Consumer Fraud

Northrop Grumman Pays $31.65M To Settle Air Force Contract Fraud Allegations

whistleblower USA Northrop Grumman Pays $31.65M To Settle Air Force Contract Fraud AllegationsA Northrop Grumman subsidiary will pay the U.S. a total of $31.65 million to settle civil and criminal allegations that it intentionally overbilled the federal government for work on two U.S. Air Force contracts for battlefield communications technology.

Northrop Grumman Systems Corporation admitted that its employees deployed to a Middle East air base defrauded the U.S. Air Force by overbilling time charged to the Battlefield Airborne Communications Node (BACN) contract.

The Virginia-based company, which maintains operations in Los Angeles and San Diego, also inflated labor hours for employees working under the Dynamic Re-tasking Capabilities Contracts, according to the U.S. Attorney’s Office in San Diego.

The Northop Grumman contracts involved developing weapons communications systems that could overcome the obstacles posed by mountainous terrain.

The U.S. Attorney for the Southern District of California’s Office said Northrop Grumman employees charged the Air Force 12 to 13.5 hours per day, seven days a week, when they actually were working about half that time.

The rest of the time, the employees were billing the U.S. Air Force for hours they spent engaging “in leisure activities, such as golfing, skiing, visiting local amusement parks, going out to eat or drink, shopping, and enjoying various amenities at the five-star hotels where the employees were housed.”

“By inflating their time, the employees working on the [contracts] personally profited and were paid thousands of dollars that they did not earn,” the U.S. Attorney’s Office said. “In an email, one [Northrop Grumman] employee summed up the billing practices by saying that they ‘worked about 6-8 hours and charged 13.’”

Northrop Grumman admitted that employees working on the BACN contract overbilled the United States by more than $5 million at one site alone, the U.S. Attorney’s Office said. The government alleges these unlawful billing practices occurred between July 1, 2010, and Dec. 31, 2013.

Of the $31.65 million Northrop Grumman paid the U.S., $4.2 million was a forfeiture the company agreed on to settle separate criminal charges, the U.S. Department of Justice said.

The settlement was the result of a False Claims Act lawsuit and joint effort by the Defense Contract Audit Agency, the Air Force Office of Special Investigations, the Defense Criminal Investigative Service, the Air Force Materiel Command Law Office Fraud Division, the U.S. Attorney’s Office for the Southern District of California, and the U.S. Department of Justice’s Commercial Litigation Branch.