As soldiers, veterans or protective service contractors, you pride ourselves on the services you provide to our nation. The government pays hundreds of billions of dollars each year to defense contractors and private security companies. While the VA struggles to provide services to our nation’s warriors, some defense contractors are living high on the hog. They are also defrauding the government, taxpayers and sometimes their own workers.
No matter what your personal politics, we can all agree that defense contractor fraud does nothing to help our service member and contracted security personnel clients. If anything, their fraud puts our nation and personnel at risk. Kevlar body armor that won’t stop bullets? Hiring poorly trained and under-equipped security officers to defend overseas military facilities?
Our firm has a rich history of successfully representing whistleblowers. Whistleblowers can be found in many industries. Healthcare, banking and mortgage industry, etc. This post is directed to private security and especially private military contractor whistleblowers.
Why would anyone become a whistleblower? For most folks, it simply is the right thing to do. Those that defend our freedom have a great sense of right and wrong. They know fraud when they see it.
If that isn’t enough of a reason, a Civil War era anti-fraud law allows whistleblowers with inside information about fraud to earn cash awards. The information must relate to private contractors or vendors that are misusing government funds. Generally, only the first to report is eligible for an award although there are a few exceptions.
The law that pays whistleblowers is called the False Claims Act and it pays between 15% and 30% of whatever the government collects from the wrongdoers. With triple damage provisions and big statutory penalties, the awards can quickly grow quite large. In the last 5 years, we have collected and turned over more than $100,000,000.00 to our whistleblower clients.
What types of things might be eligible for an award?
- the private pharmacy that overcharges the government for prescriptions that are covered by Tricare
- the private military contractor that bills the State Department for 1000 hours of service when the people assigned the contract only worked 500 hours
- the defense contractor that sells equipment or goods to the military knowing those goods are defective or do not perform as required
- the private company that wrongfully represents itself as being owned by a combat disabled veteran simply to secure a VA set aside contract.
These actions are illegal yet they happen daily.
The faces of our freedom fighters are changing. So is the way we fight wars. More and more protective services work is being assigned to private contractors. For example, embassy security is now becoming the province of private security vendors instead of the Marine Corps. Last year the State Department issued security contracts worth more than $20 billion to Aegis Defense Services, Chenega Patriot Group, GardaWorld Government Services, Sallyport Global Holdings, SOC, Sterling Operations and Triple Canopy. The numbers are staggering and so is the potential for fraud.
Current State Department Private Military Contracts
According to GovCon Wire, last year the U.S. State Department released billions of dollars of protective services contracts to a handful of companies. Those companies are:
Aegis Defense Services – $2.8 billion
Chenega Patriot Group – $3.5 billion
GardaWorld Government Services – $3.8 billion
Sallyport Global Holdings – $4.9 billion
SOC – $4.6 billion
Sterling Operations – $2.9 billion
Triple Canopy – $3.7 billion
Until these contracts were authorized, the State Department’s contracts were issued through a 2010 program called Worldwide Protective Services. The vendors back then were:
Aegis Defense Services, LLC
EOD Technology, Inc.
Global Integrated Security (USA), Inc.
International Development Solutions
Triple Canopy, Inc.
Let’s look at some of these companies.
Aegis Defense Services
Aegis Defense Services LLC received government contracts to provide services to the U.S. embassy in Kabul, Afghanistan and elsewhere. In 2013, a group of Aegis guards sued the company claiming they were forced to work 18 hour shifts. Guard Jason Boatright filed the lawsuit claiming that guards were contracted to work 12 hour shifts but often forced to work longer.
While working long hours in combat operations is sometimes unavoidable, these officers were assigned to embassy security tasks and were required to be constantly alert and vigilant.
While some folks might think that the 18 hour shifts were not particularly egregious, Boatright said that the company also fudged it bills to the government. He says the company would promote some of the protective services guards yet fail to pay them more. That didn’t stop the company from billing the government at higher rates, however.
