A recent announcement by the Civilian Board of Contract Appeals (CBCA) garnered attention for the Administrative False Claims Act (AFCA), which was previously named the Program Fraud Civil Remedies Act of 1986. The AFCA was enacted in December 2024, and many agencies are slowly implementing and addressing its procedures through rulemaking, including the U.S. Nuclear Regulatory Commission, the U.S. Postal Service, the Federal Labor Relations Authority, the Railroad Retirement Board—and of relevance here and most recently—the CBCA. The CBCA’s changes are driven by the FY2025 National Defense Authorization Act (NDAA), which expanded AFCA-related CBCA jurisdiction. Agencies now have an additional enforcement tool to pursue contractors they believe submitted not only false claims, but any false written statement—significantly increasing administrative risk exposure.
The AFCA
The AFCA enables administrative recovery of small-dollar false claims up to $1 Million when DOJ declines to pursue an allegedly false statement or claim judicially. The original threshold was limited to no greater than $150,000, showing a large increase in the claims that could fall under the AFCA. The AFCA serves as an alternate enforcement mechanism that allows agencies to pursue allegedly fraudulent claims or written statements directly. Its liability framework largely parallels the federal False Claims Act (FCA), though it authorizes double damages rather than the FCA’s treble damages. The AFCA omits the FCA’s qui tam provisions, relying instead on administrative adjudication and granting agencies subpoena authority to support investigations. Notably, any recovery is first applied to reimburse the agency for the costs of investigating and prosecuting the claim. This cost-recovery structure may encourage agencies to bring more actions, as it reduces the financial burden of enforcement and creates a direct incentive to pursue fraud cases.
Importantly, the AFCA covers false written statements, even without a claim, meaning an agency can rely upon simple submissions to the agency to form the basis of its enforcement action against a contractor. This would include submissions for payment, change order requests, and any statement that seeks action by the agency. The AFCA also allows for enforcement over what is known as a reverse false claim, where a contractor makes a statement that conceals, attempts to avoid, or attempts to decrease an obligation owed to the government.
AFCA Procedural Rules at the CBCA
To begin the process, a reviewing authority must seek permission from the Attorney General to pursue a civil fraud claim. Once permission is granted, the agency must notify the respondent of the allegations and amounts. After notice, the respondent has 30 days to elect a hearing, and under the new rules, the matter may now be referred to the CBCA for an administrative hearing. A CBCA Board member may serve as a presiding officer unless the Board chair declines the referral.
The CBCA’s new rules on AFCA cases generally follow their normal rules under the Contract Disputes Act (CDA). The agency must provide notice to the entity it is pursuing, which triggers a 30-day period for the entity to elect a hearing. After that election window closes, the agency may refer the matter to the CBCA, where the standard complaint-and-answer process begins.
One Board member will preside, set schedules, oversee discovery, conduct proceedings, and decide the merits. Contemporaneous to the complaint-and-answer process, the parties will submit an electronic evidence file, substantially similar to the Rule 4 file under the CDA, including exculpatory information, and may object to evidence. The presiding member may admit uncontested evidence, apply the Federal Rules of Evidence to objections, and dismiss cases without reaching the merits in certain situations. Party representatives need not be attorneys, and merit rulings will be provided to parties and posted on the Board’s website. Importantly, rulings are binding on the parties but are not precedential.
Takeaways for Contractors
The AFCA directly affects contractors by giving agencies an additional pathway to pursue potential fraud without initiating a full FCA action or involving DOJ. Notably, an AFCA case can proceed even without an underlying certified claim from the contractor. While contractors should already scrutinize all statements made to the government during contract performance, the AFCA heightens the importance of that diligence. Agencies now also have a direct financial and procedural incentive in the outcome of an AFCA case, which may influence their decision to initiate such proceedings. These developments come as the current administration intensifies its focus on fraud enforcement, making the AFCA yet another tool in the government’s expanding anti-fraud arsenal.
If you have concerns about the AFCA, please contact Lauren Brier, Ryan Boonstra, or another member of PilieroMazza’s False Claims Act; REAs, Claims, and Appeals; or Government Contracts practice groups.
