Contractors

The government spends more than 10 percent of the federal budget to purchase goods and services from private industry.

Unfortunately, every dollar spent creates an opportunity for profit by fraud. And the varieties of fraud committed against the government seem limited only by the imagination of the people and companies willing to commit them.

Fraud in the procurement and performance of contracts with the government takes so many different forms that even a very partial list is daunting:

  • Goods and services never actually delivered or rendered
  • Bribes and kickbacks
  • Deliberate overcharging
  • Double billing
  • Bid rigging or collusion to frustrate competitive bidding
  • Defective products and services
  • Failing to comply with contract specifications
  • Charging time or materials used for one project to another (“cross charging”)
  • Making false statements to obtain, or to keep, a contract
  • Inflating overhead costs or other expenses
  • Substituting inferior parts
  • Misrepresenting eligibility for Minority, Women or Disadvantaged Business Enterprise Programs
  • Failing to credit the government for rebates received from subcontractors
  • Billing for “ghost” payrollers
  • Retaining overpayments

Case Examples

Many successful False Claims Act cases have been brought against government contractors for fraud. By way of example:

In 2014, Okland Construction Co. agreed to pay $928,000 to settle whistleblower claims that the company submitted fraudulent claims to the Small Business Administration, falsely representing eligibility for SBA contracts, in order to procure contracts reserved for small businesses. The whistleblower in this case was a construction industry insider. He received $148,480 as his share of the settlement. Read more

Also in 2014, two Michigan-based companies agreed to pay $3.8 million to settle claims that they violated the False Claims Act by fraudulently claiming Disadvantaged Business Enterprise (DBE) credits, for which they were not eligible, on a number of federally-funded transportation projects. Read more

In 2013, the Gallup Organization agreed to pay $10.5 million to settle whistleblower claims that the company violated the False Claims Act by knowingly overstating its estimated labor hours in contract proposals and by improperly discussing employment with a then FEMA official, to obtain a FEMA subcontract at an inflated price. The whistleblower in this case was Gallup’s former director of client services. He received $1.9 million as his share of the settlement. Read more

In 2011, Oracle Corp. agreed to pay $199.5 million to settle whistleblower claims that the company violated the False Claims Act by violating its contract with the General Services Administration by knowingly failing to disclose discounts it offered to other customers in order to avoid complying with the corresponding price-reduction clause in the contract. The whistleblower in this case was a former Oracle employee, who received $40 million as his share of the settlement. Read more

In 2010, Hewlett Packard agreed to pay $55 million to settle whistleblower claims that the company violated the False Claims Act by knowingly paying kickbacks or “influencer fees” to systems integrator companies in exchange for recommendations that federal agencies purchase HP’s products, as well as by providing incomplete information to GSA contracting officers during contract negotiations. The two whistleblowers in this case were accounting executives, who received approximately $8 million as their share of the settlement. Read more

In 2009, Northrop Grumman Corp. agreed to pay $325 million to settle whistleblower claims that a subsidiary of the company violated the False Claims Act by providing and billing the National Reconnaissance Office for defective microelectronic parts. The whistleblower in this case was an aerospace employee. He received $48.75 million as his share for the settlement. Read more

In 2008, Bechtel Infrastructure Corp. agreed to pay $458 million to settle claims that the company violated the False Claims Act by failing to provide adequate construction management and quality assurances services in connection with the design and construction of the Central Artery Tunnel (the “Big Dig”) in Boston. Read more

If you have knowledge and solid evidence of fraud or false claims involving federal contractors or other recipients of federal funds, please contact our whistleblower lawyers. Consultations are free and confidential.