Defense Contractor Fraud Whistleblowers

What happens when military supply contractors shortchange the taxpayer with substandard materials? Lives are at stake.

Defense contractor fraud has existed since America’s earliest years and was a large part of the impetus for the whistleblower laws in place today. During the Civil War, some military suppliers defrauded the government and put soldiers’ lives at risk by selling boots made from cardboard, clothing made from dry rotted cloth, blind and decrepit horses, and rotted ships’ hulls painted to look like new. Some scammers even sold bullets filled with sawdust instead of gunpowder.

In response, Congress enacted the False Claims Act in 1863, also known as the FCA. The FCA allows the government – and whistleblowers acting on the government’s behalf – to sue defense contractors for improper billing practices. The FCA provides for financial penalties for improper billing, and it provides potential financial incentives for whistleblowers.

Reckless or unscrupulous defense contractors can mislead the government about the cost and quality of equipment or, in some instances, about the equipment’s compliance with various federal laws. For example, “new” and vital parts supplied to a nuclear submarine may actually be refurbished parts that are substandard. These substandard parts could jeopardize the lives of our sailors and others.

What is defense contractor fraud?

Misrepresentations about a wide range of information related to a defense contract can trigger FCA liability. When we talk about “defense contractor fraud,” we are referring both to outright fraud and a wide range of other illegal billing and contracting practices. Even overbilling practices that are reckless but not necessarily intentional can violate the FCA.

What are some common types of defense contractor fraud?

A vast range of conduct can trigger FCA liability. Two of the most common categories of false claims involving defense contractors are:

overcharging for goods or services; and
submitting false bills or claims for payment to the government.

These schemes to defraud often involve providing the government with sub-par goods, conspiring with other contractors to rig bids, or misrepresenting the price or quality of supplies or equipment. In some cases, a contractor may even be liable under the FCA for false or fraudulent claims submitted by subcontractors.

What are some examples of defense contractor fraud?

Examples of alleged defense contractor fraud that have come to light in recent years include:

In May 2021, a major defense contractor paid $50 million to resolve an FCA lawsuit based on allegations that it created fake invoices for supposed past sales of vehicle parts and presented those to the government during contract negotiations to build parts for mine-resistant ambush protected vehicles (“MRAPs”). MRAPs are used to transport troops in combat zones where improvised explosive devices may be planted. The whistleblower who initiated the litigation, a contracts manager for the contractor, was awarded more than $11 million for his role in the litigation.^1,3

In 2018 and 2019, three defense contractors agreed to pay a total of more than $120 million to resolve an FCA lawsuit based on allegations that they rigged bids for oil-delivery services. The whistleblower, the brother-in-law of an executive at one of the companies, was awarded more than $27 million for his role in the litigation.^1,3

In July 2018, 3M Company agreed to pay the federal government $9.1 million to resolve an FCA lawsuit related to its Combat Arms Earplugs used by military service members. The whistleblower, a company that made competing earplugs, had alleged that 3M and its predecessor, Aearo Technologies, Inc., knew that their earplugs had a design defect that caused them to loosen in soldiers’ ears. The whistleblower was awarded $1.9 million for its role in the litigation.^1,3

In separate litigation, the Law Offices of James Scott Farrin is representing veterans who sustained hearing damage while using the earplugs.

Attorneys of our firm have handled cases involving millions of dollars in fraud related to defense contractors.⁴ FCA violations are not reserved for billion-dollar companies or multi-million dollar weapon programs. Even smaller contractors sometimes commit fraud, and those violations can add up quickly. The Carolinas have an unusual density of defense contractors and military bases, which can be hotspots for potential fraud.

Defense contractor fraud, large and small

The U.S. defense contracting sector is immense. It includes thousands of companies, large and small, publicly traded and privately held. And defense contractor fraud can happen anywhere on the spectrum. For example, a company may build aircraft, ships, missiles, nuclear drive systems, or even satellites. Or, it may be a small, local contractor digging a drainage ditch or servicing equipment.

Here are eight of the largest defense contractors as of 2021:

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Remember that fraud doesn’t just happen in huge companies or on large contracts. For example, you may have a small local construction contractor who is building a barracks at one of the many military bases in the Carolinas. If that contractor is overcharging for labor, charging for materials not used, using materials of reduced quality to those promised, etc., they may be violating the FCA by committing defense contractor fraud.

