With a customer base that is heavily government-oriented, companies in the MST industry operate in a sphere of increasing legal risk. The U.S. government has stepped up its pursuit of government contractors domestically through the False Claims Act (FCA) and internationally through the Foreign Corrupt Practices Act (FCPA). As many companies have discovered, these aggressively enforced laws can present traps for the well-intentioned but unwary. Understanding the FCA and the FCPA is essential for any person or company doing business with a governmental entity. This paper provides an overview of those legal risks and provides practical guidelines, which, if followed, minimize those risks.

The FCA creates liability (and a potential cause of action for whistleblowers) whenever a company submits a false claim to the government, makes a false statement that causes the government to pay a claim, or keeps government money that it is not entitled to retain. Investigations of potential fraud at such companies can result in multi-million dollar settlements and judgments, debarment/exclusion from doing business with the government, and criminal sanctions, including prison for individuals and substantial fines for companies.

While the False Claims Act governs domestic activity, the FCPA addresses a company's dealings with foreign governments. Covering far more than the traditional notion of a suitcase full of cash paid to a ministry official in exchange for a big government contract, the FCPA criminalizes corruptly providing "anything of value" to any "foreign official" in order to obtain or retain business or an improper advantage. Corporate fines imposed pursuant to the statute have been staggering, regularly reaching into the hundreds of millions of dollars.

The paper will provide an overview of the laws, their potential application, and enforcement trends, as well as detailed guidance on how companies can minimize risk through effective compliance programs, internal controls, and human resource policies.