whether the Supreme Court’s decision in Jarkesy will gut the statute and continue the PFCRA’s legacy as a largely forgotten law.

Subscribe to Covington’s NDAA Blog.

This blog is the second in a series of Covington blogs on the 2025 NDAA.  The first blog summarized (1) NDAA sections affecting acquisition policy and contract administration that may be of greatest interest to government contractors; (2) initiatives that underscore Congress’s commitment to strengthening cybersecurity, both domestically and internationally; and (3) NDAA provisions that aim to accelerate the Department of Defense’s adoption of AI and Autonomous Systems and counter efforts by U.S. adversaries to subvert them.

Future posts will address NDAA provisions targeting China, supply chain and stockpile security, and Congress’s effort to mature the Office of Strategic Capital and leverage private investment to accelerate the development of critical technologies and strengthen the defense industrial base.  Subscribe to our blog here to get these updates.

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Photo of Peter B. Hutt II Peter B. Hutt II

Peter Hutt represents government contractors in False Claims Act and fraud matters, and accounting, cost, and pricing disputes and counseling matters.

Peter is a leading False Claims Act lawyer in the government contracts arena. He has represented contractors for 35 years in matters

Peter Hutt represents government contractors in False Claims Act and fraud matters, and accounting, cost, and pricing disputes and counseling matters.

Peter is a leading False Claims Act lawyer in the government contracts arena. He has represented contractors for 35 years in matters alleging cybersecurity noncompliance; cost mischarging; CAS violations; quality assurance deficiencies; substandard products and services; defective pricing; health care fraud; price reduction issues; inadequate subcontractor oversight; and reverse false claims. He has testified before Congress concerning the False Claims Act, and is a thought leader in the field. Peter also conducts internal investigations and advises clients on whether and how to make disclosures of potential wrongdoing.

Peter also represents contractors and grantees in accounting, cost, and pricing matters, and other contract and grant matters. He has addressed issues concerning pensions and post-retirement benefits; TINA and defective pricing; alleged CAS violations; cost accounting practice changes; alleged charging of unallowable and expressly unallowable costs; terminations; contract financing; price reduction clause issues; subcontracting and supply chain compliance; specialty metals compliance; and small business and DBE compliance. He has litigated cost, accounting, and contract breach matters in the Court of Federal Claims and the ASBCA.

Peter is recognized for his work both in False Claims Act and government contract disputes by Chambers USA, which notes that “He is absolutely outstanding. He is thoughtful and client-focused.” Chambers also notes that “Peter’s judgment and problem solving ability is unique. He is a very good False Claims Act lawyer.”

Photo of Sarah Harrington Sarah Harrington

Sarah Harrington co-chairs Covington’s Appellate and Supreme Court Litigation Group. She most recently served as the Deputy Assistant Attorney General in charge of the Civil Division’s Appellate Staff and has argued 22 cases before the United States Supreme Court, involving a wide range…

Sarah Harrington co-chairs Covington’s Appellate and Supreme Court Litigation Group. She most recently served as the Deputy Assistant Attorney General in charge of the Civil Division’s Appellate Staff and has argued 22 cases before the United States Supreme Court, involving a wide range of civil and criminal issues.

At the Justice Department, Sarah oversaw nationwide appellate litigation and supervised a 60-lawyer team that represents the U.S. and its federal agencies in a wide range of civil appeals. Sarah regularly worked with the U.S. Attorney General, the U.S. Solicitor General, the White House Counsel’s Office, and the General Counsels of various federal agencies. She also previously served as an Assistant to the Solicitor General of the United States, representing the federal government in the United States Supreme Court, and as an attorney in the Appellate Section of the Civil Rights Division, where she argued dozens of cases in the federal courts of appeals.

Sarah has particular experience in matters concerning administrative law, bankruptcy, preemption, federal statutory questions, civil procedure, constitutional law, federal drug approval, foreign sovereign immunity, environmental law, and trademarks. She is also a member of the American Academy of Appellate Lawyers and a Master of the Edward Coke Appellate Inn of Court, the only American Inn of Court devoted entirely to appellate and Supreme Court litigation. Sarah has been an instructor in the Supreme Court Litigation Clinic at Harvard Law School and has extensive experience speaking at conferences and with national news outlets about the Supreme Court.

Photo of Chanda Brown Chanda Brown

Chanda Brown advises clients on complex national security, defense, regulatory compliance and government contract matters, including bid-protests, size protests, internal investigations and the allocation of government rights in patents. For exporters, she provides guidance to clients regarding the export and import of dual…

Chanda Brown advises clients on complex national security, defense, regulatory compliance and government contract matters, including bid-protests, size protests, internal investigations and the allocation of government rights in patents. For exporters, she provides guidance to clients regarding the export and import of dual use and military products under the Export Administration Regulations and the International Traffic in Arms Regulations. Her work has involved responding to federal agency enforcement actions, assisting with export licensing and registrations, drafting export control plans, conducting product self-classifications and voluntary self-disclosures.

