Recently, the Federal Trade Commission concluded a colony under which Patriot LED must pay civil damages of nearly $158,000, plus a fine of $2.96 million, for its alleged false marketing of lighting products as domestic “Made in USA” products. “. These lighting products include LED lamps, tubes and fixtures, including a line of LED products – called “Patriot Tubes”. The settlement is pending Federal Court approval.
Entities receiving federally funded projects as prime contractors, subcontractors, beneficiaries or agreement holders, and those in their supply chain, may be required to supply products and construct facilities with materials that comply with the Buy American Act, Trade Agreements Act, Buy America, or other applicable national preference rules, unless an exception applies. Under these national preference rules, end products, components, and materials of construction must be produced or manufactured in the United States or an eligible country.
Misrepresentation of what will be delivered, or failure to deliver or install conforming products and materials, may result in civil or even criminal liability under the False Claims Act (FCA), in addition to other claims. governmental. Damages under the FCA range from a minimum of $12,537 to a maximum of $25,076 by misrepresentation, and this damage can be tripled. In addition to federal rules, states have similar national preference rules and misrepresentation laws.
With the passing of the Infrastructure Investment and Jobs Act, hundreds of billions of dollars are expected to be spent on infrastructure projects to build or renovate transportation, power, communications, environmental and other, in accordance with applicable national preference policies. These types of projects will be issued under government contracts, grants and other types of financial assistance agreements. With so much federal government money sent to states, local governments, and nonprofits with these nationwide chains of preference, the Patriot LED situation serves as a warning to entities directly or indirectly receiving these funds that they must be vigilant to comply with applicable national regulations. preference requirements.
In light of the proposed settlement made public with Patriot LED, what should you do?
Below are some steps you should consider taking promptly to avoid liability or to mitigate the risks associated with the use of Patriot LED products:
- Check to see if you have Patriot LED lighting products in your inventory, or if you supplied or installed Patriot LED products or materials under a contract, subcontract, grant, or a government agreement funded by the federal government.
- If you have purchased, supplied, or installed such products under a government contract, grant, or agreement, you must follow up to determine whether your products comply with the applicable requirements. If you have reason to believe that other suppliers who have provided products or materials for your projects have engaged in similar conduct, you must take steps to investigate.
- If you have received certifications of compliance with applicable laws from your subcontractors and suppliers, you may be able to rely on these certifications to avoid a penalty.
- However, if you have delivered or installed these products, you may need to do more to determine whether your products meet the requirements and, if not, what the implications are.
Given the complexity and evolving nature of the rules in this area, it is important to seek legal advice on how to resolve this issue as well as what steps to take to identify and address potential compliance risks.