Government contractor procurement fraud has increased as some government contractors and subcontractors have defrauded the government by providing defective goods, cross charging, made false certification of services provided, charged for services not provided, charged for goods not provided, violated the Truth-in-Negotiations Act ("TINA"), and made improper cost allocations.  Whistleblowers that have independent knowledge of procurement fraud committed against the government by government contractors and subcontractors can blow the whistle on the procurement fraud and if they are the first to provide notice of the fraud can recover a large financial reward for helping the government identify and stop procurement fraud.

If you are aware of defense contractor procurement fraud, highway contractor procurement fraud, health care company procurement fraud, or other government contractor or subcontractor procurement fraud, please feel free to contact Texas Government Contractor Procurement Fraud lawyer, Jason Coomer, via e-mail  or online submission form for a free review of a government contractor procurement fraud qui tam claim.

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Defense contractor procurement fraud is a common way that government contractors defraud the United States Government and taxpayers out of large amounts of money.  Many whistle blowers have been successful in blowing the whistle on defense contractor procurement fraud and revealed procurement fraud schemes that put our troops in danger and steal money from the United States.  Under Federal False Claims Act litigation billions of dollars have been regained from these procurement fraud defense contractors.  Some common ways defense contractors commit procurement fraud and cheat the government are false certification of product quality, product substitution, cross charging, false certification of services provided, charging for Services or Goods not provided, and Violations of the Truth-in-Negotiations Act ("TINA"), and Improper Cost Allocation.

False Certification of Product Quality commonly occurs after a product has been approved for mass production.  The original prototypes of a product are typically created with high quality materials and parts including strong metals, seals, plastics, and components.  However, after the original prototypes have been tested and approved, some defense contractors use inferior parts and materials to lower costs that make weapons, ships, vehicles, computers, electronics, and other military goods less reliable, weaker, and more prone to not work when needed.  The defense contractor that provides a false certification of a product's quality has committed a false certification that may subject the defense contractor to a Government Contractor Procurement Fraud False Certification of Product Quality Whistleblower Reward Lawsuit.

The Defense of Department often requires its contractors to build weapons systems in accordance with very detailed product specifications because quality and reliability are critical with weapons systems and other military equipment. Failure to comply with these specifications and falsely certifying that these specifications were met can cause death and place our troops in danger.  As such it is extremely important that  appropriate quality assurance steps are taken in building or producing weapons systems and other military equipment and that a defense contractor's certification of compliance with these specifications can be trusted.

Similar to Government Contractor Procurement Fraud False Certification of Product Quality Qui Tam Claims are Government Contractor Procurement Fraud Product Substitution False Claims.  These claims occur when a Defense Contractor that is under a government contract that specifies that the defense contractor build products using a certain grade, quality of parts, or materials & parts from American companies, fails to comply with the contract. These Defense Contractors often decide it is more profitable to use or substitute inferior parts or parts not made by American companies.  Defense Contractors that use inferior parts or parts not made by American Companies as required by their government contract may be subject to a Government Contractor Procurement Fraud Product Substitution False Claim Act Whistleblower Lawsuit.

Cross-Charging occurs when a Defense Contractor has a fixed-price contract, where the company receives a fixed price for a certain number of weapons no matter how much it costs to produce them and another that is a "cost-plus" contract, where the government pays the company for the cost of making the weapons, plus a percentage of its costs as a profit.  In this circumstance the Defense Contractor has an economic incentive to charge the time it spends working on the fixed-price contract (where it gets paid the same no matter how much time it takes) to the cost-plus contract (where it gets paid for its costs plus profit). This may be accomplished by instructing employees to write down on their time cards that they worked on the cost-plus contract when they actually worked on the fixed-price contract.  A Defense Contractor that charges fixed price work on a cost-plus contract is creating false claims or false certifications that may subject them to a Government Contractor Procurement Fraud Cross-Charging False Claims Act Lawsuit.

Improper cost allocation false claims are a more subtle version of the cross-charging scheme. In this type of false claim, a defense contractor with government contracts and private commercial contracts fails to spread or allocate their costs fairly among the different jobs. These types of false claims are typically more difficult to detect as the defense contract usually tries to hide the misallocation in indirect costs or bury the misallocations in hard to interpret records.  These improper allocation false claims are more common in large contracts where the product has military uses and private uses such as with large aircraft companies.  Defense Contractors that deliberately allocate a disproportionate share of indirect or overhead costs to the government for the purpose on increasing there profits may cause themselves to be subject to Improper Allocation False Claims Law Suits, if the correct whistle blower reports the fraud.

