May 5, 2015

Receiving an unexpected Department of Justice (“DOJ”) subpoena for documents and testimony is a jarring experience for anyone in Government contracting.  But more and more contractors may receive such subpoenas as the Government accelerates investigations of contract compliance and potential criminal and civil false claims.  So, it was particularly timely and appropriate for the ABA Public Contracts Section to have a panel of Government and private-sector counsel discuss “Subpoenas and Investigations” at the Section’s March 11 meeting in Annapolis, Md.  The following suggestions for Government contractors are a condensed version of their insights:

Why did we get a subpoena?

The DOJ issues a subpoena to investigate facts related to a matter within its jurisdiction, including false claims related to a government contract.  Such an investigation may stem from a variety of sources:  A contracting agency may suspect wrongdoing because of the knowledge from its own personnel; an audit of a contract; a qui tam complaint alleging false claims or information developed from another investigation; or an anonymous tip to a telephone hotline.

There are circumstances in which a subpoena may be required in order for the Government to obtain the information.  For instance, in the healthcare industry, a provider or other “covered entity” or “business associate” must prevent disclosure of “Protected Health Information” (“PHI”) unless disclosure is “required by law.”  A federal subpoena issued by a court or grand jury, constitutes one of these “required by law” circumstances.  In such a case, a subpoena helps protect the company from a claim of a failure to protect PHI.

Does a subpoena mean we are the target of an investigation?

Not necessarily.  The DOJ issues subpoenas to the target of an investigation but also to potential witnesses—that is, individuals or contractors who may have knowledge of relevant facts but are not suspected of wrongdoing. In addition, the Government may be trying to determine who may be “in on” some wrongful conduct and who is not involved.  If the DOJ is investigating allegations of impropriety by a subcontractor, it may issue a subpoena to the prime contractor, or other subcontractors to see if they were aware of or were also involved in improper conduct.  For example, if the DOJ suspects a subcontractor of wage or benefit violations of the Service Contract Act or Davis Bacon Act, it might subpoena documents from the prime contractor to learn whether the prime contractor knew of the violations, or perhaps instigated the violations.  According to one panel member, a cover letter asking you to keep this matter confidential is some indication that the Government currently views your company as a witness rather than as a target.

What are the first things we should do when we get a subpoena?

1.                  Read.  Read the subpoena to determine what is requested.

2.                  Notify.  Contact in-house counsel, if any, and company principals to inform them of the subpoena.  Depending on the size and organization of the company, this may include senior management and/or members of the Board of Directors.  The objective is to inform the people who must respond to the subpoena.  Company leadership probably will identify in-house or outside counsel to handle the company’s compliance with the subpoena.

3.                  Preserve.  Take steps to preserve the information, data or documents requested – instruct employees to preserve and not destroy information and documents that are or may be within the scope of the subpoena.  This may require sending emails informing relevant personnel of the subpoena and instructing them to preserve documents and data and halting any automatic destruction regime or procedures.

4.                  Identify Custodians and Locations of the Requested Records.  A straightforward request for “all records of performance” of a specified contract may in fact require identification of records kept in multiple locations, on multiple electronic systems and paper filing systems.  Identify the individuals in charge of each set of records and their locations in order to comply with the subpoena. 

5.                  Contact DOJ and Cooperate.  Contact the DOJ counsel identified in the subpoena to confirm that the subpoena was received and that the company intends to cooperate and comply.  Identify one individual on each side who is responsible for all communication about the subpoena.  Make sure that your counsel is directly involved and will manage the company’s response to the subpoena.  You have the option of seeking a court order to “quash,” limit or modify the subpoena as overbroad, unnecessarily burdensome or otherwise objectionable.  But you may be able to achieve the same objectives by discussions with DOJ counsel, so it usually makes sense to cooperate with DOJ counsel.

6.                  Understand and Clarify the Request.  DOJ counsel may or may not tell you whether your company is a target, a potential target or just a witness.  But DOJ counsel is more likely to discuss the subpoena and may identify the information that is most important to the Government.  This is important for both sides:  The Government wants useful information.  The contractor wants to comply but is interested in limiting the scope of the request in order to save time and money. 

7.                  Request Time If Necessary.  The subpoena may request that a large number of documents be produced in a short period of time.  It may also specify that the custodian of the records must appear to testify about the documents on a specified date in the near future.  Literal compliance with the subpoena may be nearly impossible, impractical and fiscally prohibitive for the company.  Therefore, cooperation with the Government is key as the Government may be willing to agree to a more reasonable time period. 

Since you must comply with a subpoena, your objective should be to make the best of the situation, and to minimize the time and cost needed to comply.  The events or allegations giving rise to the subpoena may cause your company to conduct an investigation of the facts.  Tips about such an investigation will be in another article soon.