The False Claims Act was conceived in war. President Lincoln feared that the future of the Nation hung on stopping fraud against the Union Army, and decided to reward people who turned in the traitorous black-hearts who put Union soldiers at risk by delivering sawdust instead of bullets.
Some things never change. National defense is the largest federal expenditure after health care: About three-quarters of a trillion dollars in 2009, plus another trillion for the wars in Iraq and Afghanistan. If you watch the news or surf the web, you know that contractors in Iraq have robbed us blind–and done so in ways that Honest Abe could not have imagined.
Fraud against the military takes many forms. The most dangerous is what we call “product substitution.” This occurs when a manufacturer paid to deliver a properly-manufactured airplane, tank, helmet, bulletproof vest (or, for that matter, latrine) delivers something else. Substandard parts make substandard, or “nonconforming,” products.
Our “Clients” page discusses our extenstive experience in the area of product substitution, ranging from cracked helicopter gears (U.S. ex rel. Roby v. The Boeing Company) to uninspected and defective jet engine parts (U.S. ex rel. LeFan v. General Electric) to fractured landing gear to dangerously-defective submarine valves (U.S. ex rel. Gonter v. Hunt Valve Company) and defectively-welded turrets on Humvees (U.S. ex rel. Faulkner v. O’Gara Hess & Eisenhart).
A related area of serious false claims activity relates to “misvouchering,” which occurs most often when a contractor bills a time-and-materials contract for work done on a fixed-price contract, but it can happen in many other ways–for example, when a contractor simply bills for work without having required timesheets or other documentation showing that the work was done. We have litigated several cases with misvouchering components. Similarly, many military procurements require extensive bid processes, or compliance with the Truth in Negotiations Act (“TINA”), or both. Many False Claims Act cases, including several of ours, have revolved around violations of these basic principles of fairness by government contractors.
Of course, soldiers need more than planes, ships, guns and vests, and weapons systems are a fairly small part of the procurement budget. Armies travel on their stomachs, and the military spends billions on food. Nation-building is expensive, and contractors are being paid billions for construction in Iraq and elsewhere. Military computer systems require specifically-engineered software. You get the picture: The military buys just about everything, and opportunities for fraud or other violations of the False Claims Act abound.