Defense contractors that submit false bills to the government face fines and prosecution by the Department of Justice.  A recent case stretching back nearly 10 years shows the long reach of the False Claims Act.

The Whistleblower Settlement By DRS

DRS Technical Services, Inc. agreed to pay $13.7 million to settle allegations that it violated the False Claims Act by knowingly overbilling the government for work performed by DRS personnel who lacked the job qualifications required by the contract, announced the Justice Department.

“Contractors who fail to provide qualified labor as promised are not entitled to bill the government as though they had,” said Joyce R. Branda, acting assistant attorney general for the Justice Department’s civil division, in a statement released last Tuesday.

DRS, a Virginia-based contractor owned by Italian defense giant Finmeccanica, designs and operates satellite communications systems.  DRS won a contract with the U.S. Army’s Communication and Electronics Command in 2003.

The Army used the contract to purchase a variety of goods and services needed to support U.S. forces in Iraq, Afghanistan and elsewhere on a quick turnaround basis.  Separately, the aviation arm of DRS, based in Gaithersburg, Maryland won a contract to perform aircraft maintenance for the Coast Guard in 2009. In both cases, the contractor is accused of violating labor requirements.

Accused of “Upcoding” Labor Rates

DRS employees who worked on the contracts did not have the required job qualifications to perform the work, but DRS billed the government for a higher labor category, the Justice Department alleged. The department accused DRS of wrongly billing the Army over a nine-year period and the Coast Guard over a two-year period. The total amount by which DRS overbilled the government was not specified.   The settlement resolves the government’s claims against DRS, but does not act as an admission of liability.

Blowing The Whistle Has Its Rewards

If you’re aware of a company that intentionally “upcoded” its labor rates to falsely inflate the amount of money paid to it by the government, contact us for a confidential evaluation of your  matter.  You should know that Whistleblowers could share up to 30% of the money recovered and are entitled to protection against retaliation.


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