Consumer Fraud

Whistleblower’s False Claims Act lawsuit recovers $6.5 million for U.S. Navy

osha whistle Whistleblower’s False Claims Act lawsuit recovers $6.5 million for U.S. NavyA whistleblower will receive $1.28 million for helping the U.S. Department of Defense recover millions of dollars in funds fraudulently taken from the U.S. Navy by a defense contractor, the U.S. Justice Department announced.

Vector Planning and Services Inc. (VPS) agreed to pay the U.S. government $6.5 million to resolve the whistleblower’s allegations in a lawsuit filed under the False Claims Act, which allows private individuals with evidence of fraud and other wrongdoing sue on behalf of the federal government. The Act’s whistleblower provisions (often referred to as “qui tam” provisions) have become one of the federal government’s most powerful tools in recovering taxpayer funds.

The Justice Department said that Vector, a Chantilly, Virginia-based information technology company that provides systems engineering, program management, and consulting services to the U.S. Navy, inflated claims it made to the Defense Dept. for reimbursement.

VPS has numerous contracts with the Navy and Navy contractors. Under those contracts, the company is entitled to bill the government for its indirect costs, such as overhead and other expenses that can’t be tied to a specific contract.

The whistleblower lawsuit alleged that from 2005 to 2009, VPS inflated its indirect cost billings to the government by improperly including direct costs for which it had already been paid, and indirect costs that the company spread across its government contracts and billed again.  The company also submitted claims to the Defense Dept. for fictitious costs that were never incurred, the U.S. government alleged.

“Our office will work aggressively with our investigative partners to protect taxpayer funds from abuse,” said Laura E. Duffy, U.S. Attorney for the Southern District of California, where the whistleblower lawsuit was filed. “Today’s settlement demonstrates our commitment to pursue defense contractors who knowingly defraud or overcharge military programs.”


U.S. Department of Justice