Construction contractors and their employees can face significant civil and criminal exposure under state and federal False Claims Acts (“FCA”), among other laws, for failing to appreciate the significance of, and nuances to, “Made in America” laws. This risk has increased under the current administration, which has made clear that FCA cases are a high priority for the Department of Justice (“DOJ”). True to its word, the DOJ announced $6.8 billion in total FCA recoveries (settlements and judgments) in fiscal year 2025 – the highest amount ever recorded in a single fiscal year. In April of 2026, the DOJ launched a new National Fraud Enforcement Division to streamline and strengthen government enforcement efforts at the federal, state, and local levels.
Many of the certifications and contractual obligations in contractors’ agreements can trigger FCA liability, but investigations under the Made in America laws are increasing due to the DOJ’s dual focus on FCA cases and international trade.
False Claims Act Overview
The FCA, 31 U.S.C. §§ 3729-3733, is a powerful tool for the DOJ that not only prohibits the knowing submission of false claims for payment to the government, but also imposes liability when a person or company:
- “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government;” or
- “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government.”
Virtually all states have their own state-specific FCAs, so construction contractors face both state and federal exposure. Significantly, the FCA provides for triple damages. Furthermore, the FCA applies even when the contractor completes the work properly; the government often treats the entire contract amount as “damages” under the FCA relying on the argument that “but for” the alleged false claim, the contractor would not have been awarded the work.
Whistleblowing provisions in the FCA strengthen government enforcement by allowing, broadly speaking, individuals to seek a percentage of the recovery for initiating a successful FCA case.
Contractors’ exposure under the FCA is not limited to money. The contractor, and individual employees involved in the alleged wrongdoing, can face criminal exposure and even prison. In addition, certain findings in these types of investigations can lead to potentially business-ending events, such as suspension and even debarment from public contracting.
“Made in America” Laws in the Construction Industry
The “Made in America” laws are increasingly a DOJ focus, and noncompliance can lead to FCA exposure. Hinckley Allen’s White Collar and Government Enforcement group is seeing an uptick in investigations (criminal and civil) examining whether our clients—intentionally or inadvertently—ran afoul of these complex laws and regulations.
These investigations often arise in the following forms:
- grand jury subpoena for documents and/or testimony;
- Civil Investigative Demands for documents; and/or
- law enforcement officials approach and interview employees or others, signaling that there is an ongoing investigation.
Construction contractors with experience working on projects involving federal funds are no doubt generally familiar with federal laws requiring that certain materials be “Made in America.” These so-called “domestic content” or “Made in America” laws are not new: the “Buy American Act” was enacted nearly a century ago in 1933 in response to the Great Depression. Since that time, numerous additional “Buy America” statutes have been enacted over the years imposing domestic content requirements in connection with certain federally-funded projects.
The federal government has continued to push for the increased use of products and materials made in the United States, viewing this issue as “the key to building economic prosperity and guaranteeing our national security.” To that end, the 2021 Infrastructure Investment and Jobs Act expanded and broadened Buy America coverage to all federal financial assistance programs for infrastructure projects through what is known as the “Build America Buy America” (“BABA”) Act. Among other things, the BABA Act requires that all iron, steel, manufactured products, and “construction materials” used in federally-funded infrastructure projects be “produced” in the United States. “Construction materials” are specifically defined to include non-ferrous metals (i.e., copper), plastic- and polymer-based products, glass and optical fiber, and other construction materials, including lumber and drywall. Congress intentionally did not include cement and aggregate in that law in light of indications that the transportation of those materials from within the United States could be more costly than transportation from Canada or Mexico.
