Inclusion of Deferred Compensation Found Proper Where Government Forced Contractor’s Hand
Client Alert | 1 min read | 08.11.17
In Quimba Software, Inc. v. United States (No. 12-142C), the Court of Federal Claims granted Quimba’s Motion for Summary Judgment, finding that “Quimba’s inclusion of deferred compensations costs in its 2004 [Incurred Cost Proposal] [wa]s allowable under the FAR….” Specifically, while the government argued that the FAR and CAS requirements precluded “deferred compensation for closely held companies ‘except in the year in which the compensation [wa]s paid,’” the Court found that Quimba’s situation fell within the “limited exception” to the IRS deductibility-timing rules because “Quimba’s deferral of its FY 2004 compensation was unintended, unavoidable, and unanticipated[,]” and “Quimba’s financial difficulty, which forced payment of the compensation beyond 2004, was unforeseeable through FY 2004.” In this respect, the Court recognized that the government effectively “forced Quimba’s hand” to defer compensation when it failed to make additional payments beyond the first payment as a result of the government’s “updating and approval process” of Quimba’s accounting system, which took “the entirety of FY 2004 and continue[d] through a significant part of FY 2005.”
Contacts
Insights
Client Alert | 3 min read | 11.21.25
On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future.
Client Alert | 3 min read | 11.20.25
Client Alert | 3 min read | 11.20.25
Client Alert | 6 min read | 11.19.25
