Legal Exposure from Poor Performance Monitoring
News
The U.S. Department of Justice reports that failure to monitor contract terms has led to multimillion-dollar settlements under the False Claims Act. In one notable case, a defence contractor was fined $37 million for failing to deliver on agreed safety metrics—data that was never adequately tracked. The risk for directors and executives is escalating, particularly in sectors regulated for safety or public health.
Contracts that aren't actively monitored don't just fail quietly—they can expose institutions to serious legal and regulatory risk. In the United States, enforcement of the False Claims Act has led to numerous multimillion-dollar settlements involving federal contractors who delivered substandard work or failed to meet documented obligations. Between 2021 and 2024, several health and defense contractors faced penalties ranging from $10 million to $80 million for breaching contractual and compliance terms, often because of a lack of oversight rather than outright fraud.
What these cases make clear is that legal risk often originates from within. Institutions may have contracts in place with strong terms and well-defined deliverables, but if no one is tracking whether those terms are being met—on time, within scope, and according to compliance requirements—there is little to defend against legal action. Risk becomes invisible. Obligations go unchecked. And when auditors or regulators come knocking, the absence of evidence becomes its own liability.
This is especially critical in sectors governed by safety, ethical, or performance regulations. Healthcare providers, environmental service contractors, educational grant recipients, and infrastructure providers are all under increasing scrutiny to prove delivery—not just claim it. At the same time, directors and board members face heightened fiduciary expectations. Governance failures stemming from poor contract oversight can trigger personal liability, particularly when linked to financial loss, safety violations, or regulatory breaches.
Real-time monitoring changes this dynamic. It makes obligations visible, creates a structured system for intervention, and provides audit trails that demonstrate reasonable steps have been taken to ensure compliance. With the right systems in place, institutions can not only avoid litigation but can also confidently navigate audits, media scrutiny, and board-level risk reviews.
Source: U.S. Department of Justice, Press Releases (False Claims Act Settlements), 2021–2024