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NASA is proposing amendments to implement Section 5203 of the FY 2025 National Defense Authorization Act (NDAA) (P.L. 118-159) This Section modifies Administrative False Claims Act of 2023 (AFCA), previously known as the Program Fraud Civil Remedies Act of 1986.  It offers a streamlined administrative remedy for addressing false claims and statements that the Department of Justice (DOJ) opts not to prosecute. 

The AFCA complements the more widely known and widely used civil False Claims Act by providing an administrative process by which federal executive branch agencies can address relatively small dollar value false claims that might not warrant the attention of the Department of Justice. The liability provisions of the AFCA remain closely modeled on those in the False Claims Act.  The principal differences between the False Claims Act and the AFCA are that the AFCA does not include a qui tam enforcement mechanism, covers false written statements even in the absence of a claim, and provides for administrative rather than judicial resolution.

Statement of Need:

NASA requires updated regulations to comply with the FY 2025 National Defense Authorization Act, which revitalized the Administrative False Claims Act (AFCA). The revised rule is needed to establish clear administrative procedures for addressing false claims and misrepresentations made to NASA, particularly smaller-dollar cases not pursued by the Department of Justice. This ensures the Agency has a streamlined mechanism to protect federal funds, deter fraudulent conduct, and strengthen accountability in contracts and grants.

Summary of the Legal Basis:

The rule is based on:

• 31 U.S.C. 3801-3812, the Administrative False Claims Act, as amended by Pub. L. 118-159 (FY 2025 NDAA, 5203).
• 31 U.S.C. 3809, requiring each agency head to promulgate implementing regulations.
• 51 U.S.C. 20113(a), NASA’s general authority.
  The AFCA supplements the False Claims Act by authorizing agencies to impose civil penalties administratively for false claims and false written statements submitted to NASA.

Alternatives:

The primary alternative to this rule would be to continue relying solely on the Department of Justice under the civil False Claims Act. However, that approach is inefficient for lower-value fraud cases and risks leaving misconduct unaddressed. Another alternative is maintaining NASA’s prior, outdated regulations that would fail to implement statutory requirements and would not provide the clear procedural framework mandated by Congress. Thus, amending Part 1264 is the most effective and legally compliant approach.

Anticipated Costs and Benefits:

Costs: Minimal additional administrative costs associated with investigations, hearings, and enforcement. No significant federalism, tribal, or private sector compliance burdens. No Paperwork Reduction Act implications.

Benefits: Stronger deterrence against fraud, faster resolution of cases, recovery of misused federal funds, and better stewardship of taxpayer resources. By focusing on smaller-dollar fraud cases, the rule maximizes efficiency and prevents resource-draining referrals to DOJ.

Risks:

The key risk of not implementing the rule is leaving NASA unable to effectively enforce against smaller fraudulent claims, leading to loss of federal funds, weakened deterrence, and diminished program integrity. Another risk is statutory noncompliancefailure to implement amendments within the required 180 days could expose NASA to legal or oversight challenges. Risks of implementation are low; the framework is modeled on existing federal fraud enforcement standards and provides due process protections.