Question

The PLY Company signs a five-year contract to sell the excess power it generates to the U.S. power grid. The contract calls for PLY to sell its excess electrical power to the U.S. at “the lowest reasonable cost.” During the five-year term of the contract, PLY charges the U.S. government $220 million. Near the end of the contract, Dave, the chief accountant for PLY, informs the company’s CEO that he believes the company has significantly overcharged the government for the power it has purchased from PLY. The CEO demoted and then fired Dave. Dave filed a qui tam suit against PLY alleging that PLY overcharged the government using 15 different methods. The U.S. Justice Department reviews the qui tam suit and “takes” 12 of the alleged overcharging schemes, and Dave, “the whistleblower,” continued the other three allegations. At trial the federal judge agrees that four of the allegations, totaling $56,000,000 are “fraud” under the Federal False Claims Act (FFCA). Another 6 allegations totaling $34,000,000 are simple contract errors. Additionally, the U.S. Justice department levies a two-year period in which PLY is debarred from entering into new contracts with the U.S. government or any of its agencies.

The fact that the court ordered PLY to be debarred for a two-year period:

		A. Is embarrassing, but it has no economic consequences for the company.
		B. Ends the current contract but has no impact on future contracts.
		C. Actually related on to the attorneys ability to continue to preside over trials for this two-year period.
		D. Prohibits PLY from entering into new contracts with the government during this two-year period so the economic consequences are that the company’s profits on new contracts cannot occur.

Answer 1

Answer: D. Prohibits PLY from entering into new contracts with the government during this two-year period so the economic consequences are that the company’s profits on new contracts cannot occur.