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The Rise of Government Contractor Fraud and Military Contractor Fraud in Security and Military Support Around the World by Defense Contractor Fraud Whistleblower Lawyer and Military Contractor Fraud Whistleblower Lawyer Jason S. Coomer

As Private Security and government contractors have become more common in military bases and other locations around the World, fraudulent defense contractors have become more common.  During the Iraq War and Afghanistan War, the number of government contractors for security, military support, and other essential services increased dramatically.  The money spent on these government contracts has in the Billions of Dollars.

Unfortunately, some corrupt government contractors made or are making big profits by billing the United States for services they are not performing as well as defective products and services they have sold to the government.  Even worse, in some situations illegal price gouging and government fraud has become common practice and the armed forces of the United States are suffering.  As such, it is now time for whistleblowers and American heroes to blow the whistle on these corrupt government contractors that are defrauding the United States, stealing from the United States, and placing our troops in danger.

History of Qui Tam Lawsuits and Defense Contractor Fraud Lawsuits

Defense Contractor lawsuits have existed for centuries as deceptive government contractors have been around as long as government contracting has. Qui tam actions allow private citizens to file a lawsuit on behalf of the U.S. government in an effort to recover losses caused by fraud against the government. This law is an incentive for civilians with specialized knowledge who know of individuals or companies making false claims for profit to come forward with information. In reward, the "whistleblower" (also known as the relator) shares in any federal revenue recovered.

For more on the history of Defense Contractor Fraud Lawsuits and Qui Tam Lawsuits, go to the following article on Qui Tam Claims.

Qui Tam Lawsuits and Defense Contractor Fraud Lawsuits

In 1986 as a result of increased government contractor fraud, Congress amended the False Claims Act in order to make it easier for whistleblowers to file claims against fraudulent corporations and individuals.  The act also help protect the Whistleblower or Relator from retaliation.

The 1986 Amendment defines a "claim" as:

"...any request or demand which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded."

The whistleblower's share of recovery is a maximum of 30 percent and the government's prior knowledge of fraud now does not necessarily bar a whistleblower from collecting lost revenue. If the government took over the lawsuit, the relator can "continue as a party to the action." The defendant is also required to pay for the relator's attorney fees. The whistleblower is also protected from retaliatory actions by his or her employer. As a result or the amendment, qui tam lawsuits increased dramatically.   Though the amendment was first made fore corrupt defense contractors, the amendment has uncovered billions of dollars in health care fraud.

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.

Defense Contractor Fraud Claims in the News

The United States Department of Defense spending for goods and services in Fiscal Year 2007 exceeded $300 billion.  With this increased budget has come relaxed oversight and regulation.  Quality control and proper testing of these good and services has become lax as documentation for large defense contracts has been reduced allowing fraudulent contractors to get away with defrauding the Pentagon, Department of Defense, and United States.

Recently several news stories have surfaced regarding suspected defense contractor fraud and government contractor fraud.  Below are brief exerts of some news stories on potential Defense Contractor Fraud Claims and Government Contractor Fraud Claims.  For more information follow the links to these stories.

Army Overseer Tells of Ouster Over KBR Stir By JAMES RISEN
Published: June 17, 2008 New York Times

WASHINGTON — The Army official who managed the Pentagon’s largest contract in Iraq says he was ousted from his job when he refused to approve paying more than $1 billion in questionable charges to KBR, the Houston-based company that has provided food, housing and other services to American troops.

Qui tam actions typically revolve around false claims that are either directly or indirectly presented to the Government for "payment or approval." These false claims can be generated through the submission of false bills, records, statements or other representations made to the Government.

Guilty Plea Given in Iraq Contract Fraud By ERIC SCHMITT
Published: June 11, 2008 New York Times

WASHINGTON — A retired Army colonel who has been a focus of a wide-ranging criminal inquiry into contracting fraud in Iraq pleaded guilty on Tuesday to steering a military contract for warehouses in Iraq to a contractor for $4,000 and a vacation to Thailand....

