Military Defense Contractor Fraud

The Department of Defense (DOD) is the branch of government that oversees matters of national security and defense through the establishment and maintenance of effective systems, equipment, armaments, policies and more. The DOD has over a million active military members and nearly 750,000 civilian personnel in its employ ranging from IT specialists to accountants and doctors. In fact, a large number of civilian employees come from the private-business sector. These persons procure work through contracts and are bestowed the title of defense contractors.

How does military contractor fraud happen?

Fraud occurs when contracted individuals and corporations attempt to deceive the federal government for financial gain. There are a few common ways they do this, for instance:

  • By inflating prices, overstating time sheets and falsifying invoices;
  • By switching higher-grade products for subpar alternatives, intentionally supplying incorrect products and forgoing important inspections in an effort to save time and money;
  • By manipulating the two types of contracts given (fixed-price and cost-plus contracts) contractors who are awarded both types can transfer prices to maximize earnings.
How easy is it to defraud the U.S. Government?

Recently, a colonel from the Fort Gordon Army Base along with his wife and an ex-employee were accused of accepting bribes in return for granting big contracts to select companies. In conjunction with other illegal acts, they managed to get over $20 million dollars from various department agencies through a multi-layered scheme.

In March of 2017, an admiral and eight other U.S. Navy officers were indicted for their roles in a scheme that included major kickbacks and services in exchange for classified information and preferential treatment to a well-connected defense contractor who swindled tens of millions of dollars from the Navy.

It is too easy for federal officers, from high ranking officials to paper-pushers, to engage in fraud given the enormous payments to the company performing the work.

The False Claims Act (FCA) allows individuals to file a whistleblower action on behalf of the government in cases of military contract fraud. The whistleblower is entitled to up to 30% of what the government recovers.

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