Boeing: Extended Breaks on the Air Force’s Bill

In the Boeing C-17 Long Beach settlement, Boeing paid the United States $18 million to resolve allegations that it knowingly charged Air Force maintenance contracts for mechanics’ extended breaks and lunch hours. A former Boeing employee brought the allegations through a False Claims Act qui tam case, putting the difference between time billed and maintenance performed in front of the government.

The Justice Department announced the payment on October 14, 2015. The contracts covered maintenance and repair at Boeing’s Long Beach Depot Center in California. Boeing both manufactured and maintained the C-17 Globemaster, a military aircraft used to transport troops and cargo around the world.

Extended Breaks Charged as Maintenance

The government alleged that Boeing charged the Air Force for time its mechanics spent on extended breaks and lunch instead of maintenance and repair work properly chargeable to the contracts. Boeing allegedly knew the time did not belong on those contracts and charged it anyway.

We find it remarkable that a lunch break can turn into a maintenance charge. Taxpayers were buying maintenance for military aircraft, and the government alleged that Boeing sent them the bill for extended breaks.

That is a concrete example of the labor-billing allegations an insider can recognize from the work itself. A mechanic knows the assignment and the time spent doing it. The billing records show what the company represented to its government customer, and the case turns on connecting those accounts.

How Maintenance Time Reaches the Government’s Bill

A labor charge tells the customer something about the work behind it: that the work occurred and that it belonged to the contract being charged. Time sheets, job codes and payroll records answer different parts of that question. We connect them to the maintenance assignment and the payment request so that the account of the work can be compared with the account sent to the Air Force.

The distinction between paying an employee and charging a customer matters here. Under the government’s cost rules, a contractor must have records showing that it incurred the costs it claims and why they belong to that contract. Payroll can show that the company paid for someone’s time. The contract and the work records explain why the government was asked to bear that cost.

The payment terms determine how labor affects the amount due. On a cost-reimbursement contract, we connect the labor cost to the work the government agreed to reimburse. On a time-and-materials contract, we connect the billed hours to the work and the agreed hourly rate. The contract, its changes and the payment request tell us how the charge reached the customer.

The Long Beach defense contractor fraud case brought together the Justice Department’s Civil Division Commercial Litigation Branch, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency and the Defense Contract Management Agency. That included the agency responsible for auditing contractor costs and the agency responsible for overseeing contract administration.

Boeing’s Other Air Force Maintenance Billing Cases

The San Antonio C-17 matter concerned mechanics’ meeting time and other labor allegedly charged improperly to maintenance contracts. Boeing paid $23 million in that separate case, which the Justice Department announced on October 10, 2014. The same company and aircraft appear in both cases, but the Long Beach allegation concerned extended breaks and lunch at a different depot.

Boeing’s KC-10 insulation-blanket case involved another aircraft and another alleged combination of problems. The government alleged defective installation of blanket kits, overstated installation hours and excessive hourly rates. The August 13, 2009 announcement put the settlement at $25 million, including $18.4 million in cash and $6.6 million in repair work at Boeing’s expense. That case connected the work’s quality with its labor bill.

The Former Employee’s Case and the Whistleblower Reward

The former employee brought the Long Beach allegations under the False Claims Act’s qui tam provisions, which allow private individuals to bring a case on the government’s behalf and share in the recovery. At the time of the announcement, the Justice Department had not yet determined the former employee’s share.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For someone who knows the maintenance work or the billing decisions, we help connect that knowledge to the charges the government received in a defense contractor whistleblower case.

What Evidence Is Needed to Prove Fraud?

For a maintenance-time allegation, the evidence connects what mechanics actually did with the hours charged, the contract’s requirements and what the company knew. We examine the records behind that connection with the insider who understands the work.

A supervisor’s instruction can explain why the hours and the work diverged. We examine who chose the job code, who approved the time and what each person knew about the actual assignment. In the Huntington Ingalls case, the whistleblower’s complaint alleged that supervisors instructed workers to put the wrong hull numbers on daily time logs. A person familiar with the crew’s actual assignment can explain a mismatch that the completed time record conceals.

You Know the Work Behind the Hours

If you saw maintenance time charged differently from the work your crew performed, speak to one of our whistleblower experts about the hours that were billed. We work with you to build your strongest defense contractor whistleblower case around the assignments, billing decisions and government money, and bring in defense contractor whistleblower lawyers who understand labor-mischarging cases. We stay beside you as your knowledge of the work becomes the foundation of the case.