What is Defense Contractor Fraud?
The U.S. government relies on private companies to deliver on their promises across many sectors, but none is arguably more important than the goods and services provided to the government by defense contractors. These “goods and services” can be anything from combat equipment for soldiers to critical intelligence analysis performed by private technology contractors. Whatever equipment or services they may be, U.S. servicemen and women rely on them to protect American interests abroad and at home.
Each year the U.S. government spends approximately $500 billion on defense and international security. This amounts to about 20% of the Federal budget. As the role of private contractors has expanded within the Department of Defense so have their costs. In 2014, the top 10 defense contractors alone accounted for $110.3 billion in spending. When fraud is committed under these circumstances American taxpayers are left to pick up the tab as their taxes are shifted to overpay for government contracts instead of being reinvested into services and communities 
that would benefit citizens. A Department of Defense report prepared in the Senate found that since 2011 hundreds of defense contractors
who had defrauded the government were awarded $1.1 trillion in contracts.
In order to reduce and discourage defense contractor waste and fraud, the federal government uses the False Claims Act to find and prosecute corrupt defense contractors. Since 1987, $2.6 billion has been recovered from defense contractors who defrauded the government. Due to their part in the government’s recovery of fraudulent funds, whistleblowers have received $455 million for reporting defense contractor fraud.
Examples of Defense Contractor Fraud
Violating Federal Contract Terms
When a company lies about fulfilling terms specified in a federal contract.
Example:
Sometimes, before a federal contract is secured with a company, the government will require that the business is owned by or employs U.S. veterans. Some unscrupulous companies misrepresented or lied about their background in order to circumvent the requirements, committing a False Certification crime.
Failure to comply with contract specification
This includes omitting quality procedures, required testing, or other steps in the production process.
Example:
Purchasing vehicle parts of substandard quality from an unauthorized source even though the contract specified that products delivered are to be built using specific guidelines.
Overbilling and inflating expenses
Private companies may intentionally inflate contract costs, timelines, or required resources.
Example:
Although the military may have paid to receive high-quality equipment, goods delivered are then discovered to be inferior, defective or outright broken. In other instances, mercenary troops who were paid to provide security services on U.S. bases overbilled the Army for employees who were not physically present in the base.
Winning a contract through kickbacks or bribes
In order to secure their business or work on another federally-funded project, some companies bribe or provide gifts to U.S. officials.
Example:
Kickbacks includes both direct payments (bribery), as well as other indirect favors such as expensive gifts, paid vacations, or the hiring of a relative.
Contractor Fraud and The False Claims Act
All forms of government contractor fraud are prosecuted under the False Claims Act. The Department of Justice regularly relies on individual whistleblowers to come forward and help root out fraud and corruption. In return, the government provides whistleblower protections and whistleblower rewards.
Learn more about the False Claims Act
Reporting Defense Contractor Fraud
If you have information about defense contractor fraud, our expert legal team will conduct a free case evaluation to help you better understand your legal options and what you can expect should you decide to file a whistleblower claim. If you delay in filing a claim it can weaken your case and reduce your potential reward, so we urge you to contact us by filling out a form or calling us toll‐free at 1‐800‐681‐3228.