According to his complaint, “Aegis has been able to bill [the State Department] at a higher rate for employees’ work under more highly paid positions than it could have if the employees filled the contracted-for positions,” the complaint said.
One guard told the Project on Government Oversight (POGO), “[I]f we ever got seriously hit [by terrorists], there is no doubt in my mind the guard force here would not be able to handle it, and mass casualties and mayhem would ensue.” That guard claimed inadequate training and an overextended guard force.
According to POGO, this guard wasn’t alone. In July 2012, 40 Aegis Defense Services protective services workers assigned to the embassy’s Emergency Response Team gave no confidence vote to three of their leaders, saying that they suffered from “tactical incompetence” and “a dangerous lack of understanding of the operational environment.”
Aegis’ predecessor was ArmorGroup North America (AGNA), a division of Wackenhut. Yet another expose suggested a series of problems including overworked guards and low morale with that private military contractor.
After our embassy in Benghazi was attacked, the State Department’s Inspector General did an audit of the security at Kabul. Its findings were not surprising. Billing errors, overbilling, lack of training records… In one finding, the report said 14 of Aegis’ Explosive Detection Dog handlers may not have received proper training.
Is this the guards fault? No. The responsibility lies squarely with the company.
DynCorp International is another American private military contractor. Based in McLean, Virginia, the company has over 16,000 employees. One of its contracts was issued by the State Department and required the company to train Iraqi police forces.
In July of 2016, the Justice Department filed a False Claims Act whistleblower complaint against DynCorp International. According to the government’s complaint, DynCorp knowingly allowed one of its main subcontractors to charge “excessive and unsubstantiated rates for hotel lodging, translator, security guard and driving services and overhead expenses”, and included these charges in the claims it submitted under the contract to the State Department. Prosecutors also alleged that DynCorp added its own markup to its subcontractor’s excessive charges, thereby further inflating the claims it submitted to the government.
In a press statement after the lawsuit was filed, DynCorp’s CFO claimed its prices were reasonable and “comparable to other prices that folks were charging on the ground, at that time.”
We are a bit skeptical of that argument, especially since we believe that many of the other companies were overcharging!
Prior to the Iraqi police training scandal, DynCorp was embroiled in allegations that it overbilled the Defense Department for training pilots to fly drug interdiction missions in Afghanistan. The private military contractor was acting as a subcontractor for Northrup Grumman. The issues came to a head after a DOD Inspector General report noted serious concerns on how DynCorp billed over $100 million under that contract.
Triple Canopy, Inc is an American based private military contractor that provides protective services to the military, government and corporate clients. Based in Virginia, the company has approximately 5,500 employees.
Triple Canopy was hired by the Department of Defense in 2009 to provide security to the Al Asad Airbase. The base was the second largest in Iraq and home to thousands of armed forces personnel. In 2011, the company was sued by a whistleblower under the False Claims Act. In 2012, the government intervened and took over the prosecution of the case.
In its complaint, prosecutors said that Triple Canopy was required to hire trained marksmen to provide protective services for the base. They say that the company didn’t hire guards. Instead they hired dozens of people from Uganda, most of whom couldn’t shoot straight.
The complaint says that despite that most of these guards could not qualify – even after repeated training attempts – the company continued to “bill the government the full price for each and every one of its unqualified security guards.”
The complaint was originally filed by a former Triple Canopy employee who grew disgusted by the fraud he observed.
While our brave troops slept at night, the government said poorly trained and unqualified guards were standing watch over the base’s perimeter.
Worse, the complaint also says that the company inflated the number of guards on duty and the hours they worked.
One commentator claims to have been at the US embassy in 2004 when security was turned over to the State Department. He told POGO, “Triple Canopy became the new private military contractor / vendor for security. He said the new security people were “ex-military from Latin America. They had no clue, didn’t speak English, and were nowhere as observant or disciplined as the Gurkhas.”
