Air Force Contract Fraud Case: False Labor, a Bonus and a Future Job

This Air Force defense contract case involved false labor invoices routed through Superior Communications Solutions to Advanced C4 Solutions, according to the Justice Department’s June 27, 2017 release on the criminal case. The release describes the guilty plea of a former Advanced C4 Solutions program manager who joined Superior Communications Solutions and received a bonus funded by Air Force contract profits. If you know the work behind a labor invoice, or the employment promise behind a contracting relationship, you may recognize different parts of the same arrangement.

The case brings together inflated labor billing and a future job offered during a procurement scheme. We see more than a false bill here: a government purchase became an opportunity for personal rewards.

The Air Force Order, the Bonus and the Job Offer

The Justice Department’s account identified DO27 as an $18,332,738 Air Force technology-project labor contract awarded to Advanced C4 Solutions. The former program manager’s criminal case concerned a scheme involving more than $53 million in federal contract awards. Under his plea agreement, he received a $500,000 bonus when he joined Superior Communications Solutions, paid from the profits its operator had earned on Air Force contracts.

The government official in the arrangement was a program manager at the Navy’s Space and Naval Warfare Systems Center who procured telecommunications equipment, software and services. According to the contractor program manager’s plea agreement, the official improperly shared information and helped structure contracts to favor the participants’ companies. The release says the official accepted employment with Superior Communications Solutions while still taking government actions that benefited its operator.

The operator paid the official $86,000 in the year after retirement, routing the payment through two other companies to conceal its source. The release also alleged that the official approved invoices benefiting Superior Communications Solutions after accepting its job offer but before leaving government service. Public work, private rewards.

An insider’s knowledge of the bonus or employment offer can explain a relationship that a list of hours and rates leaves out. That is why we look beyond the face of an invoice, to the people who stood to benefit from the purchase.

How Labor Becomes the Government’s Bill

A labor charge can make different claims: that the work occurred, that it belonged to the contract charged and that the worker met the billed category’s qualifications. Time sheets, job codes, payroll records, resumes and contract requirements answer different parts of that question.

Under a time-and-materials arrangement, the customer pays qualifying labor hours at fixed category rates. Those rates include wages, overhead, general and administrative costs, and profit. A false hour can therefore carry more than the employee’s wage into the bill, while an unsupported labor category can change the rate attached to actual work.

Someone working for the supplier can know which employee performed the task even when the government receives its payment request from a different company. We connect that knowledge to the subcontract, the billed work and the prime’s payment request.

The Intermediary Behind the Invoice

The Justice Department’s release identifies Superior Communications Solutions as the middleman and Iron Bow Technologies as the company supplying most of its installation labor. Superior Communications Solutions’ part-owner and operator also worked as Iron Bow’s defense account manager. His position connected the company selling the labor with the intermediary marking it up.

In describing the former Advanced C4 Solutions program manager’s indictment, the release says he and the operator developed the request for proposals so Advanced C4 Solutions would win DO27. The operator then quoted installation labor on behalf of Superior Communications Solutions at less than the price he had previously quoted for Iron Bow. Once selected, Superior Communications Solutions subcontracted most of that work back to Iron Bow and added a markup.

The release’s indictment account alleged that the two participants directed an employee of Superior Communications Solutions to create false invoices for hours supposedly worked by its employees. It described those invoices going to Advanced C4 Solutions and being paid by the United States government. For someone who knew which company’s employees actually performed the installation, the invoice’s account of the work would be the place to start.

Transparency International Defence and Security addressed subcontractor visibility in its 2022 report on private military and security companies, Hidden Costs. It recommended disclosure of subcontractors, their ownership and the itemized value of their services when primes submit invoices. The recommendation includes business registration and subcontractors beyond the first and second tiers. For us, the useful connection is between the subcontractor’s actual work, its ownership and what the prime presented for payment.

What Evidence Is Needed to Prove Fraud?

The evidence connects the labor representation, the actual work, the government’s payment request and the decisions behind the charge. We examine the contract or task order, its modifications, the relevant line item and the records supporting payment with you.

The MPRI settlement concerned allegations that the company billed Army labor for employees on leave outside Afghanistan. The DRS Technical Services settlement concerned allegations that personnel on Army and Coast Guard contracts lacked the qualifications required for the billed labor categories.

Those cases show why we ask what a particular labor entry represents. For an insider concerned about an intermediary, the same examination follows the charge through the supplier’s submission and the government’s bill. Who supplied the labor, what work it covered and who directed the representation are connected questions.

A separate whistleblower complaint against Huntington Ingalls Industries alleged that shifting labor between jobs concealed exceeded hourly targets and protected incentive payments. The Air Force case also puts personal benefits beside labor charges. For us, the question is who stood to gain from the bill, as well as who submitted it.

The Whistleblower’s Connection to Government Money

An insider who understands the work and the billing can help connect a false labor representation to a defense contractor whistleblower claim. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work through the labor charge, the payment path and your knowledge of the decisions with you.

When You Know What Was Behind the Charge

If you can explain the inflated hours, the intermediary’s role or the job offer behind a defense contract, speak to one of our Whistleblower Experts about how the labor was billed. We bring in defense contractor whistleblower lawyers who understand labor billing and procurement relationships, and work with you to build your strongest case. You have our expertise and partnership from that first conversation through the case.