During the American Civil War, dishonest contractors sold ailing mules, rancid food and faulty ammunition to the Union Army. These suppliers made huge profits while putting the safety and health of Union troops at risk. In response, Congress passed the False Claims Act, a law which allows people who are not affiliated with the government to file qui tam actions on behalf of the government in order to stop fraud and misuse of government funds.
Today, the government pays almost $400 billion a year to military contractors. These contractors include large companies like Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics who provide large weapons, air craft and technical services, as well as smaller companies in the U.S. and overseas that provide a variety of goods and services to the American Armed Forces. But, one thing has not changed since the Civil War; unscrupulous contractors are still trying to take advantage of the government. Defense contractor fraud remains one of the most active areas of false claims litigation under the Federal False Claims Act.
Examples of Defense Contractor Fraud:
- Cross-charging: A defense contractor improperly shifts costs and expenses from one defense contract to another in order to increase profits
- Improper Product Substitution: Providing parts that are not manufactured according to contract specifications; substituting cheaper or substandard parts
- Providing Substandard Products or Services: Delivery of products that do not perform as promised or that are of lesser quality than the services or products specified in the contract; failure to properly test or inspect a product; failure to alert the government of product defects
- Improper Cost Allocation: Shifting costs from private or foreign contracts to contracts with the U.S. government
- Inflation of Costs and Charges: improperly inflating costs and charges in order to increase the revenue the company earns from the government; this includes inflated time records, inflated equipment and materials costs, and billing for services or products that were not provided
- Violations of the Truth-In-Negotiations Act: Not disclosing relevant information about costs related to a single-source, no-bid contracts; inflating costs and expenses because there are no other bidders for a contract
- Failing to comply with federal laws and statutes: This includes violations of equal opportunity employment laws, environmental regulations, small business procurement laws and regulations, federal wage and hour laws and regulations, and competitive bidding laws.
Whistleblower lawsuits have helped the government recover billions of dollars from defense contractors under the False Claims Act. If you have information regarding potential fraud against the government by a defense contractor, contact the whistleblower lawyers at Petrelli Law. P.C. to learn more about qui tam actions. The consultation is free.