The CBCA Updates Rules to Reflect New Jurisdiction over AFCA Referrals

On January 28, 2026, the U.S. Civilian Board of Contract Appeals ("CBCA" or the "Board") issued its final rules governing the Board's administrative process for deciding claims referred to the Board under the Administrative False Claims Act of 2023 ("AFCA"), as amended by the National Defense Authorization Act for Fiscal Year 2025 ("FY 2025 NDAA").

The AFCA, previously known as the Program Fraud Civil Remedies Act of 1986, allows administrative investigations and prosecution of false claims and statements made by contractors to the government that the U.S. Department of Justice elects not to pursue. The FY 2025 NDAA that amended the AFCA also amended the Contract Disputes Act to expand the jurisdiction of the CBCA to hear fraud claims referred to the Board under the AFCA.

This article highlights the key aspects of the amended AFCA, as well as the Board's newly implemented rules governing AFCA hearings.

Key Aspects of the AFCA

There are several revisions to the AFCA as a result of the recent amendments. Below are some highlights of the revised statute:

• The AFCA provides an administrative process that allows agencies to pursue false claims and statements for relatively small dollar amounts that the U.S. Department of Justice elects not to prosecute;
• The AFCA provides for administrative, rather than judicial, resolution (unlike the False Claims Act);

• The ceiling for AFCA enforcement actions is $1 million. This amount is to be periodically adjusted for inflation;
• The AFCA does not contain a qui tam enforcement mechanism;
• A contractor may be found liable under the AFCA for written false statements. There does not need to be a false claim for payment for potential AFCA liability;
• The AFCA includes liability for "reverse false claims" arising from a contractor's claims made to avoid, conceal, or decrease an obligation to pay or transmit money, property, or services to the government;
• The AFCA provides a penalty for each false claim or written false statement of $5,000. The statute also assesses damages of twice the amount of the false claim in circumstances where the government has already paid the claim;
• The amounts recovered under an AFCA action will first be used to reimburse agencies for the costs of investigating and prosecuting the underlying claim. Remaining funds will be deposited into the Treasury;
• An agency's reviewing officials are required to notify the Attorney General 30 days prior to entering into a settlement agreement with a contractor or referring allegations to a presiding officer; and
• If an agency initiates a fraud claim against a contractor, the agency must provide the contractor with notice. Upon receiving notice, the contractor has 30 days to elect a hearing. Should the contractor elect a hearing, the agency will refer the matter to the Board.

U.S. Civilian Board of Contract Appeals Rules for AFCA Hearings

The Board's rules governing AFCA referral hearings generally follow its procedure for Contract Disputes Act claims. However, there are rules worth mentioning:

• A referral to the Board is effectuated by the transmission to the Board Clerk of the agency's complaint, a copy of the notice of referral provided to the respondent, and any answer filed by the respondent;
• A single Board judge will preside over the referral, unless the Board's chair rejects or refuses to accept the referral;
• The presiding Board judge will set the hearing schedule, oversee discovery, conduct conferences, hearings, other necessary procedures, and ultimately decide the merits of the case;
• The Board's rules also include the process for submission of an electronic evidence file, as well as the objection to an admission of evidence. The Board will utilize the Federal Rules of Evidence to resolve any objection;
• The Board's rules also clarify that a party representative need not be an attorney; and
• Rulings issued by the presiding Board judge are considered to be binding on the parties, but not precedential.

Notably, the Board's rules take effect on February 27, 2026.

Conclusion

Last year's implementation of the new AFCA increased the enforcement mechanisms for the current federal pursuit of waste, fraud, and abuse within federal agencies, as well as the contractors with whom they do business. The passage of the Act also reflects an increase in focus on relatively low-value claims that can be identified, investigated, and prosecuted at the agency level.

The publication of the CBCA's rules come on the heels of an all-time high in False Claims Act recoveries in FY 2025 ($6.8 billion), as well as the Small Business Administration's recent effort to terminate 154 small business concerns from the SBA's 8(a) program for the alleged failure to meet "economic disadvantage" requirements. As such, contractors should continue to reinforce internal controls and compliance programs as necessary to respond to the ongoing scrutiny by agencies of asserted costs, and to satisfy the rigorous administrative audits that have become increasingly prevalent in recent years.

If you have any questions about navigating the AFCA claim process, please contact our construction and government contracts group.