Defense/Military Contractor Fraud

Private defense contractors have large dollar agreements with the federal government. The number of false claims and fraud by military and defense contractors has been quite large. Individuals who bring information forward of such fraud, can be rewarded from false claim lawsuits. The law firm of Tarshish Cody PLC can advise you if you believe you know of false claims and fraud by federal contractors. Call 952-361-5556.

Cross-Charging

The federal government will typically create a military contract that falls into one of two categories: “fixed-price” or “cost-plus.” Fixed-price contracts pay a pre-determined price for products regardless of the producer costs of production.

A cost-plus contract permits a contractor to bill the government a certain price for a product and then add a percentage of theirs costs incurred for production.

Cross-charging occurs when a defense contractor submits both types of contracts for reimbursement. Defense contractors may deliberately bill the government with costs added to a pre-determined price in a fraudulent attempt to cross-charge the government. This is accomplished through manipulation of accounting records and falsification of time spent in production.

Improper Cost Allocation

 US defense contractors who supply the federal government may also be suppliers to private businesses, and various government agencies. In these cases, defense contractors should divide their costs of production fairly among their various contracts. A fraudulent practice involves such defense contractors allocating production costs for private businesses or other federal agencies, onto the billing of a particular government agency. This results in the government agency paying costs that really should be borne by another business or government agency.

Inflating Costs

Another typical type of fraud by defense contractors involves the fraudulent inflation of their costs in their billing to the government. They can falsify purchase orders, and various production records to increase their billing to the federal government.

TINA Violations

US military contractors sometimes fall into a special category of “sole source supplier.” This refers to producers of specialized weapons and equipment that are so unique that only one supplier can provide them. This unique nature of the products provided prevents a competitive bidding process to determine pricing. There is a federal Truth in Negotiations Act law (TINA) that demands of these sole source contractors that they fully and truthfully share all relevant production information, including production costs and certify the information shared is complete, accurate, and current. This information enables the government to arrive at a reasonable price level to pay for the product. At the same time, some contractors may withhold information required by TINA, and on some occasions, they may provide inflated price data to the government, to obtain a higher price. When this deliberate fraud is uncovered, it can be the basis of a whistleblower or qui tam lawsuit.

The law firm of Tarshish Cody PLC is experienced in evaluating whistleblower and qui tam law suit litigation. Call our attorneys to schedule a free initial consultation to help determine if you may be eligible for a percentage of recovered funds paid as a result of defense contractor fraud. Call 952-361-5556.

Product Substitution

Another fraudulent practice by defense contractors is the use of (inferior)

substitute parts or products, when the contract specifies a specific grade or product. Some defense contracts specify American components, and some defense contractors will secretly substitute foreign parts. These practices violate federal law and can be subject to a False Claims lawsuit.

Failure to Comply with Contract Specifications

Many government contracts demand certain testing, and quality assurance (QA) provisions by the contractor. When a defense supplier intentionally evades these requirements that will constitute fraud.

Government contracts also frequently include additional service-oriented steps required to maintain quality assurance, necessary testing, or comply with other required steps in the production process. If a defense contractor intentionally fails to complete these steps, it may be a violation of the False Claims Act.

Our attorneys at Tarshish Cody PLC will schedule a free initial consultation to discuss if your knowledge of fraud and illegal practices by government contractors meet the standards for a False Claims act lawsuit, and recoverable awards. Call 952-361-5556 (or fill out the free case evaluation form below).

Attorney Practicing In This Area

Kyle Kosieracki