Chenega Patriot Group (Chenega Technology Services Corp)
It’s hard to accuse Chenega of being guilty of fraud. Despite being a private military contractor on paper, the company subcontracted all its work.
After 9/11, the Pentagon hired thousands of private military contractor security personnel. These guards were hired to replace military police officers. As America geared up for war, soldiers were pulled from the States and readied for combat operations in the mideast.
The Defense Department sought bids to backfill the loss of soldiers and provide security services to 40 military installations. Wackenhut expected to be the successful bidder but lost. Actually, no one won. Instead the Pentagon issued two no bid contracts worth almost $500 million dollars. The recipients of those contracts were two little known Native Alaska Corporations, including Chenega. The contract called for 4,385 private security guards.
Did Chenega hire thousands of Native Alaskans to fill the contracts? Actually no. They and the other Alaskan Native Corporation simply subcontracted out the work to other companies including Wackenhut. The Washington Post would later warn that Chenega was not following the rules on contracting and charging far more than other (and we think better qualified) vendors.
Our research shows that Alaska Native Corporations resulted in few jobs for their constituents. Rather the jobs were contracted away, often to companies that underpaid their workers and cut corners. Wackenhut, a British company, has been accused of providing substandard security at critical US facilities.
Need an example? Investigators from the Project for Government Oversight were able to drive up to a building at the Oak Ridge National Laboratories in Tennessee. Oak Ridge is where we make nuclear weapons. The investigators say they “easily parked in front of the building which is “protected” by a single chain link fence, walked around for about 15 minutes, and were leaving before guards finally approached them and escorted them from the area.” The building they are describing is one that contains hundreds of cans of enriched uranium 233!
POGO also claims that Wackenhut and the Oak Ridge nuclear facility miserably failed a simulated security breach exercise.
Sallyport Global Holdings
Sallyport Global Holdings is one of the new State Department contract recipients. Its current contract could be worth $4.9 billion. The company is a veteran private military contractor, however.
After the U.S invaded Iraq, one of the biggest private military contractors was a company called Custer Battles. Their life on the battlefield was cut short after being accused of stealing from US government financed Iraqi reconstruction efforts. The company and some of its principals were cut off from further government work while the investigation was proceeding. (More on them below.) One of the principals facing suspension was Joe Morris.
An AP writer says Morris was accused of submitting fake invoices to the government while at Custer Battles.
Did that stop Morris from working in the industry? No. The AP writer, Deborah Hastings, says he simply went to work for another private military contractor, Sallyport.
(We note that on a subsequent challenge to the 2016 contract, the General Accounting Office released prior “technical evaluation panel” ratings for the bidders. Sallyport and Triple Canopy received “substantial confidence” ratings while Aegis was “satisfactory” and GardaWorld was redacted! Torres received a “no confidence” rating.)
Custer Battles, LLC
Custer Battles was an early private military contractor. It won one of the first contracts after the U.S. invaded Iraq. Although the company was a start up with little experience, its leaders were decorated military veterans. Despite the pedigree of its leadership team, the company soon suffered serious setbacks.
Custer Battles received widespread media attention after one of its security convoys allegedly shot at unarmed civilians in a minivan. The company vigorously denied those charges. No one was killed or prosecuted.
Later the company would be accused of massive billing fraud and sued by two former employees who filed a False Claims Act whistleblower lawsuit.
Blackwater was one of the most well known private security contractors. Founded by former Navy Seal Erik Prince in 1997, the company is today known as Academi. It achieved its notoriety after members of a Blackwater security convoy shot and killed 17 Iraqi civilians in Nisour Square, Baghdad. Four of its guards were later convicted in a Washington DC federal court and sentenced to terms of 30 years to life. The four men maintain their innocence despite the convictions. More on that below.
The story that is not often told is the pending False Claims Act whistleblower lawsuit against Blackwater. The suit was brought by two former Blackwater security specialists with deployment in Afghanistan and Iraq.
