The Qui Tam Team Blog Join In the Fight Against Fraud

Recent Qui Tam Cases Part 2: Military Contractors

With the number of military contractors at an all-time high, it is not much of a surprise that we are seeing many qui tam cases related to military contracts. These cases often concern procurement contracts, which makes military contractor fraud particularly disturbing. Not only does this type of fraud waste massive amounts of taxpayer dollars, it also puts the lives of military personnel at risk, thereby undermining national defense. Every time a military contractor fails to deliver a shipment of food for troops or omits a crucial piece of specified safety equipment, everyone loses--including the contractor when it eventually gets hit with a qui tam suit.

In February 2009, shipping company APL Ltd. agreed to pay the government $26.3 million to resolve a qui tam case alleging that the company submitted false claims in connection with its contract to transport thousands of containers to Iraq and Afghanistan. The government alleged that APL overcharged and double-billed for certain services. An APL employee discovered what the company was doing, and filed a qui tam suit.

In March 2009, Sikorsky Aircraft Company, which manufactures the storied Black Hawk helicopter for various branches of the military, agreed to pay the government $2.9 million to settle claims that it failed to install required safety equipment. Under Sikorsky's contract, it was obligated to install certain armored plates in Black Hawks to ensure that they could withstand combat. Fortunately no injuries resulted from the fraud, but it was fraud nonetheless because Sikorsky claimed payment for non-compliant goods.

In April 2009, Northrup Grumann agreed to pay the government $325 million to settle a qui tam suit alleging that a company Northrup Grumann purchased in 2002, TRW, made defective parts for spy satellites. TRW worked with another company to cover up malfunctions in satellite parts, which resulted in delayed satellite launches and failures in orbit. This enormous settlement was the largest ever for a qui tam claim alleging procurement fraud.

In August2009, another aircraft company entered into a multi-million dollar settlement to resolve a qui tam suit. Boeing Company agreed to pay the government $25 million to settle allegations that it performed defective work on the entire KC-10 Extender fleet (the KC-10 Extender performs the delicate task of mid-flight refueling for the Air Force). The original qui tam claim alleged that Boeing had performed faulty work while installing insulation in the KC-10. During the government's investigation, it found that Boeing had also overcharged the government for this faulty work by inflating the number of hours necessary and charging an excessive hourly rate.

In November 2009, the Department of Justice joined a qui tam suit against Public Warehousing Company (PWC) and  The Sultan Center Food Products Company (TSC), Kuwaiti-based companies that supplied food to troops in the Middle East. The suit alleges that the companies violated the False Claims Act by overcharging the government for locally available produce, and also by failing to pass along to the government cost savings obtained through rebates. PWC has contracts worth billions of dollars to supply food to troops in Kuwait, Iraq, and Jordan.