Defense Contractor Fraud

Reporting Defense Contractor Fraud: Whistleblower Law

Defense contractor fraud is a major category of litigation, which is no surprise since in 2011 the US government spent over 316 billion in defense contracts.
If you work for a defense contractor and are aware of fraud you may be entitled to collect millions of dollars while at the same time saving taxpayers money and helping national security. Our lawyers are among the most experienced in the country. Your confidentiality is assured, Under the law, a contractor may not discharge, demote, or otherwise discriminate against an employee for engaging in protected fraud reporting activity.

Defense Contractor Fraud claims can be contemplated against any contractor including: Boeing, Northrop Grumman, General Dynamics, Raytheon, L-3 Communications, United Technologies, SAIC, KBR, Computer Sciences Corp, Honeywell, ITT Corp, FMC Corp, AM General, Navistar International and dozens of others.

Work for Covered agencies include the Department of Defense, the Army, the Navy, the Air Force, the Coast Guard, and the National Aeronautics and Space Administration (NASA).

There are many ways that a contractor can defraud the government. Here are a few:

Violations of the Truth-in-Negotiations Act (TINA)
Cross Charging
Product Substitution
Improper Cost Allocation
Failure to comply with contract specifications and Non compliant Products

Truth in Negotiations Act (TINA) Violations

If the government cannot put out competitive bids from a sole-source supplier, TINA requires the contractor to truthfully disclose all the information about its costs to the government in sole-source contract negotiations. This ensures the government can pay a fair price for the weapons system without compromising national security.

Unfortunately greed can get in the way of the TINA rules and defense contractors in TINA scenarios hold back relevant information, or more often deliberately inflate the projected costs in order to get a much higher price. If you know about this type practice at your company you can confidentially report it.

Cross Charging Fraud: Mixing Fixed Cost and Cost Plus Contracts

This is a very common type of fraud in which a defense contractor deliberately blurs the line between different projects being worked on.

Fixed-price contracts are those in which the company makes a set number of weapons no matter how much it costs to produce them. If another weapons system is being produced under a contract contract that is a "cost-plus" contract, one in which government pays the company for the cost of making the weapons, as well as percentage of its costs as a profit.

The company motivated by greed will often charge the time it spends working on the fixed-price contract (it gets paid the same no matter how much time it takes) to the cost-plus contract (it gets paid for its costs plus profit). Any employee who is asked to alter time cards for these projects could be a whistleblower.

Product Substitution/Inferior Grade

This occurs when the company violates the contract by changing the parts that are supposed to be in the product. Defense contractors are required to build weapons using certain grade and quality of component parts which usually must be bought from American companies. Greedy contractors may substitute components with inferior or foreign made parts. If you are aware of this you can report it.

Improper Cost Allocation

When a contractor such as an aircraft manufacturer does both private civilian and government contracts, they must properly account for and allocate their costs between the different projects. Often the costs fall into a gray area and may not be easily classified as directly tied to a particular project. This can include overhead, operating expenses, supervisors' time, and similar costs. Greedy contractors will attempt to shift costs to the government, way from private customers, who will only pay the market price for the aircraft. This cost-shifting allows the contractor to quote low prices to their private customers, a huge competitive advantage leaving taxpayers the government to pay for the losses on price cuts. Contractors in the private/government sphere, especially aircraft industry that deliberately shift overhead and related indirect costs to the government may be committing large scale fraud.

Failure to comply with contract specifications

When military contractor goes over budget on a contract or falls behind schedule,it may cut corners on required test, quality, and product specifications. The Defense Department requires its contractors to build weapons systems in accordance with very detailed product specifications, if those are not met there may be fraud.

Contact us now at 1-800-934-2921 if you believe you know of a Military Contractor Fraud.


For further info visit our Defense Contractor Fraud Web Site

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