Their lawsuit alleges that Blackwater defrauded the United States from June 2009 through May 2011 “by repeatedly billing the U.S. State Department for (a) contractors’ services in positions that they did not hold, in order to avoid contractual penalties for inadequate staffing; and (b) for the worthless services of contractors who had not passed weapons qualifications, who had failed a required drug test or were under the influence of alcohol, or whose biographies had been falsified.” Their suit also claims that Blackwater defrauded the government by billing the State Department for personnel gear that they did not actually issue.
In one example, the men say that the company billed an office worker as a “defensive marksman.” In another example, the men say that the company would warn employees of upcoming drug tests.
The whistleblower case against Blackwater is still pending.
The Need for Private Military Contractor Whistleblowers
This post isn’t about the politics of using private contractors instead of soldiers in war zones. In fact, we believe there is a place for contractors. Any military unit or private military contractor is liable to have a few bad actors. Our complaint isn’t with the brave security specialists on the front lines both in the US and abroad.
The Blackwater – Nisour Square incident became the focal point of the political focal point for the discussion on whether we should use contractors and how they should be held accountable in the event of civilian casualties. We leave those decisions to those in Washington.
A properly staffed, trained and equipped private military contractor offers flexibility to our military and more experienced boots on the ground. Using contractors frees up military assets for more important deployment. Whatever one’s feelings on the use of these contractors, the men and women who fill the guard and security specialist positions put their lives on the line every day.
Our issue isn’t political. It’s fraud. Private military contractor vendors have a history of defrauding the government (and often shortchanging their workforce.) As a former law enforcement officer, I have several friends who went to work for these companies. They were well trained but tell stories of many companies that were cutting corners.
False Claims Act – Cash Awards for Whistleblowers
Passed in 1863 during the Civil War, the False Claims Act empowers ordinary people to do extraordinary things. During the Civil War, unscrupulous contractors would provision the Union Army with rancid food, moth invested blankets and wagons that would quickly lose their wheels. Today we have weapons sights that don’t perform as needed and body armor that won’t stop bullets.
There was no such thing as a private military contractor during the Civil War. Had the Army contracted for services then, we probably would have similar schemes to the ones we see today.
Common Forms of Private Military Contractor Fraud
Common forms of private military contractor fraud today include:
- Billing for services not provided
- Overbilling on hours
- Understaffing contracts
- Overworking guards to the point of fatigue
- Billing for a higher level of service than provided (Billing the officer worker as a combat team leader.)
- Billing for guards / security specialists that are not qualified
- False weapons certification
- Misuse of government property
- Billing Ugandan farmers as trained marksmen (our personal favorite)
Under the False Claims Act, if you have inside knowledge of these frauds, you may be eligible for an award. The Act pays between 15% and 30% of whatever the government collects from the wrongdoers. Because the law allows triple damages and statutory penalties of over $20,000 per false invoice, the penalties can quickly mount.
We have met several security specialists working for these companies. Most are experienced law enforcement and ex-military. Whether working for Uncle Sam or a private contractor, our brothers and sisters in arms tend to be highly patriotic with a strong sense of right and wrong. Simply doing what they do makes them heroes. Standing up to corrupt contracting fraud makes them truly standout.
While some vendors fail to properly train and equip their guards and while the VA struggles to provide services to our nation’s warriors, some defense contractors are living high on the hog. We have no problem with a private military contractor seeking to make a profit. Putting profits before people and committing fraud is simply wrong, however.
Because of the False Claims Act, you can do something about fraud and greed and earn a significant award.
When it comes to inadequate training and equipment or understaffing, your information may help save a life.
Interested in learning more? Call us. The consultation is without charge or obligation. It is also protected by the attorney – client privilege and kept confidential. We can help you decide if you have a case and what your case may be worth.
In the military or government service but still have information about government contractor fraud? Call us. In many cases your government service does not preclude you from being earning a whistleblower award.