First RF: The Cost Data Behind the Army’s Antenna Price

In the First RF settlement, the company agreed to pay $10 million to resolve allegations that false manufacturing-cost data inflated prices for Army electronic-warfare antennas. If you worked on a cost estimate, supplier quote or pricing submission, this case turns on the part of the deal you may know best: what the Army was told it would cost to make the equipment.

First RF Corporation was an antenna and radio system company in Boulder, Colorado. The Justice Department announced the settlement on October 24, 2014, over allegations involving antennas sold to the Army to combat improvised explosive devices.

What the Government Alleged About the Antenna Price

The government alleged that First RF knowingly submitted false data about its manufacturing costs in connection with a 2005 Army contract. According to the Justice Department, that information inflated the price of the antennas and the payments First RF received. The allegation followed the cost representation all the way into the government’s bill.

That sequence matters to someone who knows the business behind a proposal. The alleged misrepresentation concerned what it cost First RF to manufacture the antennas, information inside the company that the Army relied on when agreeing to a price. We see a buyer being asked to negotiate against a fiction: figures the seller allegedly knows are false. Taxpayers pay the resulting price.

The Cost Records Behind a Negotiated Price

A negotiated price can carry a false cost figure into later payments. In reviewing a concern like the First RF allegation, we connect the cost estimate and the information supporting it with the proposal, negotiation record and payment affected. The useful comparison is between what the business knew about making the product and what it told the government when the price was agreed.

The contract’s payment terms determine how that connection works. Even with a firm-fixed-price contract, false cost figures can inflate the price at the original negotiation. A later invoice can match the agreed price while carrying forward the overcharge, which is why the proposal and negotiation file matter.

When certified cost or pricing data are required, the company’s pricing-data certificate tells the government that the facts behind its estimate are accurate, complete and current when the price is agreed. That promise reaches reasonably available information elsewhere in the company, beyond what the negotiator personally knows.

For an insider, that brings the manufacturing, purchasing and pricing functions into the same inquiry. A purchasing employee may know the supplier’s offer, while an estimator knows which cost went into the proposal and a contracts employee knows what reached the government. We examine those connections together, including when the information became available and which version the negotiation used.

The Supplier Offer Behind the Estimate

A separate pricing audit shows how concrete that comparison can be. In its 2018 Semiannual Report to the Congress, the Defense Department’s inspector general summarized an audit in which a contractor failed to provide accurate data about agreed supplier prices, firm quotes, updated offers and parts ordered before certification. The auditors recommended a price adjustment based on those costs and the indirect costs allocated to them.

Those are records a purchasing or estimating employee may recognize from ordinary work. The date of an updated supplier offer and the cost used in the certified submission can tell different stories about the same purchase.

Other Defense Pricing Cases Follow the Same Connection

Ultralife agreed to pay $2.7 million in a settlement announced in June 2011 over pricing allegations involving three Army battery contracts. The government alleged that Ultralife certified cost or pricing data as current, accurate and complete when they were not, inflating the negotiated prices. The Army allegedly paid more on the strength of that promise.

In Lockheed Martin’s F-35 pricing case, the Justice Department alleged that the company withheld known supplier cost or pricing data during negotiations for production or sustainment contracts. It alleged that disclosure would have produced lower negotiated prices. A supplier’s information can matter to the government’s bargain even when the supplier is not the company sitting across the negotiating table.

Who Investigated First RF?

The settlement resulted from a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Colorado and the Defense Criminal Investigative Service. The announcement also quoted the director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit on investigating suspected cost misrepresentation.

The U.S. Attorney for the District of Colorado also addressed the urgency of military procurement in the announcement. The point was about honesty in the negotiation, where the contractor’s figures helped determine what the government would pay:

We agree with that distinction. An urgent need for equipment makes honest cost information more valuable to the buyer, and the government’s allegation was that First RF knowingly supplied false information at that very point in the purchase.

What Evidence Is Needed to Prove Fraud?

For a pricing case, the evidence connects the cost information inside the business to the representation made to the government and the price or payment it affected. We look at the records behind that representation, including the estimate, supporting production or supplier information, proposal revisions and negotiation exchanges. Your knowledge of why a figure changed, who knew the underlying cost and which version reached the buyer can explain the significance of the paperwork.

First RF’s alleged price-to-payment connection is the reason those details matter. If your work gave you a view of the manufacturing costs or the figures used in negotiations, we can help build a defense contractor whistleblower case around what you know. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know the Costs Behind the Proposal

If the antenna costs or supplier figures you knew differed from the ones used to negotiate a government price, speak with our whistleblower experts about that difference. We work alongside you to build your strongest defense pricing whistleblower case around your knowledge of the product, the costs and the decisions behind the submission. We bring in defense contractor whistleblower lawyers who understand pricing disputes and stay with you through the case.