Are there defense contractors in North Carolina and South Carolina?

Certainly. Almost every state has a military base or presence of some kind, and furthermore, states have their own National Guard contingents. Here is a list of some military bases in the Carolinas, to give you an idea.

Marine Corps Air Station New River
Seymour Johnson Air Force Base
Fort Bragg
Air Station Elizabeth City
Camp Lejeune Marine Corps Base
U.S. Coast Guard Aviation Logistics Center
Camp Mackall Training Base
Marine Corps Air Station Cherry Point
United States Coast Guard Sector North Carolina
Military Ocean Terminal Sunny Point
Pope Air Force Base
Camp Mackall
145th Airlift Wing Charlotte
108th Training Command Charlotte
Army Research Office
Joint Base Charleston
Shaw Air Force Base
Fort Jackson
Marine Corps Air Station Beaufort
Parris Island
Naval Hospital Beaufort
Naval Hospital Charleston
Naval Weapons Station Charleston

What can I do to stop defense contractor fraud?

A whistleblower can sue on the government’s behalf in a “qui tam” lawsuit. Lawsuits brought by whistleblowers (also known as “relators”) accounted for 76.28 percent of the $37.18 billion in FCA judgments and settlements between 2011 and 2020.^1,3 A whistleblower can be anyone who has non-public knowledge about the fraud or other improper contracting practices. The whistleblower may be entitled to up to 30% of the settlement or court judgment.

Do I need a procurement fraud whistleblower lawyer if I suspect defense contractor fraud?

If you suspect or know of defense contracting fraud or other improper contracting practices, you should contact an experienced whistleblower attorney. We can help try to persuade government lawyers to intervene in the case, which increases the chance of success.

An experienced qui tam attorney can help you investigate the fraud and prepare and file a lawsuit under seal, steps that are crucial to trying to ensure that you are compensated for your efforts and the risk you take by speaking up. Navigating the FCA’s complexities and litigating a case can be a daunting task for a whistleblower without an attorney.

What laws prohibit defense contractors from retaliating against whistleblowers?

The FCA itself provides protections for whistleblowers from retaliation, including the following:

Termination
Suspension
Demotion
Harassment

An employer or contractor who proves they suffered retaliation for reporting defense contractor fraud may be entitled to compensation to make him or her whole. This may include reinstatement to his or her job, double the amount of back pay lost as a result of termination, and attorney’s fees. Additionally, employees of federal contractors, subcontractors, grantees, or subgrantees may be entitled to additional protections under federal law.

Talk with a whistleblower attorney

Fraud against the government by the defense contracting industry dates back to America’s earliest years. While whistleblowers initiate the majority of the litigation that seeks to expose fraud against the government, much more of it is believed to go unreported.

If you suspect fraud against the government, let’s talk. We can confidentially help you determine if you should move forward with a whistleblower/qui tam claim. We appreciate the struggle you may be facing. That is why we have a You-First Policy in place. We can try to help protect you regardless of how the fraud may have involved or impacted you.

If we decide to take your case and you don’t get a reward for reporting fraud, you owe us no fee.²

“Bill has the ability to ‘think outside the box’…which makes him extremely effective as an advocate for his clients.” ¹ — Attorney who previously worked with Bill

See what else our clients say

Awards we’ve won

For standards of inclusion for awards listed, visit bestlawyers.com, thenationaltriallawyers.org, superlawyers.com, farrin.com/business-nc-power-list, and millondollaradvocates.com. National Trial Lawyers Top 100 designation is for 2022. Regarding the Million Dollar Advocates Forum, we do not represent that similar results will be achieved in your case. Each case is different and must be evaluated separately. Firm award is for the Law Offices of James Scott Farrin. Attorney awards are for attorneys with the Law Offices of James Scott Farrin.

Contact the Carolina
Whistleblower Attorneys

If you’re wondering if it’s a good idea to speak with a whistleblower lawyer about what you know, let us set the record straight.

Corporate ethics hotlines can be risky and may lead to termination. If you’ve already done this, call us immediately.
Your coworkers could be aware of the fraud – or complicit in it – and you should not talk to them about it.
The first claim to be filed under the False Claims Act can proceed – if you’re not first, you’re at a serious disadvantage and may get nothing (another reason not to speak to your coworkers about it).
A confidential discussion costs you a few minutes, but could save you time, stress, and money.

1-888-292-8852

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