When the government wants to purchase highly specialized weapons, military services, or other military equipment, it often is limited to one potential defense contractor because of the specialized need.  This limited supply often creates monopoly power in the "sole-source supplier".  This creates a problem in making sure that the sole-source supplier does not over charge the government for the good or services that it is supplying to the government.  The Truth In Negotiation Act (TINA) requires the Defense Contractor to truthfully disclose all relevant information about its costs to the government in sole-source contract negotiations. Defense Contractors that submit false cost and pricing data to the Defense Department or failure of a sole-source Defense Contractor to provide accurate cost information to intentionally inflate costs to increase profits can cause liability for a violation of the Truth In Negotiation Act and result in a Government Contractor Procurement Fraud Truth In Negotiation Act Violation False Claims Act Law Suit.

For more information on War Profiteering Whistleblower Qui Tam Lawsuits, Defense Contractor False Certification Lawsuits, and other Government Contractor Procurement Fraud Lawsuits, please go to the following web page on War Profiteering Whistleblower Qui Tam Lawsuit, Defense Contractor False Certification Lawsuit, and other Government Contractor Procurement Fraud Lawsuit Information.  

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The increased government spending over the past decade created an environment where many corporations, dishonest government contractors, fraudulent government sub-contractors, and other dishonest people have begun committing procurement fraud including systematic procurement fraud against the government including the Department of Defense.  This government contractor procurement fraud has defrauded the government out of large amounts of money.  As such, the government is offering large financial rewards for government contractor procurement fraud whistleblowers that are aware of fraudulent billing of the government.  These government contractor procurement fraud whistleblowers can often work with government contractor procurement fraud whistleblowers lawyers and the Department of Justice to expose fraudulent government contractors and criminals that are committing procurement fraud. 

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Government Contractor Procurement Fraud Lawsuits and Government Contractor Procurement Fraud Actions

The United States Department of Justice is working with procurement fraud whistleblowers to root out government contractor fraud committed in connection with the procurement of goods and services used by our military and civilian agencies, including fraud that affects our men and women fighting in Iraq and Afghanistan. Since January 2009, procurement fraud cases, including the non-war related procurement fraud recoveries have accounted for over $1.01 billion in recoveries – more than the Department's recoveries in 2007 and 2008 combined. The Department’s recoveries since 2009 include more than $718 million attributable to Department of Defense contracts.

Ensuring that our military and procurement systems are protected from fraud is vitally important. Using the False Claims Act, the Department is aggressively pursuing fraud in connection with the wars in Southwest Asia. During fiscal year 2010, the Civil Division recovered $10.6 million in these cases. To date, settlements and judgments in procurement fraud cases involving the wars in Southwest Asia total $152.2 million. Of this amount, $129.7 million has been recovered since January 2009.

The Department has intervened in a case against Public Warehousing Company, a multi-billion dollar defense contractor that is alleged to have engaged in war profiteering on three prime vendor contracts (for which it was paid $9.8 billion) with the Defense Logistics Agency to supply food to U.S. troops in Kuwait, Jordan, and Iraq. At home, the Department is leading an investigation into companies, as well as individual executives, who manufacture and sell defective Zylon fabric used as the key ballistic material in bulletproof vests sold to the United States for use by federal, state, local, and tribal law enforcement agencies. The investigation has revealed that these vests degraded quickly over time due to heat and humidity and were unfit for ballistic use. Thus far, the Department has obtained more than $59 million in this effort, and the investigation continues today.

In addition to investigating and initiating cases that target procurement fraud, the Division also aggressively pursues counterclaims when fraudulent conduct surfaces in defensive matters. The Division handles defensive procurement cases when they are filed in the United States Court of Federal Claims. The Division has had substantial success in recent years in obtaining judgments and settlements stemming from fraud in such cases, which often involve inflated contractor damages claims. For example, in Daewoo Engineering v. United States, the Department of Justice collected approximately $51 million in 2010 in settlement of fraud claims arising from a contract dispute concerning the construction of a road in Palau. The Division also recently settled for $9 million fraud claims in Securitas v. United States, a case concerning security guard contracts for services at United States military installations in Germany.

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The Defense Procurement Fraud Clearinghouse

The Defense Procurement Fraud Debarment (DPFD) Clearinghouse, was established in 1993 and has been assigned to the Bureau of of Justice. This provision required the U.S. Attorney General to establish a single point of contact for contractors or subcontractors of the U.S. Department of Defense (DoD) to promptly confirm whether potential employees have been convicted of fraud or any other felony arising out of a contract with the Department of Defense. The clearinghouse serves as this point of contact and is the repository for all DPFD-related records.