In corporate transactions and public company representations, Chanda performs due diligence in connection with large and small government contractors. In transactions involving acquisitions by non-U.S. companies, she has helped clients navigate complex transactions before the Committee on Foreign Investment in the United States (CFIUS).

Photo of Stephanie Barna Stephanie Barna

Stephanie Barna draws on over three decades of U.S. military and government service to provide advisory and advocacy support and counseling to clients facing policy and political challenges in the aerospace and defense sectors.

Prior to joining the firm, Stephanie was a senior…

Stephanie Barna draws on over three decades of U.S. military and government service to provide advisory and advocacy support and counseling to clients facing policy and political challenges in the aerospace and defense sectors.

Prior to joining the firm, Stephanie was a senior leader on Capitol Hill and in the U.S. Department of Defense (DoD). Most recently, she was General Counsel of the Senate Armed Services Committee, where she was responsible for the annual $740 billion National Defense Authorization Act (NDAA). Additionally, she managed the Senate confirmation of three- and four-star military officers and civilians nominated by the President for appointment to senior political positions in DoD and the Department of Energy’s national security nuclear enterprise, and was the Committee’s lead for investigations.

Previously, as a senior executive in the Office of the Army General Counsel, Stephanie served as a legal advisor to three Army Secretaries. In 2014, Secretary of Defense Chuck Hagel appointed her to be the Principal Deputy Assistant Secretary of Defense for Manpower and Reserve Affairs. In that role, she was a principal advisor to the Secretary of Defense on all matters relating to civilian and military personnel, reserve integration, military community and family policy, and Total Force manpower and resources. Stephanie was later appointed by Secretary of Defense Jim Mattis to perform the duties of the Under Secretary of Defense for Personnel and Readiness, responsible for programs and funding of more than $35 billion.

Stephanie was also previously the Deputy General Counsel for Operations and Personnel in the Office of the Army General Counsel. She led a team of senior lawyers in resolving the full spectrum of issues arising from Army wartime operations and the life cycle of Army military and civilian personnel. Stephanie was also a personal advisor to the Army Secretary on his institutional reorganization and business transformation initiatives and acted for the Secretary in investigating irregularities in fielding of the Multiple Launch Rocket System and classified contracts. She also played a key role in a number of high-profile personnel investigations, including the WikiLeaks breach. Prior to her appointment as Deputy, she was Associate Deputy General Counsel (Operations and Personnel) and Acting Deputy General Counsel.

Stephanie is a retired Colonel in the U.S. Army and served in the U.S. Army Judge Advocate General’s Corps as an Assistant to the General Counsel, Office of the Army General Counsel; Deputy Staff Judge Advocate, U.S. Army Special Forces Command (Airborne); Special Assistant to the Assistant Secretary of the Army (Manpower & Reserve Affairs); and General Law Attorney, Administrative Law Division.

Stephanie was selected by the National Academy of Public Administration for inclusion in its 2022 Class of Academy Fellows, in recognition of her years of public administration service and expertise.

Photo of Robert Huffman Robert Huffman

Bob Huffman counsels government contractors on emerging technology issues, including artificial intelligence (AI), cybersecurity, and software supply chain security, that are currently affecting federal and state procurement. His areas of expertise include the Department of Defense (DOD) and other agency acquisition regulations governing…

Bob Huffman counsels government contractors on emerging technology issues, including artificial intelligence (AI), cybersecurity, and software supply chain security, that are currently affecting federal and state procurement. His areas of expertise include the Department of Defense (DOD) and other agency acquisition regulations governing information security and the reporting of cyber incidents, the Cybersecurity Maturity Model Certification (CMMC) program, the requirements for secure software development self-attestations and bills of materials (SBOMs) emanating from the May 2021 Executive Order on Cybersecurity, and the various requirements for responsible AI procurement, safety, and testing currently being implemented under the October 2023 AI Executive Order. 

Bob also represents contractors in False Claims Act (FCA) litigation and investigations involving cybersecurity and other technology compliance issues, as well more traditional government contracting costs, quality, and regulatory compliance issues. These investigations include significant parallel civil/criminal proceedings growing out of the Department of Justice’s Cyber Fraud Initiative. They also include investigations resulting from False Claims Act qui tam lawsuits and other enforcement proceedings. Bob has represented clients in over a dozen FCA qui tam suits.

Bob also regularly counsels clients on government contracting supply chain compliance issues, including those arising under the Buy American Act/Trade Agreements Act and Section 889 of the FY2019 National Defense Authorization Act. In addition, Bob advises government contractors on rules relating to IP, including government patent rights, technical data rights, rights in computer software, and the rules applicable to IP in the acquisition of commercial products, services, and software. He focuses this aspect of his practice on the overlap of these traditional government contracts IP rules with the IP issues associated with the acquisition of AI services and the data needed to train the large learning models on which those services are based. 

Bob is ranked by Chambers USA for his work in government contracts and he writes extensively in the areas of procurement-related AI, cybersecurity, software security, and supply chain regulation. He also teaches a course at Georgetown Law School that focuses on the technology, supply chain, and national security issues associated with energy and climate change.