On Tuesday, the government said in court documents that in 2005, Colonel Selph served in Baghdad as head of a selection board that awarded a $12 million contract to build and operate Pentagon warehouses in Iraq.

The winning contractor was not identified by name in the court documents made public on Tuesday. But in previous court papers, the government said Lee Dynamics International, an American-owned company operating in Kuwait, was awarded $12 million in contracts in 2005 to build, operate and maintain several warehouses in Iraq. Those papers contend that as a result of bribes, the company illegally received advance information about the contracts.

Iraq Spending Ignored Rules, Pentagon Says By JAMES GLANZ
Published: May 23, 2008 New York Times

A Pentagon audit of $8.2 billion in American taxpayer money spent by the United States Army on contractors in Iraq has found that almost none of the payments followed federal rules and that in some cases, contracts worth millions of dollars were paid for despite little or no record of what, if anything, was received.

The audit also found a sometimes stunning lack of accountability in the way the United States military spent some $1.8 billion in seized or frozen Iraqi assets, which in the early phases of the conflict were often doled out in stacks or pallets of cash. The audit was released Thursday in tandem with a Congressional hearing on the payments.

3 Indicted in a Fraud Scheme on Military Contracts Overseas By THE ASSOCIATED PRESS
Published: February 13, 2008 New York Times

ATLANTA (AP) — A federal grand jury has indicted a Florida couple and a North Carolina man in what prosecutors call a scheme to rig millions of dollars of water purification contracts for United States military units overseas, officials said Tuesday.

The accused — Richard E. Long, 63, and Debra L. Long, 44, of St. Augustine, Fla., and Mack S. Smith, 56, of Bladenboro, N.C. — are charged with conspiracy, bribery of a public official, wire fraud and money laundering, said David E. Nahmias, a United States attorney.

From 2001 to 2007, Mr. Smith paid the Longs about $553,700, including down payments for two homes in St. Augustine, the indictment said.

U.S. Widens Net on Pricing of Food Supplies for G.I.’s By ERIC SCHMITT and ANDREW MARTIN
Published: October 18, 2007 New York Times

WASHINGTON, Oct. 17 — Federal agents are investigating whether several large food companies charged the government excessively high prices for supplies to American troops in Iraq and Kuwait, administration officials said Wednesday.

$6 Billion in Contracts Reviewed, Pentagon Says By ERIC SCHMITT and GINGER THOMPSON
Published: September 21, 2007 New York Times

WASHINGTON, Sept. 20 — Military officials said Thursday that contracts worth $6 billion to provide essential supplies to American troops in Kuwait, Iraq and Afghanistan — including food, water and shelter — were under review by criminal investigators, double the amount the Pentagon had previously disclosed.

In addition, $88 billion in contracts and programs, including those for body armor for American soldiers and matériel for Iraqi and Afghan security forces, are being audited for financial irregularities, the officials said.

Taken together, the figures, provided by the Pentagon in a hearing before the House Armed Services Committee, represent the fullest public accounting of the magnitude of a widening government investigation into bid-rigging, bribery and kickbacks by members of the military and civilians linked to the Pentagon’s purchasing system.

Defense Oversight By Robert O'Harrow (Government Inc.)
 June 10, 2008; 2:25 PM ET Washington Post

The Inspector General's Office at the Department of Defense has issued its latest twice-yearly overview of its work. Sobering stuff.

Billions spent with little oversight. Poor documentation. No meaningful changes in sight.

We at Government Inc. cringe and warn gentle-minded readers to think twice about reading on.

Here are some excerpts, in no particular order:

"The Army and Marine Corps issued contracts and Federal Supply Schedule orders valued at more than $5.2 billion for body armor components. The Federal Acquisition Regulation requires contracting organizations to maintain adequate contract documentation to provide a complete acquisition history. Specific information concerning testing and approval of first articles was not included in 13 of 28 Army contracts and orders reviewed, and contracting files were not maintained in 11 of 28 Army contracts to show why procurement decisions were made."