Legislation: The Defense Procurement Fraud Debarment (DPFD) Clearing house was established by Section 815, Subsection 10, of the National Defense Authorization Act for fiscal year (FY) 1993 [Public Law 102-484, United States Code, Section 2408 (c)].

Clearinghouse Data Submissions: Defense-related fraud and felony cases are tried in federal court and prosecuted by a U.S. Attorney. U.S. Attorneys' Offices submit copies of sentencing orders for all individuals convicted of defense-related fraud or felony in their districts to the Defense Procurement Fraud Debarment Clearinghouse on a quarterly basis. BJA maintains a list of people who have been disqualified from contracting with DoD based on these sentencing orders.

Clearinghouse Services: The clearinghouse responds to inquiries from federal agencies, DoD contractors, and first-tier subcontractors as required to determine employment or contract eligibility. The clearinghouse also forwards pertinent information to the U.S. General Services Administration (GSA), where the information is coded to identify the specific category of federal exclusion which is included in the GSA publication Lists of Parties Excluded From Federal Procurement or Non-procurement Programs, more commonly known as the Debarment List or EPLS. The exclusion is categorized according to the specific cause (i.e., the statute violated and the treatment or exclusion).

Information for DoD Contractors DoD contractors and subcontractors should verify that potential employees have not been debarred and are not on the current List of Parties Excluded from Federal Procurement or Non-procurement Programs (EPLS). Individuals who have been convicted of fraud or any other felony arising out of a contract with DoD are prohibited from contracting with or being employed by any DoD contractor, as stipulated under the National Defense Authorization Act of 1989 (Public Law 100-456).

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Government contractor wage fraud has increased as some government contractors and subcontractors have sought to fraudulently avoid paying the prevailing wage or fringe benefits in violation of the Davis Bacon and Related Act (DBRA).  Government Contractors that violate DBRA and/or falsely certify services or goods that they seek payment from the government for can be subject to Federal False Claims Act Lawsuits and required to pay back fraudulently taken money.  Whistleblowers that have independent knowledge of fraud committed against the government by government contractors and subcontractors can become American heroes by blowing the whistle on fraud and if they are the first to provide notice of the fraud can recover a portion of the recovered money.

The Davis Bacon and Related Acts (DBRA) requires all contractors and subcontractors performing work on federal or District of Columbia construction contracts or federally assisted contracts in excess of $2,000 to pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits for corresponding classes of laborers and mechanics employed on similar projects in the area. The prevailing wage rates and fringe benefits are determined by the Secretary of Labor for inclusion in covered contracts.

In addition to the Davis Bacon Act itself, Congress added Davis-Bacon prevailing wage provisions to approximately 60 laws—"related Acts"—under which federal agencies assist construction projects through grants, loans, loan guarantees, and insurance. (Examples of the related Acts are the Federal-Aid Highway Acts, the Housing and Community Development Act of 1974, and the Federal Water Pollution Control Act.) Generally, the application of prevailing wage requirements to projects receiving federal assistance under any particular "related" Act depends on the provisions of that law.

The U.S. Department of Labor (DOL) has oversight responsibilities to assure coordination of administration and consistency of enforcement of the labor standards provisions of the Davis Bacon and Related Acts. Under this authority, DOL has issued regulations establishing standards and procedures for the administration and enforcement of the Davis-Bacon labor standards provisions. Federal contracting agencies have day-to-day responsibility for administration and enforcement of the Davis-Bacon labor standards provisions in covered contracts for which they are responsible or to which they provide federal assistance under laws they administer.

For more information on the Davis-Bacon and Related Acts (DBRA), please go to the following United States Department of Labor Web Page.

Through government contractor fraud qui tam lawsuits and other federal false claims act lawsuits, whistleblowers, the United States Department of Justice, and fraudulent contractor qui lawyers have helped the government recover billions of dollars that was wrongfully taken through fraud from the government.  Often in these cases the fraudulent government contractor has paid off key government official to look the other way and it is essential to have a whistleblower with specialized knowledge of the fraud to expose the contractor fraud.  In other cases, the fraudulent government contractor is exploiting a lack of efficient supervision in the bureaucratic system.  In these cases, it also typically takes a whistleblower with specialized knowledge to locate the fraud and expose it.

Anyone who defrauds the government out of revenue can be held accountable under the False Claims Act. Common defendants include defense contractors, health care providers, other government contractors & subcontractors, state and local government agencies,  and private universities. Whistleblowers often include current and former employees of the defrauding company, competitors of government contractors and public interest groups.

The False Claims Act was enacted to encourage private citizens to assist the government in the fight against fraud. Often the whistleblower faces an uphill battle as large, powerful corporations or individuals are usually named as defendants. An experienced attorney in qui tam claims may help you gain a percentage of stolen government funds.