Home Depot Facing Lawsuit for Violating the Buy American Act; Lists Chinese-made Products on GSA Schedule

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Home Depot is facing a lawsuit for violating the Buy American Act after allegedly providing Chinese-made products and other non-Trade Agreement Act compliant items to government customers through its GSA Schedule.

Home Depot is facing a lawsuit for violating the Buy American Act (BAA). The suit, brought in the United States District Court of Central District California, by whistle-blowers employed at Actus Lend Lease, a partner company of Home Depot, alleges that both companies supplied goods to government agencies through their GSA Schedules which were incorrectly identified as being compliant with BAA, but were actually made in China (see case #08-07940-RGK).

When applying for a GSA Schedule, companies are required to certify the source of each product offered. The GSA only allows items made in the United States or in Trade Agreement Act (TAA) compliant countries to be offered through the Schedules. The plaintiffs accuse Home Depot of misrepresenting the countries of origin of many of their items.

The 1933 “Buy American Act” was passed to protect American jobs. It requires that end products purchased by the government be made in the USA. The law allows exceptions for products made in other countries provided that they are parties to certain trade treaties. China is not a party to any of the necessary treaties and therefore not TAA compliant.

“The Home Depot case illustrates the importance for contractors to have a thorough understanding the GSA Schedule process,” said Scott Orbach, President of EZGSA, a Bethesda, Maryland-based GSA Schedule consulting firm. “Even seemingly successful and sophisticated large companies can lack GSA expertise and the results of an oversight can be devastating.”

The federal False Claims Act (or Lincoln Law) allows private individuals to sue “any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” (31 U.S.C. §§ 3729–3733) The plaintiffs, known as ‘relator’, have the right to sue under the theory that when the government is defrauded, the relator as a citizen and a taxpayer incurs a portion of the damages. Under the law, the penalty for submitting a false claim is triple the amount claimed and $5,000 to $10,000 for each occurrence. The U.S. Department of Justice will frequently join the relator as an additional plaintiff, although they have not yet indicated whether they’ll be joining the Home Depot case. If damages are awarded, or if the parties settle, the relator typically receives 15% to 25% of any amount collected.

Other large companies such as Staples Inc., Office Depot, Inc. and Office Max Inc. have paid a total of $22 million to settle claims that they have violated the Buy American Act. “Businesses need to be as accurate and exact as possible when adding products to their GSA Schedules, or risk facing costly and serious legal and monetary consequences,” concluded Orbach.

About the GSA Schedule:

GSA Schedules are the federal government’s preferred procurement method to purchase goods and services from approved commercial vendors in a fast and reliable manner. Federal sales through GSA Schedules totaled $37 billion in FY2010.

About EZGSA:

EZGSA is a full-service government consulting firm specializing in GSA Schedule proposal, contract management and federal business development services for companies aiming to increase their sales opportunities in the federal marketplace. As the private sector’s “Gateway to Government Sales,” EZGSA’s experienced team of proposal specialists is proud to have assisted over 900 clients of all industries with their GSA Schedule awards.

EZGSA clients averaged $1.8 million dollars in sales through their GSA Schedules during FY2010.

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Scott Orbach
EZGSA
(301) 913-5000 5001
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