The United States spends around $500 billion annually on national security, with a large majority of this money being used to purchase goods and services from defense contractors. A defense contractor is a business or organization that bids on contracts from the United States government to manufacture goods or provide services for the United States military and the Department of Defense. In some cases, defense contractors are also referred to as military contractors because all or most of their business comes from providing goods or services to the United States military.
Defense contractors mainly manufacture weapons, aircraft, ships, vehicles and specialized electronic systems. Other important services they provide include logistics, technical training and support, intelligence, engineering, consulting, security management and specialized private military services. According to a 2013 report prepared for Congress by the Congressional Research Service, over the last two decades, military contractors have made up more than half of the Department of Defense’s total workforce in Iraq, Afghanistan, and the Balkans.
Boeing, Lockheed Martin, Northrop Grumman, General Dynamics and Raytheon are a few of the largest defense contractors in the United States.
Defense Contractor Fraud and the Whistleblower
Defense contractor fraud occurs when defense contractors submit false claims about the products they manufacture or the services they provide for the United States government. There are many different ways in which defense companies can cheat the government, and companies frequently are guilty of multiple types of fraud. In many cases it is a whistleblower that brings that fraud to light.
Defense contractors account for 11 percent of the government’s fraud settlements, making the industry one of the biggest targets of false claims litigation under the Federal False Claims Act. Over just one three week period in October 2014, the U.S. Department of Justice received nearly $25 million [Source: total figures below] in the settlement of three False Claims Act (FCA) actions – all of them involving defense contractor fraud. A brief summary of these actions illustrates the broad nature of the defense contractor fraud, as well as the importance of the whistleblower in exposing FCA violations.
- October 29 – a shipyard in Florida paid $1 million to resolve FCA allegations that it created a front company in order to be awarded contracts meant for disabled veteran owned businesses. The allegations were originally filed in a lawsuit by two whistleblowers under the qui tam provisions of the False Claims Act. They will receive $180,000 as an award.
- October 24 – a company in Colorado that makes antenna and radio systems paid $10 million to resolve allegations that it violated the FCA by submitting inflated claims for electronic warfare antennas sold to the U.S. Army to combat Improvised Explosive Devices.
- October 7 – a company that designs, operates and maintains satellite and wireless network solutions and telecommunications services and security systems, paid $13.7 million to resolve allegations that it overbilled the government for services and supplies to be provided to the Army’s Communication and Electronics Command in Iraq and Afghanistan, and to the Coast Guard for aircraft maintenance.
During this same time period The Boeing Company paid $23 million to settle a fourth DOJ False Claims Act complaint that was originally filed by a whistleblower. The details can be found on the Aerospace Fraud page.
What Can You Do to Stop Defense Contractor Fraud?
Defense companies who commit fraud are stealing taxpayer dollars that fund the United States Armed Forces’ mission to protect us. These greed-driven fraud schemes put the lives of our military servicemen and women at risk and undermine our nation’s security. As a whistleblower, you can help put a stop to fraud by exposing these corrupt companies.
The Federal False Claims Act of 1986 states that a whistleblower can file a lawsuit on behalf of the United States if they have information about a company making false claims to defraud the government. Qui tam lawsuits filed by whistleblowers have recovered billions of taxpayer dollars from defense contractors who submitted false claims in order to cheat the United States government. In 2009, a whistleblower filed a false claims lawsuit against a company that allegedly failed to disclose information on the failure of electrical components the company had sold to the United States for use in defense satellites. The company paid $325 million to settle the claims and the whistleblower received a $48.8 million award.
If you have information proving that a government contractor is committing fraud, you may be entitled to a reward. Federal false claims cases often result in large multi-million dollar settlements and, in order to encourage people to come forward with information about fraud, the government offers whistleblower rewards up to 25 percent of the total amount recovered. Expert legal assistance can protect your rights, give you the best chance of a successful outcome and can maximize the size of your reward.
Please contact the Baum, Hedlund, Aristei and Goldman whistleblower team if you are considering taking legal action.