Federal Contractor Whistleblower

Fraud costs taxpayers billions each year. A federal contractor whistleblower can report this fraud and earn millions.

Government contract fraud is unfortunately very common in federal procurement and services contracts. The federal government contracts so much of its work to the private sector that it can’t keep up with all of its contractors and their work. In fact, the Congressional Budget Office has admitted it has no idea how many contractor employees the federal government relies on, or at what cost. That’s why taxpayers and the government rewards a federal contractor whistleblower who reports fraud in government procurement and other contracts.

Last year, the government recovered over $95 million from a defense contractor accused of defrauding the government by overcharging for the food it supplied U.S. troops. But the fraud was first discovered and reported by a federal contractor whistleblower who filed a lawsuit on the government’s behalf. After the government intervened and obtained its recovery, the whistleblower was awarded $38.85 million.

Whistleblowers can help the government police fraud in a number of different areas where the federal government enters into contracts for various goods and services.

Defense contracts for military equipment and services

Government contract fraud is common with defense contractors.  Some of the most common types of defense contract fraud include:

  • Cross-charging – Defense contracts are usually fixed price contracts or “cost-plus” contracts. In cost-plus contracts, a defense contractor is paid a fee that is a percentage of the total costs the contractor incurred in performing the procurement contract. Cross-charging occurs when a defense contractor includes the cost from performing another contract into the total costs they report to the government under a cost-plus contract. The defense contractor therefore gets a higher fee for performing the cost-plus contract because they led the government to believe the cost was higher than it really was. A common example of cross-charging would be a company that shifts the costs it incurs from performing its fixed price contracts for other private companies onto its account with the U.S. government, with which it has a cost-plus contract. This leaves the contractor with a windfall that American taxpayers pick up.
  • Inflated billing – Like cross-charging, inflated billing is another way contractors can commit fraud through cost-plus contracts. Since the contractor’s payment is a percentage of the total costs the contractor incurs, the contractor is incentivized to inflate those costs. Common ways to inflate costs include falsifying time sheets and purchase orders, billing for extra time on projects that weren’t necessary, and misrepresenting the cost of materials. Whistleblowers are especially necessary when it comes to identifying and reporting inflated billing, since the federal government usually has no way of knowing which invoices are legitimate and which include inflated costs. Even the Truth in Negotiations Act, which requires most contractors to provide specific costs and pricing details to the government before entering a contract, can’t completely protect the government against inflated billing.
  • False claims – When the federal government enters into a contract with a private contractor to procure a certain product or service, it usually imposes requirements and conditions that the private contractor has to follow in performing the contract. Sometimes these conditions include only using American-manufactured materials or meeting certain standards. Some contractors, however, take shortcuts. When the contractor performs a procurement contract, there is an implication that they have complied with the contract’s conditions and requirements. So, if the contractor uses cheap imported steel when the contract requires domestic steel, the contractor is submitting a false claim to the government when it requests payment for the completed contract. A whistleblower can report this type of fraud to the government before the government finds out on its own that a product is defective or doesn’t meet the necessary standards. In cases involving defective equipment, a whistleblower can save lives by reporting the fraud.

Fraud in government construction contracts

The government spends billions of dollars to build our roads, bridges, and highways. The government awards contracts for these projects to private contractors through an auction system in which contractors bid against each other to see who can provide the cheapest contract to the government while still ensuring a modest profit. Greed, and a lack of effective oversight, can easily lead to government contract fraud.

There are many ways a contractor can commit fraud when securing or performing these contracts. They can engage in cross-charging and inflated billing as some defense contractors do, or they can engage in other forms of fraud, such as charging for services not performed, falsely certifying their compliance with contractual conditions and requirements, or using defective products.

Contractors can also commit fraud by rigging the bidding process for government contractors. This type of fraud includes entering into illegal agreements with other contractors to refrain from bidding on certain contracts (to drive the price up, and often in exchange for subcontracting work) or bribing government officials to award their firm the contract.

Agricultural subsidies programs fraud

Farming is a vital part of the American economy, and the federal government provides over $20 billion annually in agricultural subsidies to farmers across the country.

While subsidies help keep domestic agricultural products affordable, farming subsidies are a major target for people wanting to commit government contract fraud. Due to a lack of oversight, many individuals and organizations have submitted fraudulent claims to the United States Department of Agriculture for those subsidies.

One common example of agricultural subsidies fraud is when a large farming operation splits itself into different parts and submits subsidy claims for each part. In one case, a Mississippi cotton farmer created 78 different corporations—three of which were called “Megabucks Farms,” Easy Money Farms,” and “Get Rich Farms”—and bilked the government out of $11 million.

False claims in disaster relief efforts

Government contract fraud also occurs in connection with federal disaster relief programs. After Hurricanes Katrina and Rita, for example, the government announced that the Federal Emergency Management Authority had lost at least $1 billion due to fraudulent claims. FEMA is also the federal agency responsible for disasters such as terrorist attacks, earthquakes, wildfires, and snowstorms.

Fraud can arise from disaster relief in several ways. Some of the false claims come from individuals who lie about how they were affected by the disaster in order to receive large payments from FEMA, such as by claiming damage to a house they do not own or filing claims under other people’s names.

Disaster relief fraud also comes from private contractors who are responsible for cleaning up areas impacted by natural disasters and providing aid to victims. Fraud can occur when those contractors misallocate resources or submit false invoices to FEMA.

Fraud in federal research grants

The U.S. government spends over $100 billion each year on scientific research, which can lead to advances in military technology, energy policy, medicine, agriculture, and other fields. Federal agencies such as the National Institutes of Health and the National Science Foundation are in charge of distributing these grants to universities and researchers.

Unfortunately, however, some of the institutions and individuals who receive these grants use the research funds inappropriately or falsify research to generate additional funding. Other examples include institutions that illegally profit off the research they conduct for the government or use the grant to fund unrelated research projects.

 

If you are interested in being a federal contractor whistleblower, start here:

 

How does a whistleblower earn a reward?

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Who can qualify as a whistleblower?

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How much are whistleblowers paid?

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An experienced lawyer can help a federal contractor whistleblower earn a significant reward

We have helped our whistleblower clients earn awards for reporting government contract fraud through extensive investigation and documentation, diligent preparation of winning whistleblower lawsuits, and our solid working relationship with government attorneys.

There are billions of dollars lost every year through government contract fraud. If you are aware of a business that is submitting false claims, or substandard equipment or services to the federal government, our firm may be able to help you file a whistleblower lawsuit and recover a substantial reward when the government collects the money it lost.

 

What are the 7 steps you need to follow to win a whistleblower reward? Watch our video.

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