Protecting Defense Contracting with a Purpose: Interpreting Civil Liability Under the Anti-Kickback Act

The Department of Defense awards over $600 billion in government defense contracts to private contractors every year. The magnitude of these awards and the structure of defense contracts place the government at serious risk if fraud and misrepresentation are not adequately regulated and prosecuted. The Anti-Kickback Act of 1986 seeks to protect the government from fraud by imposing damages on prime contractors that either accept kickbacks or include the cost of kickbacks in their contract prices. The Act’s civil liability provision provides for direct and vicarious liability against prime contractor corporations whose employees or subcontractors engage in kickback activity. Recently, conflicting interpretations have surfaced regarding the extent of vicarious liability damages under the Act’s civil liability provision. This Note argues that the textual ambiguity and inconclusive legislative history surrounding the civil liability provision require that the provision be interpreted and applied in light of the Act’s purpose and goals. Accordingly, this Note argues that the civil liability provision should be interpreted to limit vicarious liability damages against prime contractor corporations. This interpretation satisfies the Act’s purpose and goals and avoids the substantial risks created by expanding vicarious liability damages. Most significantly, limiting vicarious liability damages appropriately protects the government’s interest, maintains the role of prime contractor corporations, and preserves the market for government defense contracts.