Similar to other Made in America requirements, the BABA Act establishes criteria for determining whether products are “produced” in the United States. For example, with respect to iron and steel, the BABA Act requires that “all manufacturing processes, from the initial melting stage through the application of coatings, occur[] in the United States.” Under official guidance with respect to the BABA Act, a product is considered a “predominantly” iron or steel product if the cost of the iron and steel content of the product exceeds 50 percent of all components of the product. In order for other manufactured products to comply with the BABA Act, they must be manufactured in the United States and the cost of the components of the manufactured products that are mined, produced, or manufactured in the United States must be “greater than 55 percent of the total cost of all components of the manufactured product.” The BABA Act also contemplates waivers in limited circumstances, such as where compliance would be “inconsistent with the public interest,” where the materials in question are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality, and where the inclusion of U.S.-produced materials “will increase the cost of the overall project by more than 25 percent.”
Compliance with the BABA Act (along with other Made in America laws) presents numerous traps for the unwary that can lead to significant unwanted consequences, including serious risks of civil and even criminal exposure under the federal False Claims Act and several other federal and state statutes.
Recent Cases and Settlements
The potential criminal and civil exposure to companies and their employees is highlighted in the enforcement matters below:
- In September 2025, forklift companies and their current and former executives were criminally charged with wire fraud, false statements, and conspiracy to enter goods into the U.S. by means of false statements due to the Chinese origin of forklifts they sold to federal governmental agencies. In addition, the indictment contends that the defendants created false invoices to evade tariffs. The indictment also seeks to forfeit all proceeds from the alleged crimes[MP2.1]. A trial is scheduled for January 2027.
- A New York company owner pleaded guilty to wire fraud—and settled a civil case against him—for selling goods (backpacks, duffle bags, and other products) to the Department of Defense and other federal agencies and misrepresenting that those products were made in the U.S. He received a 3-month sentence and two additional years of supervised release; he also agreed to pay $702,000 plus interest to resolve the civil claims under the False Claims Act.
- A Connecticut LED company and its owner entered into a $300,000 civil settlement with the United States for supplying LED lights and lighting products to various federal agencies including the Coast Guard, Air Force, GSA, and the Department of State, among others. The government contended that the company had provided the General Services Administration with a “letter of supply” falsely attesting its compliance with the Buy America Act and the Trade Agreements Act, 19 U.S.C. §2501, et seq., even though all or some of the goods had originated in China. The press release that the United States Attorney’s Office issued makes clear not only that there had been a parallel criminal investigation, but also that—as part of the settlement—the company withdrew appeals challenging the Army’s decision to terminate its contract.
Practical Tips
Contractors are urged to embrace at least the following practical tips to avoid potential traps for the unwary:
- Install, implement, and redeploy training and re-training protocols so that your project team is equipped to recognize and act on potential exposure points. Training with legal counsel can enable your project team to ask questions in a confidential and privileged setting.
- Review and understand applicable domestic content requirements at bid/proposal time and factor the costs of compliance into your pricing.
- Be proactive: furnish applicable domestic content requirements to prospective subcontractors and suppliers and specifically call out the applicability of the BABA Act and/or other Made in America requirements.
- Identify where compliance is feasible and where waivers may be required, if available. If waivers are required, determine whether the materials in question are already subject to blanket waivers or whether specific waivers should be requested. Carefully document all waiver requests and other requests for material substitutions. Obtain approvals in writing from duly-authorized personnel.
- Perform appropriate quality assurance/quality control measures to assess compliance with applicable requirements and address instances of non-compliance.
- Establish and implement protocols to ensure that certifications – whether related to applications for payment, submission of claims, or otherwise – are accurate.
These are just a few generally recommended guideposts. However, each situation is unique and, depending on the facts, may require additional or different efforts to protect against liability risks when it comes to compliance with the BABA Act and other domestic content requirements. Suffice it to say, compliance with Made in America laws is critical. A failure to comply can not only lead to breach of contract liability, but may pave a path towards extremely serious civil and criminal consequences under numerous theories and federal and state statutes.
This information is provided for educational purposes only. It should not be construed or relied on as legal advice. It is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication or other legal counsel.
