Our Lawyers Focus on Whistleblowers Combatting Defense Contract Fraud
We Help You Anonymously Report DOD Contract Schemes and Collect a Reward
The U.S. Department of Defense spends more than $350 billion a year contracting with suppliers that provide weapons, uniforms, computer systems, vehicles, aircraft and other goods and services to the U.S. military.
Hundreds of thousands of companies bid for government contracts, and it’s simply too difficult for the government to keep a close eye on all of them. Unfortunately, contractors know this, and many of them attempt to steal from taxpayers by engaging in defense contractor fraud.
The False Claims Act Allows You to Report Government Contract Fraud
If you’re aware of defense contract fraud in New York or anywhere in the U.S. or elsewhere, the federal False Claims Act gives you a pathway to report the fraud, file a lawsuit on behalf of the government and receive a financial reward. Originally created during the Civil War as a way for President Lincoln to curtail government fraud in the military, the False Claims Act is a “whistleblower” law that makes it illegal for contractors to submit false claims to a government agency.
The government finds these fraudulent contractors and holds them accountable with the help of Qui Tam Plaintiffs, or whistleblowers who file lawsuits on behalf of the government. Anyone who has information about fraud can become a whistleblower, so long as they are not the mastermind behind the fraud scheme.
Blow the Whistle on Government Fraud and You May Be Entitled to a Reward
Once a whistleblower reports fraud, the Department of Justice will initiate an investigation and decide whether or not it will take up the case by filing a qui tam (whistleblower) lawsuit (“under seal”) or secretly.
If the Department of Justice chooses to prosecute, the whistleblower is entitled to receive between 15 and 25% of the money recovered in the lawsuit through a verdict or settlement. If the DOJ chooses not to take up the case, the whistleblower can opt to pursue their lawsuit privately. In this scenario, the whistleblower stands to make even more: between 25 and 30% of the total recovery.
Since the whistleblower award is a percentage of the settlement or verdict, the higher the recovery, the higher the whistleblower award. Defense contract fraud cases often have billion-dollar stakes, which means whistleblowers can make upwards of a million dollars, in some cases tens of millions.
Although the total recovery ultimately comes down to the monetary value of the fraud, False Claims Act penalties, and enforcement fines, you can increase your recovery by:
- Working with a False Claims Act-experienced lawyer to make sure your report is selected by the Department of Justice for prosecution from the many thousands they receive each year.
- Providing an exceptional and detailed information package with not only the details and extent of the contract fraud but also the context and surrounding circumstances.
- Being helpful and available during the government investigation; the most valuable military contract whistle blowers are rewarded handsomely.
Halperin Bikel lawyers know how to prepare, package and
present your case so that it will attract the interest of the federal prosecutors who sift through literally thousands of complaints each year to select the handful they will pursue.
What is Defense Contractor Fraud? Types of Military Contract Schemes
Any time a defense contractor submits a false claim (or in essence, makes a material misrepresentation) related to the products or services they provide to the government, they are committing defense contractor fraud. Although this type of fraud is prohibited under the False Claims Act (and in some cases under criminal law), there are a wide variety of ways a contractor might try to profit by cheating the government.
Most commonly, DOD false claims fall into one of these categories:
- Cross Charging
- Military contracts are divided into two categories - fixed-price contracts, where the government pays a fixed price for the product or service, no matter how much it costs the contractor to produce, or cost-plus contracts, where the government pays a fixed price plus a percentage of the contractor’s costs. Many contractors have both types of contracts, and cross charging happens when they shift costs associated with a fixed-price contract to a cost-plus one, usually by falsifying accounting or time keeping records.
- Truth in Negotiations Act (TINA) Violations
- When the Department of Defense can only purchase a particular product from one supplier (known as a single source supplier), the supplier may try to falsely inflate prices, knowing that the government can’t compare costs with another manufacturer. TINA requires that contractors disclose accurate information about production costs so the government can pay them accordingly. Violations of the Truth in Negotiations Act are considered fraud.
