The False Claims Act – Defense Contractor Fraud

A significant percentage of the federal government’s annual spending goes to military or defense contractors (including Fortune 500 companies such as GE, Boeing, Pratt & Whitney, Grumman, and Lockheed Martin) who develop and implement multi-billion dollar weapons systems, facilities, equipment, supplies, and logistical and technical services, as well as to contractors who provide ordinary items like computers, uniforms, vehicle parts, and office equipment.  Unfortunately, with so much spending devoted to the country’s defense, there are many opportunities for companies to commit defense contractor fraud against the government.

Defense contractor fraud continues to be a significant percentage of the wrongdoing actionable under the False Claims Act (“FCA”). Billions of dollars have already been recovered from defense contractors, largely as a result of qui tam whistleblowers acting under the FCA.

$107 million was recovered from defense contractors under the FCA in 2018.

Toyobo Co. Ltd. paid the government $66 million to resolve claims that the company sold defective Zylon fiber used in bullet proof vests.

Some of the more common ways in which defense contractors have tried to defraud the federal government include:

  • Intentional inflation of prices on government contracts
  • Unlawful billing schemes, such as cross-charging (improperly shifting costs and expenses from one defense contract to another to boost profits)
  • Improper cost allocation (charging the government more in order to charge private businesses less)
  • Charging for high-quality parts or equipment while actually using cheaper substitutions
  • Supplying substandard or defective products or services
  • Improper inflation of costs or charges (using inflated time records, inflated equipment and materials costs, fake purchase orders)
  • Failure to comply with specifications of a contract

If you think a defense contractor has committed fraud on the government and are thinking of blowing the whistle, the whistleblower lawyers at Bernstein Liebhard can help. Contact Michael S. Bigin or Laurence J. Hasson for a free, confidential consultation.