Whistleblowers Cash In On False Claims Act

One of the more startling trends in defense contracting is the recent rise in payments made by industry to government agencies and whistleblowers under the False Claims Act. The Department of Justice recorded $890 million in 2013 based on procurement fraud claims under the FCA — primarily involving defense contractors.

Out-of-court payments typically ranged from $1 million to $5 million, and contractors often paid the settlements even though the government could not demonstrate a specific intent to defraud the government.

Why would contractors pay seven-figure settlements instead of fighting the FCA claims in court? The answer may be fear of what could happen in court. Last year, a federal judge ordered a contractor to pay a record $664 million after finding the contractor had violated the FCA in bidding and performing on an Air Force contract.