Government Procurement Fraud
Unfortunately, fraud against our military is nothing new. In fact, Congress enacted the False Claims Act (FCA) during the Civil War—then called “Lincoln’s Law”—to combat defense contractor fraud committed against the Union Army. Whether it be war profiteers or large defense contractors cutting corners, the Department of Defense continues to be a prime target of fraud.
The Department of Defense spent more than $400 billion on goods and services in FY2020, and more than $6 billion was returned to the United States between 2013 to 2017 from defense contracting fraud cases. These fraud schemes include selling inferior or ineligible goods, inflating costs, billing for work not performed, misrepresenting or hiding pricing information, and fraudulently inducing contracts with the United States through false representations.
In addition, contracts with the Department of Defense and its agencies require contractors to comply with the Contractor Code of Business Ethics and Conduct codified in 48 C.F.R. 52.203-13. Among other things, this regulatory and contractual requirement compels contractors to report to the government credible evidence of criminal conduct, including fraud, conflicts of interest, bribery, and gratuity violations.
In the fall of 2021, Reese Marketos attorneys Josh Russ, Andrew Wirmani, and Allison Cook led a False Claims Act trial against a helicopter manufacturer in the Northern District of Alabama. Reese Marketos represented two whistleblowers who were previously employed by the company and reported fraud to the United States government. The whistleblowers alleged that the defendant fraudulently induced the U.S. Army into multiple helicopter contracts by misrepresenting its intent to comply with the Contractor Code of Business Ethics and Conduct. In particular, Reese Marketos’s clients asserted that the manufacturer had credible evidence of criminal conduct and conflicts of interest as it entered into government contracts yet never reported that information as required under federal law. After a nearly two-week trial, the jury returned a verdict of more than $36 million in favor of the United States and the whistleblowers. The jury took approximately an hour to deliberate before returning its verdict.