Catch of the Week – Northrop Grumman Systems
Northrop Grumman Systems Corporation agreed to a $31.65 million settlement to resolve allegations that it overstated employee hours on two government contracts related to battlefield communications services for the United States Air Force. Of the total settlement, $27.45 million was paid to resolve civil allegations that NGSC violated the False Claims Act, and $4.2 million was forfeited by the company to resolve criminal allegations related to the same conduct.
Billing Violations
NGSC employees worked on the contracts from an air base in the Middle East beginning in 2010. While there, the employees – and often, their families – stayed at five-star hotels in a nearby city. In a Statement of Facts incorporated in the settlement agreement, NGSC admitted that “some or all” of its employees “flat billed their time, generally billing exactly 12 or 13.5 hours per day, every day” during the relevant time period. In fact, however, employees were not actually performing work during all the times they billed. Instead, they were off-site, “golfing, skiing, visiting local amusement parks, partying at local clubs,” and engaging in other leisure activities.
Self-Reporting
NGSC voluntarily disclosed the wrongful conduct to the government in February 2013 and, according to the settlement, cooperated in the government investigation. The settlement also recites that NGSC took voluntary corrective action to discipline or terminate employees and improve internal procedures, and agreed to continue to cooperate in ongoing government investigations against involved individuals.
Analysis
Various government attorneys commented on this settlement. Assistant Attorney General for the Civil Division Joseph H. Hunt said “contractors that knowingly inflate their bills to the government will face serious consequences. This settlement demonstrates, once again, that we will not tolerate those who falsely charge the armed forces or any agency of the United States to illegally profit at the expense of the American taxpayer.” U.S. Attorney for the Southern District of California Adam Braverman said “Federal contracts are not a license to steal from the U.S. Treasury. DOJ is firmly committed to vigilantly weeding out abuse and will swiftly pursue all available remedies when egregious fraud occurs.”
NGSC did the right thing in reporting the misconduct, and the government was apparently satisfied with the efforts undertaken by the company to improve compliance. Where government contractors do not do the right thing, whistleblowers play a critical role in reporting misconduct and government contract fraud, including fraud in defense contracts. Whistleblower rewards are available to qualified individuals who file claims under the qui tam provisions of the False Claims Act. If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click contact us.
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Tagged in: Catch of the Week, Defense Contract Fraud, Falsifying Invoices, FCA Federal, Government Procurement Fraud,