Boeing Procurement Employee Case: The Buyer Who Sold the Bids

A Boeing procurement employee admitted selling inside bid information for cash to steer military-parts orders, according to the Justice Department’s October 2014 announcement about the criminal case. The Boeing government procurement case reached inside the buyer’s business, where information could change who won the work. If you have seen a supplier receive a competitor’s information before an award, you may recognize the problem: the person trusted with the bids has another customer.

How the Information Changed the Orders

The Justice Department’s November follow-up identified J.L. Manufacturing as a Boeing subcontractor on government F-15 fighter jet contracts and described cash payments for inside financial and bid information. The October announcement described the employee selling bid information for cash and the resulting orders for J.L. Manufacturing and Globe Dynamics.

The October criminal-case announcement traced the employee’s information sales through the people running the suppliers. J.L. Manufacturing specialized in hard-metal aerospace machining, producing small to medium-sized complex parts. Its owner oversaw its operations and finances, while Inland Empire and Associates consulted for the company on Boeing subcontracts. The Boeing employee supplied nonpublic competitor bids and historical prices through the manufacturer’s owner and its consultant. The owner used that information to prepare and submit J.L. Manufacturing’s offers to Boeing. That puts the employee’s information at the point where the supplier was deciding what price to quote for military aircraft parts.

The same announcement described a direct channel to Globe Dynamics International, whose owner ran the company and submitted its bids. The owner and the Boeing employee communicated regularly by telephone and email between California and St. Louis, using a coded request for a price check. Both understood the request to mean historical pricing and competitors’ bid information. The employee provided those details for Globe Dynamics to use in its offers on military aircraft parts. For an insider who knows the purchasing process, the significance is the connection between that private conversation and the price the supplier then submitted.

A supplier was buying access from someone inside the purchasing operation that awarded the business. We see the absurdity here: the buyer’s own employee made its bid information his merchandise. Honest suppliers were competing for work while the information needed to influence the result was changing hands privately.

That private transaction still belonged to a military supply chain. A prime contractor contracts directly with the government, while subcontractors supply the prime or other subcontractors. For someone working beneath the prime, the order in your purchasing system can be the connection to government spending.

Orders Won, Cash Paid

The November announcement reported approximately $250,000 paid to the Boeing employee by J.L. Manufacturing and another subcontractor combined. The October announcement reported approximately $2,052,746 in orders for J.L. Manufacturing alone. The company received seven of the nine orders examined.

Globe Dynamics received seven of sixteen orders, worth more than $1.5 million. We connect the commercial award to the private payment and the information exchanged between them.

The October announcement also followed the cash beyond the award. J.L. Manufacturing’s owner and consultant paid the Boeing employee in St. Louis and California in exchange for the information. The employee then arranged cash deposits into his personal checking account to conceal the bribes on more than one occasion. Those deposits add a different part of the transaction to the supplier’s bid and Boeing’s purchase order: the money reaching the employee who supplied the information.

What Evidence Is Needed to Prove Fraud?

The useful evidence of government procurement fraud connects the information, the bid, the award and the money. Communications can explain how the supplier arrived at that offer and who provided information from inside the buyer. The order and payment records connect that exchange to business actually awarded.

For someone handling requests for quotations, the RFQ, the submitted quote and the bidder’s pricing communications may tell different parts of the story. You may know who supplied a rival’s information or why an offer changed before the award. Connecting that knowledge to the purchasing decision is the part we work through with you.

The government-money connection continues beyond the winning quote. The contract and its modifications identify the work and terms, while the proposal, negotiation record, payment request and acceptance record connect the purchase to a government bill. We follow the particular order and payment terms so the case rests on the transaction you know.

A buyer may know who could see a quote. A supplier employee may know who supplied a rival’s information, and a finance employee may understand a payment that the award file does not explain. Our work is to connect what each person saw to what the buyer was told and where government money went.

Private Purchasing Authority Can Be Bought

The person influencing the award can sit inside the contractor’s business. The Anti-Kickback Act reaches improper payments within prime and subcontract relationships, including payments involving private contractor employees. We examine who controlled the buying decision and what that person received for using that control.

A wider oversight problem appears in Hidden Costs: US Private Military and Security Companies and the Risks of Corruption and Conflict, published by Transparency International Defence and Security in 2022. In its examination of security contractors, the report describes government reliance on primes to vet lower-tier subcontractors and recommends fuller reporting of subcontractors and their ownership. It helps explain why we look beneath the prime’s name to the people and businesses making the purchasing decisions.

When Inside Information Reaches a Civil Case

Separate civil cases show how procurement information can connect to false government bills. A former Level 3 Communications employee brought a whistleblower suit connected to a civil settlement over allegations including subcontractor kickbacks and improperly obtained competitive-bid information. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know Who Supplied the Bid Information

If you know how a supplier obtained a rival’s quote or why a purchasing employee received a private payment, speak with our whistleblower experts about the award behind it. We connect your knowledge of the bid process to the orders and government payments, and work with you to build your strongest defense procurement whistleblower case. We bring in defense procurement fraud whistleblower lawyers and remain your partners throughout the case.