"From March 2004 through February 2006, the quality of water provided by contractors, through treatment or distribution at three of the sites DoD IG auditors visited, was not maintained in accordance with field water sanitary standards as specified in the Department of Army guidance. Although required, KBR did not maintain the quality of the water it distributed to point-of-use storage containers at Camp Ar Ramadi, Camp Q-West, and Camp Victory. Additionally, at Camp Q-West, KBR improperly provided chlorinated wastewater from its Reverse Osmosis Water Purification Unit to personal hygiene facilities."

"The Office of Inspector General Department of Defense is heavily engaged in combating fraud, waste and abuse. In FY 2007, DoD IG audits achieved $697 million in savings and identified $1.5 billion in funds that could be put to better use. Investigative activities identified 413 suspects who were indicted. Additionally, 307 suspects were convicted of crimes. All in all, $926 million was returned to the U.S. Government in investigative fines, restitution, and recoveries."

Defense Contractor Fraud Whistleblower Lawyers and Military Contractor Fraud Whistleblower Lawyers Can Help Military Contractor Whistleblowers Blow the Whistle on Those that Commit Fraud Against the United States Government, Help Protect Military Contractor Whistleblowers, and Help Military Contractor Whistleblowers Obtain a Share of Funds Recovered Through Quit Tam Claims, False Claims Act, and Defense Contractor Fraud Lawsuits

There are several types of Qui Tam claims covered under the False Claims Act:

  • Mischarging or overcharging for goods or services.

  • Improper price data and the request for payment for services never provided.

  • Holding government property for fraudulent purposes.

  • Avoiding payment of a debt to the government because of illegal reasons.

  • Knowingly providing the government with defective or dangerous products that were falsely certified.

  • Falsely certifying information for the entitlement of benefits.

  • Having any false claim paid by the government.

The mischarging case is the most common type of qui tam case filed. Mischarging cases generally involve filing false claims for goods or services that were not provided or delivered. A common mischarging scenario is employee labor charged to a government contract not worked on. Other common mischarging schemes are claims made to the Government for medical services not rendered or for services performed by an attending physician when the service was actually performed by a nurse or other provider that should have been billed at a lower rate.

Another type of case is the false negotiation or defective pricing case that involves the submission of false cost and pricing data to the Government. This scheme, which takes on many forms, involves the submission of false costs or pricing data to the Government during the negotiation of a contract that subsequently results in an inflated contract price.

Other common types of cases involve product and service substitution and false certification of entitlement for benefits. Examples of product and service substitution are falsely certifying that a product meets specifications, false testing schemes such as falsely certifying that reliability testing was conducted and providing an inferior service or product. Examples of false certification of entitlement cases are falsely certifying information for FHA mortgage guarantees and price supports.

Potential heroes that blow the whistle on government fraud and corruption include employees, former employees, high-level executives, sub contractors, general contractors, and people working with major defense contractors, telecommunications companies, and large health care organizations.

Defense Contractor Fraud Whistleblower Lawyers and Military Contractor Fraud Whistleblower Lawyers Can Help Military Whistleblowers Blow the Whistle on Those that Commit Fraud Against the United States Government, Help Protect Military Whistleblowers, and Help Military Whistleblowers Obtain a Share of Funds Recovered

If you are aware of a defense contractor, highway contractor, large health care company, or other large contractor or subcontractor that is defrauding the United States Government out of millions or billions of dollars, it is important to blow the whistle on the fraud.  By reporting the fraud you can save the government and taxpayers large amounts of money. 

However, if you are not the first to file or do not blow the whistle correctly pursuant to the Federal False Claims Act, you may not be able to share in the recovery.  As such, to become a relator it is important to collect evidence of the fraud and contact a Federal False Claims Act Lawyer such as Jason Coomer and the attorneys that he works with to make sure that every effort is made to protect your rights as a relator so that you can share in the recover that is made from your efforts.  In working together, Whistle blowers and Qui Tam Lawyers throughout the nation can blow the whistle on fraud that hurts the United States and our armed forces.

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