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Northrop Grumman settles False Claims Act case for $27.45 million

The Justice Department has accused defense contracting giant Northrop Grumman Systems Corporation (NGSC) of overbilling for employee hours on two Air Force battlefield communications contracts. It has now agreed to pay $25.8 million to settle those claims without admitting responsibility. When added to previous repayments, the company will have paid $27.45 million to reimburse the government. In addition, it has agreed to forfeit $4.2 million to resolve criminal allegations brought by the U.S. Attorney's Office for the Southern District of California.

According to the DOJ, NGSC entered into two contracts with the U.S. Air Force to provide battlefield communications services: The Dynamic Re-tasking Capability contract and the Battlefield Airborne Communications Node contract. Between July 1, 2010, and Dec. 31, 2013, the DOJ alleges, the company billed the Air Force for the labor of certain individuals stationed in the Middle East. Unfortunately, they did not actually work the hours claimed.

"Federal contracts are not a license to steal from the U.S. Treasury," said a U.S Attorney involved in the settlement. "DOJ is firmly committed to vigilantly weeding out abuse and will swiftly pursue all available remedies when egregious fraud occurs."

"Air Force OSI's Office of Procurement Fraud is dedicated to protecting the taxpayer's interests worldwide while safeguarding the needs of the warfighter," added a spokesperson for the Air Force OSI Office of Procurement Fraud. "This investigation is a testament to AFOSI's global reach, and to our partnerships with DCIS and the FBI which allowed us to meticulously unravel this international conspiracy to defraud the U.S. Air Force."

Allegations of procurement fraud can result in serious consequences, as this case shows. Not only is NGSC being required to disgorge the improper payments, but it also faced a criminal case in regard to the alleged fraud.

Whistleblowers can receive substantial rewards in False Claims Act cases

Although the DOJ did not credit a whistleblower with uncovering this particular alleged fraud, private citizens can obtain substantial monetary awards for blowing the whistle on fraud, waste or abuse in federal contracts of any type. Whistleblowers often come from private companies that contract with the federal government for military, healthcare and other services. In successful cases, whistleblowers can receive, as a reward, between 15 and 30 percent of any money recaptured by the government.

If you have noticed a potential fraud involving government contracting, you may want to blow the whistle. Before you do so, protect your rights and your potential recovery by contacting an attorney familiar with the False Claims Act.

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