Defense Contractor Fraud

Defense contractor fraud occurs when private companies use certain dishonest practices when they work on U.S. government military or defense contracts. These companies often provide goods or services to the Department of Defense (DoD) or other federal agencies.

Defense contractors must follow strict performance, billing and ethical guidelines. Congress authorized $841.4 billion for the Department of Defense in fiscal year 2024. The potential for fraud is significant because the scale of U.S. defense spending is massive. Whistleblowers help report misconduct and protect taxpayer dollars.

Fraud schemes can vary widely, but many defense contractor fraud cases fall into a few categories. Whistleblowers may uncover fraud involving:

• Overbilling or false claims: Charging the government for goods not delivered, hours not worked or services never performed
• Product substitution: Replacing required materials or equipment with cheaper or substandard alternatives
• Noncompliance with material contract terms: Failing to meet quality, safety or testing standards required under contract
• Kickbacks or bid rigging: Using financial incentives to improperly secure contracts or gain an unfair advantage
• Falsified certifications: Misrepresenting compliance with environmental, cybersecurity or employment regulations

These violations can happen at any stage of contract work, including manufacturing, logistics, consulting and cybersecurity. Both prime contractors and subcontractors can be held liable for fraud under the False Claims Act (FCA).

Whistleblowers who have evidence of defense contractor fraud can file a qui tam lawsuit under the federal False Claims Act. This process allows individuals to sue on behalf of the U.S. government and potentially get part of any funds the government recovers. To file a whistleblower claim, you generally must have:

• Nonpublic knowledge of fraud or misconduct involving federal funds or contracts
• Credible documentation or firsthand experience of the fraudulent activity
• Evidence that the misconduct was knowing or reckless, not just an error or oversight

The False Claims Act protects whistleblowers from retaliation, such as termination or demotion. It also protects against harassment or other punishment for reporting fraud. Whistleblowers may include employees, subcontractors, competitors or others with insider knowledge.

What protections and rewards are available?

Qui tam cases are filed confidentially under seal, meaning the defendant is not initially informed. The government then investigates the claim to determine whether to intervene. If the case is successful, whistleblowers may receive between 15% and 30% of the government’s recovery.

However, filing a qui tam case can be legally and procedurally complex. A defense contractor fraud attorney can help confirm your claim meets all legal requirements and deadlines. The attorney can also help protect your rights throughout the process.

Who can report defense contractor fraud?

Anyone can report defense contractor fraud, according to the FCA. The individual can be either a civilian or military personnel. The Whistleblower Protection Act covers federal employees.

How much can whistleblowers receive in defense fraud cases?

Whistleblowers may receive 15% to 30% of the funds the government recovers in a successful False Claims Act case. The percentage awarded depends on factors like cooperation and the government’s level of involvement.

Can you report defense contractor fraud anonymously?

The filing is not technically anonymous. Whistleblower claims under the FCA are filed under seal, meaning the defendant is not initially notified. This gives the government time to investigate before altering the defendant.

Why is defense contractor fraud so common or difficult to prevent?

Defense contractor fraud persists because the defense contract landscape is immense and complex. Military projects often include classified and highly specialized information, making government oversight challenging. It's difficult to closely examine every transaction, and many opportunities for fraud can go undetected.

What kind of evidence should I have before reporting?

You don't need to be a detective with a perfect case. Instead, focus on gathering documents, emails or billing records that directly relate to the issue. Insider knowledge of the situation is especially valuable. It can provide critical context and point investigators in the right direction.

How can a defense contractor fraud whistleblower lawyer help?

Proper defense contractor fraud representation can be an indispensable ally for whistleblowers. Attorneys can by confirming all necessary procedures are followed correctly.

Additionally, an attorney can:

• Advise you on strategies to maintain anonymity where possible
• Protect you from potential retaliation by your employer
• Work to maximize any financial recovery you may be entitled to under the law

Motley Rice attorneys have represented whistleblowers in some of the most complex and high-profile government fraud cases in the country, from securities to qui tam cases and more. Our team understands the scope and seriousness of defense contractor fraud and has experience helping individuals bring actionable claims under the False Claims Act.

Motley Rice supported litigation accusing federal contractors KBR and Halliburton of hiding behind government immunity to avoid accountability for fraudulent overseas operations. We’ve also advocated for whistleblowers in other defense-related claims involving overbilling, defective equipment and unlawful contract practices. We are committed to helping whistleblowers come forward, protect their careers and pursue the compensation they may deserve.

Read more on our whistleblower litigation experience.