Whistleblowers and Government Contracts

WHY WHISTLEBLOWERS ARE ESSENTIAL TO ELIMINATING FRAUD AGAINST THE GOVERNMENT

Understanding the Basics of Government ContractsWhen the government uses a private company to provide goods and services, it typically does so via a contract. Our government relies on outside companies to provide a number of services and projects, from building roads to providing services related to national security and providing healthcare. The government also relies on a number of services that give aid and essentials to those serving in our military.

Fraud and Government ContractsBillions of dollars in fraud against the government are lost every single year, and the fraud is sometimes perpetrated by companies who contract with the government. This fraud can be committed by billing the government more than the services actually cost or by providing fraudulent services to citizens or service members. The government works actively to prevent and stop fraud from occurring and heavily depends on those who have relevant information about that fraud to come forward.

The Whistleblower’s Role in Stopping FraudA whistleblower is a person who speaks out about wrongdoing they have seen. They play an integral role in eliminating fraud that costs taxpayers significant sums of money. Whistleblowers can bring a lawsuit on behalf of the government through what is known as the False Claims Act. The False Claims Act is the government’s “most effective civil tool” in identifying and stopping fraud, according to Principal Deputy Assistant Attorney General Benjamin C. Mizer.

How Much Money is Recovered Through the False Claims Act?In fiscal year 2015, the government recovered $3.5 billion in settlements and judgments from civil cases involving fraud and false claims. Of that recovered amount, $1.1 billion was related specifically to cases alleging false claims for payment under government contracts. As you can see, whistleblowers are essential to pointing out fraud to the Justice Department, who can then use that information to pursue claims and recover large sums of money from those who are perpetrating the fraud.

Incentives to WhistleblowersIn exchange for the information they provide, whistleblowers receive a percentage of the recovered amount. This reward is typically between 15 and 30 percent of the total recovery. In addition to financial reward, whistleblowers are stopping fraud that costs taxpayers money and exploits people who the contracted services and goods are supposed to help. In many cases of government contract fraud, it is the men and women in our armed forces that are on the receiving end of fraudulent activity.

How Whistleblower Cases WorkWhen a person has information about fraud against the government, they will file a claim through the assistance of a whistleblower attorney, which details the allegations and provides evidence that is submitted to the courts. The Justice Department will then investigate the allegations of fraud to determine whether or not they will intervene. Government intervention is a desirable outcome for whistleblowers, as it ensures that the case will be pursued with the full attention and resources of the federal government. If fraud is found and an amount is recovered, the whistleblower will then be awarded their percentage of the recovery.

Examples of Government Contract FraudThe Justice Department’s press release about recoveries made via the False Claims Act gives us some examples of the process in action: • The Department of Defense reached a $146 million settlement with Supreme Group B.V. and several of its

subsidiaries for false claims about food, water, fuel, and transportation of cargo for American soldiers in Afghanistan.

• Lockheed Martin Integrated Systems paid $27.5 million and DRS Technical Services Inc. paid $13.7 million over allegations that they billed for the services of higher level, qualified employees required under contracts, while their actual employees lacked the required job qualifications stipulated in the contract.

• VMware Inc. and Carahsoft Technology Corporation paid the United States $75.5 million and Iron Mountain Companies paid $44.5 million to settle claims that their sales practices resulted in overcharging government agencies for software products and services sold through GSA’s Multiple Award Schedule.

Whistleblowers are Often Employees of Dishonest CompaniesThe whistleblowers who prompt action in cases regarding government contract fraud are often employees of the companies committing the fraud. For example, in the case of the settlement with Supreme Group B.V., the whistleblower was Michael Epp, Supreme GmbH’s former Director, Commercial Division and Supply Chain, who received over $16 million as his reward.

The First-to-File PolicyOne of the important stipulations made in the False Claims Act is the first-to-file policy. This essentially means that it is only the first party to make a claim against a perpetrator of fraud who will be considered for government intervention and rewards for recovered amounts. This is to discourage relators (whistleblowers) who file repeat claims from piggybacking on the claims made by the initial relator, and to reduce draining of resources of investigators.

Have You Witnessed Fraud Relating to Government Contracts?If you have important information about fraud and wish to come forward about the wrongdoing you’ve witnessed, the whistleblower attorneys at the Louthian Law Firm can help. These cases can be complex, and building a strong case is essential to the success of a claim. Our attorneys have years of experience in crafting whistleblower cases that result in payments to those who are willing to come forward. Contact us today for more information.