Defense Contractors and Your Tax Dollars

Government Procurement Fraud

It is no secret that the United States has a colossal federal budget – one that is projected to reach a staggering $4.09 trillion in the 2018 fiscal year. Of this, over $634 billion, or 15% of the total budget, is allocated to defense spending. Though it is hard to argue the Department of Defense prioritizing the safety of U.S. citizens, the lack of federal oversight when it comes to defense contractors leads to millions in annual losses. And with $3.5 trillion of the aforementioned budget stemming from tax revenue, the citizens are oftentimes the ones who lose out.

Defense contractors serve a vital purpose for the Department of Defense, providing goods and services that range from information technology and strategic consulting to the provision of weapons and machinery. Though these contractors often come in the form of household names such as GE, Boeing, Lockheed Martin, and General Dynamics, the ever-present need for the services these firms provide require many smaller, independent companies to join the government procurement workforce.

In fact, of the 1,104,000 personnel employed by the U.S. Government in 2015, 268,000 were contractors – an astonishing 28%. According to the same report, over 50% of the annual defense budget is spent on services or goods that these employees provide. While this is all well and good when the system operates in a morally responsible manner, that is quite often not the case. In fact, the Department of Defense has cited a loss of at least $150 billion since the beginning of the Afghanistan and Iraqi wars in 2001.

Defense contractor fraud comes in many forms, all of which are covered by the False Claims Act. The most common violation involves the submission of fraudulent contracts when negotiating prices with the government. By skewing the estimated prices of labor costs or goods, shifty contractors can overbill the government for egregious amounts. Similarly, the substitution of cheaper, unauthorized products rather than those agreed upon by contract can bilk the Department of Defense even further. Such was the case in a 2017 false claims case, in which two owners of defense contracting firms were found to have caused a $1.4 million dollar loss in a mere 60 transactions.

These schemes directly violate both the False Claims Act and the Truth-In-Negotiations Act (TINA), which was passed in 1962 in an attempt to retain an honest level of interaction between contractors and the government procurement officers with whom they negotiate. This act requires that all parameters outlined in a submitted contract are accurate, current, and complete in all aspects. Though TINA primarily enforces appropriate pricing tactics, it also contains stipulations that incorporate a standard of quality for all procured goods and services.

Infringements on quality are perhaps the most grievous form of defense contractor fraud, as they directly put our armed forces at risk. By sourcing products from illegitimate parties or failing to comply with safety regulations in an attempt to receive undue compensation, these contractors profit by endangering the very glue that holds our defense system together. These brave men and women dedicate their lives to serving their country and upholding a standard of moral obligation – one that is quickly deflated when we allow deceitful contractors to take advantage of both the military personnel and the government as a whole.

Becoming a whistleblower in any form of government can be a frightening prospect, which is likely why these devious practices have been run rampant for over a decade. However, under the False Claims Act, whistleblowers may seek protection from retaliation when reporting defense contractor fraud. Relators who choose to report wrongdoing and subsequently file a whistleblower claim may not only be entitled to financial compensation, but are rewarded in the knowledge that they were able to singlehandedly uphold the mission of the Department of Defense – to protect the security of our country.

 

Whistleblower Justice Network Can Help You

Whistleblower Justice Network partners with whistleblowers worldwide to expose schemes perpetrated by government contractors that violate the Truth-In-Negotiations Act and/or the False Claims Act. We work with whistleblowers to help them report these violations, while maintaining their anonymity and ensuring they file their best possible whistleblower action. Utilizing the qui tam provision of the False Claims Act, we aid whistleblowers in bringing corporations that use deceptive tactics for personal gain to justice.

If you have meaningful information regarding defense contractor fraud that you believe is in violation of TINA or the False Claims Act, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at www.whistleblowerjustice.net, or call us at 844-WJN-4ALL, to learn if we can help you.

 

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