- Buy American/Berry Amendment Violations
- Under the Berry Amendment, the Department of Defense is prohibited from purchasing materials made outside of the U.S. except in some quite narrow circumstances relating to availability. If a contractor secretly uses foreign materials to produce a product to fulfill a government contract, it is another type of government contract fraud.
- Wrongful Cost Allocation
- Most large defense contractors have many contracts with the U.S. government as well as private contracts domestically and internationally. Similar to cross charging, wrongful cost allocation happens when a contractor shifts costs to the U.S. government that should be paid through private or foreign contracts. This is often done so the contractor can quote lower prices to obtain private contracts, while receiving the same amount of money by charging the Department of Defense at its higher rate.
- Improper Material Substitution
- The DOD has strict quality and testing requirements for the products it purchases, and it will not accept used, damaged or refurbished goods. If a contractor cuts corners and falsely certifies that its products meet the government’s standards, it is committing fraud.
- Worthless Products/Contract Specification Fraud
- Because of the sheer number of products and services the DOD purchases, it is impossible for it to check the quality of every single item, and it’s up to contractors to certify that they have met the specifications of the contract. A contractor commits fraud if it knowingly submits products that will not perform as promised or does not meet the agreed-upon specifications.
- Accounting Misrepresentations
- This encompasses a variety of ways a contractor might “cook the books” by failing to accurately document costs, altering accounting information, withholding financial records or misrepresenting expenses when bidding for a contract or submitting expense reports.
- Improper Billing
- When a contractor charges the government for services that were never provided or claims materials that were of a higher quality and price than what was actually used. In some cases, contractors may also blatantly overcharge for labor or other expenses; with a lack of oversight and absent a whistleblower the scheme can go on for years.
- Under the Defense Federal Acquisition Regulation Supplement rule, contractors are required to take appropriate action to protect digital information, and they must report a cybersecurity breach within 72 hours of becoming aware of it. This is a strong focus area for the Department of Justice with scores of prosecutions in process.
- Noncompliance and Failure to Report
- If a contractor violates any of the above, whether intentionally or not, it has a duty to report it to the government immediately. Failure to report noncompliance is fraud in and of itself.
These forms of fraud can happen at any company that holds defense contracts, including aircraft manufacturing companies, intelligence and counterintelligence services, weapons producers, biotechnology companies, cyber intelligence providers, food suppliers, IT companies, combat systems manufacturers and a near-endless number of additional categories and sectors.
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Reporting Defense Contract Fraud Under the False Claims Act
Five Key Things to Know
- You must be the first to file.
- The False Claims Act specifies that only the first person to file a qui tam lawsuit will receive a reward. If someone with the same or similar information as you files a claim a day before you, you are disqualified from earning a whistleblower payout. This is why it’s important to act quickly and contact a lawyer when you have information about government contract fraud.
- Your information must be new.
- For federal or state prosecutors to take up your case, the evidence you have must be non-public and previously unknown by the government. Make sure the evidence you have hasn’t been publicized or reported before.
- Your employer doesn’t have to know that you’re a whistleblower.
- You do not have to tell your employer that you have or plan to report fraud happening at your workplace. Attorney-client privilege prevents your lawyer from sharing information about your case with anyone except the government, and your lawsuit will be filed “under seal,” meaning you will remain anonymous until the Department of Justice concludes its investigation.
- The False Claims Act protects you from retaliation.
- It is illegal for your employer to fire, demote or harass you for reporting fraud. If you are retaliated against, you may be entitled to remedies like back pay, reinstatement to your position and other damages.
- Reporting directly to the government may bar you from receiving a reward.
- You can obliterate your chances of receiving the maximum whistleblower reward if you report it to the Department of Justice directly. Instead, work with a whistleblower lawyer, who will make sure you fulfill every requirement to build a successful case and earn a significant award which can only be secured by filing a False Claims Act lawsuit.
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