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Ninth Circuit Allows $1 Billion Whistleblower Lawsuit to Proceed

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A 2005 GAO report concerning problems in the Raytheon contract to develop an environmental satellite system did not bar a later False Claims Act lawsuit filed by a whistleblower under the public disclosure provision, according to the Ninth Circuit. Reuters put the value of the potential lawsuit at $1 billion in a recent headline about the case.

Military Contractor L-3 Settles Defective Sight Case for $25 Million

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L-3 Communications and its subsidiary, EOTech, have agreed to pay $25.6 million to resolve a civil fraud lawsuit under the False Claims Act. The company allegedly sold millions of dollars of defective combat optical sights to the Department of Defense, Homeland Security and Federal Bureau of Investigation as part of government contracts.

Federal Contractor Misconduct Led by Energy and Healthcare Companies

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Defense contractors are no longer tops on the list of naughty government contractors, with energy and healthcare companies (in particular the pharmaceutical manufacturers) leading the list of misconduct among those that receive federal government spending. The Project on Government Oversight has revamped and re-released its database of misconduct by federal contractors. In total, the companies tracked by POGO have paid at least $92 billion in fines, settlements and court judgments for corporate wrongdoing. The database profiles just over 200 of the largest contractors and tracks 2,500 instances of misconduct (both resolved and pending) dating back to 1995.

VA Revamping Verification Program Fighting Veteran First Contracting Fraud

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Happy Veterans Day! We thought it worth taking a moment out of our day to highlight an issue of importance to veterans which interacts with our representation of whistleblowers reporting fraud – as well as specifically thank veterans for their service to our country.

Military Contractor Fraud Triumvirate


Three prime examples of military contractor fraud deserve attention today. Two put  service members at serious  risk of bodily harm or death, and all of them bilked tax payers.

In the first case, a subcontractor of Sikorsky agreed to pay $1.2 million to settle a FCA claim. Ceradyne, Inc., of Costa Mesa, CA, allegedly failed to ballistically test armor plating it installed near the pilot and copilot in Black Hawk helicopters.  The Black Hawk is used by the Army, Navy, Air Force, and Marines. Ceradyne allegedly failed to conduct the tests between 1992 and 2006, so there is potentially  a whole generation of Black Hawks out there that is not providing adequate protection for its crew members.

The second case also involves helicopters. This time, Bell Helicopter Textron realized that it (oops) overcharged the government for helicopters and services. Bell already paid more than $12.8 million in 2006 to settle its billing mistakes. Now, Bell must pay an additional $3.7 million to settle any claims the U.S. may have against the subsidiary Bell Helicopter Textron Canada Limited as a result of intra-company charges that led to more overbilling. This case comes under the umbrella of the National Procurement Fraud initiative, which is designed to identify this type of fraud early on. Unfortunately, military contractors are good at staying one step ahead of the government.

In the third leg of the military contractor fraud triumvirate is a case involving M24o and M249 machine guns.  A former employee of defense contractor Northside Machine Company accused his employer of ordering him to approve gun parts that didn’t meet quality standards for troops and then (surprise!) firing him for blowing the whistle. Northside provides trigger assemblies and other parts for M240s and M249s, which are widely used by the military. A federally funded research group found that 30% of troops surveyed reported that the M249 had simply stopped firing during combat, which is probably not the best thing when some insurgent is trying to take you out!

UPDATE: Maybe this should actually be called a quadumvirate! The Army has announced that it is recalling 44,000 advanced combat helmets manufactured by Hebron, OH-based ArmorSource LLC. Apparently the helmets (already issued to soldiers worldwide) do not meet military specs. So now, it looks like tax dollars are being spent to send soldiers out in helicopters with inadequate armor to fight with guns that don’t shoot while wearing helmets that may not offer enough protection!

This article is brought to you by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Whistle Blown on KBR Once Again


The army just can’t seem to break it off with military contractor KBR. They’re like that couple everyone wants to break up, but they stay together–usually with one party taking advantage of the other. We’ve recently blogged about KBR’s ongoing legal troubles, but here is just one more volume for a shelf sagging under the weight.

Even though the DOJ has just joined a whistleblower lawsuit against KBR, the Army has announced a $568 million no-bid contract with the company through 2011 for military support services in Iraq.

KBR allegedly accepted meals, sports tickets, and golf outings from two freight forwarding companies.

KBR denies the allegations, of course, and in a statement said that “Gifts of dinners, baseball tickets and other similar items would violate KBR policies.” This is sort of like saying, “It would just be so awful if some (hypothetical, of course) company bribed officials. Nothing specific, other than dinners and baseball tickets…er…” KBR went on to say that maybe, possibly, if this hypothetical naughty company did give any gifts, they would have been less than $20,000. No big deal, right?

The problem is that this kind of behavior ends up costing taxpayers money in the end. Although the government hasn’t definitively stated whether the kickbacks cost taxpayers money yet, there is a strong possibility that KBR passed up companies offering lower costs for those that bought the best dinners and seats for games. Choosing a supplier on the basis of the gifts they provide shifts a government contractor’s priorities away from where they belong (providing the best value to the taxpayer) and warps the “bidding” process into one in which the contractor puts its own interests first.  Fortunately, there are whistleblowers out there to help keep contractors like KBR in check.

This article was sponsored by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

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