Overcharging the government or billing the government for services not provided are some of the well-known ways federal contractors violate the False Claims Act. But providing defective or substandard materials as part of a government contract is also fraud. 

Defense contractor fraud and government procurement fraud siphon billions away

from the more than $1 trillion Congress appropriates every year for the national defense. In the case of contracts to provide equipment for the military or first responders, fraud isn’t just wasteful spending, it puts front-line workers at risk of injury or death. Whistleblowers who see and report this type of fraud aren’t only helping recover stolen taxpayer dollars, but they are helping protect the people who serve and protect the country.

The Department of Justice’s annual False Claims Act report shows how the law holds companies accountable for illegal schemes that include improper product substitution, providing substandard products, and violating anti-kickback statutes and the Buy American Act. In the last year:

• The Justice Department recovered $136 million from 17 different entities and individuals through its investigation of the body armor industry’s use of defective Zylon, a material used to make bullet-proof vests. One contractor paid $3.35 million to resolve allegations that it sold defective material for bullet-proof vests used by law enforcement.
• A housing company paid $35.2 million to settle allegations that it fraudulently induced service branches to pay the company performance incentives for military housing management and maintenance. The company was alleged to have altered or manipulated property management software data, and destroying or falsifying resident comment cards, to achieve the performance standards.
• Another contractor paid $13.67 million to resolve allegations that its employees received kickbacks from local companies in exchange for award of subcontracts relating to logistics support for U.S. Army forces in Operation Iraqi Freedom and that the company sought reimbursement of inflated subcontract prices.

Military contractors have also paid to settle qui tam lawsuits. These are federal lawsuits filed under the whistleblower provisions of the False Claims Act that allow private citizens with knowledge of fraud to file on behalf of the government and, if a recovery is successful, share up to 30 percent of the recovered funds.

Last year, a textile manufacturer in Virginia agreed to pay $3 million to settle False Claims Act allegations brought by a whistleblower who worked at the company that it knowingly sold fabrics to the military that failed to meet specifications.

According to prosecutors, the whistleblower in the case brought information regarding falsified test results to the attention of former company management but was ignored. In the lawsuit, the whistleblower alleged the company falsely certified on at least 100 occasions that its military-grade fabrics met all required specifications.

In 2021, a whistleblower alleged that two Georgia companies provided unapproved substitute parts to the U.S. Army and violated the Buy American Act by providing parts made in another country. The companies agreed to pay $900,000 to settle the allegations.

If you have information about military contractor fraud, contact us for a confidential, free consultation. The lawyers at Keller Grover understand the important role whistleblowers play in holding their employers accountable for fraud against the government and the military. 

Our attorneys are uniquely qualified with experience dealing with fraud and employment cases. We can advise potential whistleblowers about the best path forward from the very beginning, helping minimize the impact of reporting, protect rights and achieve the best possible outcome for their situation.