Northrop Grumman: Leisure Time on the Air Force’s Bill

The Northrop Grumman BACN settlement provided for approximately $27.45 million in civil recovery over allegations of false labor hours billed to the Air Force. In a separate criminal agreement, the company admitted that employees charged work time while golfing, skiing and enjoying hotel amenities. For someone who knows the deployment, the daily work or the time approvals, the gap between the hours worked and the hours billed is the heart of this case.

The Justice Department announced the civil settlement on November 2, 2018. The settling company was Northrop Grumman Systems Corporation, a subsidiary of Northrop Grumman Corporation.

What the Northrop Grumman BACN Settlement Covered

The civil settlement covered allegations that Northrop Grumman Systems Corporation overstated employee hours on two Air Force battlefield communications contracts. They were the Battlefield Airborne Communications Node contract, known as BACN, and the Dynamic Re-tasking Capability contract, or DRC. The government alleged that the company billed for labor hours purportedly worked by personnel stationed in the Middle East between July 1, 2010, and December 31, 2013.

The allegation went straight to the labor being sold: people had not worked the hours the Air Force was charged. That connects the employee’s time entry to the company’s bill and the government’s money. An insider who knows what happened during a shift can explain a difference that the billed total alone conceals.

What the Criminal Agreement Admitted About BACN Billing

In its agreement resolving the criminal investigation, Northrop Grumman Systems Corporation admitted that employees deployed to an air base in the Middle East defrauded the Air Force by overbilling the BACN contract. The U.S. Attorney’s Office’s account of those admissions describes employees charging exactly 12 or 13.5 hours per day, seven days a week, from January 2011 to October 2013. They were not working those hours.

The company admitted that employees charged BACN for time spent golfing, skiing, visiting amusement parks, eating and drinking, shopping, and using amenities at the five-star hotels where they stayed. The announcement also described employees personally profiting from inflated time and receiving thousands of dollars they had not earned. It quoted an employee’s email describing the practice:

We see an Air Force labor bill carrying time the company’s own admission places on the golf course or at the hotel. Leisure, billed as work. Northrop Grumman admitted that BACN employees overbilled the United States by more than $5 million at one site alone.

How a Time Entry Reaches the Government’s Bill

A labor charge carries information about the work performed, the contract charged and, where the contract requires it, the worker’s qualifications. Time sheets, job codes, payroll records and contract requirements answer different parts of that story.

The contract’s payment terms explain what those hours mean in dollars. We connect the time entry to the relevant contract line and payment request to understand what the government was asked to buy. Payroll can show that an employee received money, while the job code shows where the company assigned the charge. The invoice or voucher carries that charge toward the government. For an insider, knowing who performed the work and which project received it can connect the personnel records to the billing records.

What Evidence Is Needed to Prove Fraud?

For a false-hours case, the useful evidence connects the work, the time entry and the government bill. The BACN employee email adds something especially valuable: an internal description of working fewer hours than were charged. We examine that kind of account alongside the time records, contract assignment and payment request, so the person’s knowledge explains a particular charge.

Deployment and leave records can supply another part of the comparison. In a separate overseas labor-billing case, MPRI agreed to a $3.2 million settlement after the government alleged that it billed Army labor for employees on leave outside Afghanistan. The Justice Department’s account of that case concerned a different employer and contract, but the evidence question is closely related: where was the person, what work occurred and what labor reached the military’s bill?

The MPRI whistleblower was a finance officer and contract support official in Afghanistan. That role matters because the connection between a person’s assignment and a billed charge may be visible inside finance or contract support, as well as to the people working alongside them. You may know the daily reality, the accounting trail or the approval behind the charge. We work with you to understand how those pieces fit.

A 2022 study of compliance and ethics programs in the International Journal of Management and Humanities compared 49 defense contractors and reported higher penalties and penalty ratios among firms with those programs. The existence of a compliance program offers little comfort if the underlying hours are false. For us, the practical question remains whether the timekeeping control matched the hours to the work.

The Defense Contract Audit Agency and the Defense Criminal Investigative Service both took part in the Northrop Grumman matter. The former examines contractor accounting and costs, while the latter conducts criminal investigations. Here, audit work and fraud investigations met around the same labor charges.

The Billed Hours and a Whistleblower Case

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The employee email in this matter shows how an account from inside the work can explain what a time sheet leaves out. We build your whistleblower case around what you know about the work and what the government was charged.

You Know What Happened During the Shift

If the time charged to a defense contract differs from the work you saw, speak with our Whistleblower Experts about the hours billed but never worked. We build the case with you and bring in defense contractor whistleblower lawyers who understand labor charging and government payment records. We stay beside you as your knowledge of the work becomes the foundation of the case.