$24 Million Dollar Refrigerators…Seeking Defense Spending Whistleblowers
It wasn’t too many years ago we were reading about defense contractors charging $900 for a hammer and $2000 for a toilet seat. While government contractors are notorious for ripping off taxpayers, we may have just witnessed a new low. The Air Force just announced that it was cancelling a contract with Boeing for new refrigerators on Air Force One.
The bill for these new units? $24 million but wait, that’s only for two. Air Force One is apparently equipped with five of the little refrigerators.
Sole source contracts have always been a vehicle for fraud. When government doesn’t bid a project and simply awards a contract to a vendor, there is always the risk that the contract will be seriously overpriced. Without competitive bids, there is no incentive to keep prices reasonable.
Boeing was the lucky vendor who was awarded the contract. But after the terms of the contract leaked out and Congress began asking questions, the contract was cancelled by the Air Force and White House Military Office.
Unfortunately, simply because a contractor overcharges doesn’t make the contract illegal. Ridiculous prices if not justified may violate the Truth in Negotiation Act, however.
We have seen many illegal behaviors in the defense industry and Boeing is not immune from getting caught in some of those schemes.
Whistleblower Awards – Defense Contractor Fraud
A Civil War era law allows private individuals with inside information about fraud to claim large cash awards. If you have information about fraud involving government contracts, you may be eligible for awards of 10% to 30% of whatever we or the government collects from the wrongdoers.
Typical defense schemes include:
- Billing for parts or services never provided or delivered
- Falsification of invoices
- Providing substandard, defective or recycled parts or goods
- On “cost plus” contracts, billing for too many hours or shifting fixed price work to cost plus contracts (“cross charging”)
- Relabeling foreign made goods as “Made in the USA”
- Bid rigging
- Failing to comply with Truth in Negotiations Act (TINA) requirements
Fraud on our military is unconscionable. Often these schemes endanger our fighting men and women. Recent cases have involved armored personnel carriers that won’t stop bullets, defective flak jackets and body armor, gun sights that are inaccurate and using recycled parts in air force jets when new parts are required for safety reasons.
Taxpayers will spend $700 billion this year on defense. With that much money, the temptation is just too much for some contractors. In our opinion, that includes Boeing and their $23.8 billion contract for two small refrigerators.
When the military gets ripped off, so do taxpayers. The False Claims Act allows us to help level the playing field, stop corporate greed and cooperation and earn our clients large cash awards.
Special Note on Middle Eastern Defense Contractor Fraud
Since 9/11, Americans have spent about $7 trillion dollars to fight the war on terror. That money has gone to our military and to defend our borders. Leaving aside proposals for a new border wall, we spend billions domestically and beefing up our allies in the Middle East. Iraq, Israel, Afghanistan…
It’s hard enough to fight defense contractor fraud in the United States. Add a war zone into the mix and it becomes even more difficult. We have spoken with embassy personnel in Afghanistan and Pakistan and with the inspector general’s office for the Afghanistan Reconstruction. There is fraud everywhere. Even in the contracts for drinking water for our military.
A 2013 report suggested that we have lost $60 billion to waste and fraud in Iraq. That figure is over $100 billion in Afghanistan. And remember, these were 2013 figures!
With almost 2 million open contracts, the Department of Defense can’t police everyone. And policing contractors in war zones is even more difficult.
Last summer while attending a conference I met with the Special Inspector General of the Afghanistan Reconstruction, John Sopko. He is a civilian in his 60’s. With just 197 employees – most in the United States – he is responsible for policing billions of dollars in US spending in Afghanistan.
After speaking with him, I began to understand just how difficult the problems are in policing contracts and contractors. If one of his auditors wants to inspect a facility, they can’t just hop in a car and drive over for a surprise inspection. Instead, they have to coordinate with the military, make advance preparations, arrange for helicopter gunship escorts and hop in an armored personnel carrier and even then, they can’t stay long.
Try being an auditor in 115 degree heat wearing heavy body armor and not speaking the local language. And don’t forget, while always waiting for someone to shoot at you.
Contractors, Military – the Eyes and Ears of Uncle Sam
The best folks at identifying fraud are those on the inside. It could be a soldier, foreign worker or employee of a defense contractor. And all are eligible for awards.
Congress passed the False Claims Act during the Civil War. It was passed when defense contractors were ripping off the Union Army. Back then it was lame mules. Gunpowder laced with sawdust and uniforms filled with moth holes.
Over 150 years later the law is still on the books. Why? Because it is effective at routing out fraud. Congress knew that the best way to fight fraud was to pay whistleblowers an incentive for stepping forward.
Whether you are an American or Iraqi national, it doesn’t matter. What does matter is that you have inside information about fraud involving tax dollars or government contracting programs.
Can military and government officials qualify? Maybe. We can help you figure that out. The short (and oversimplified) answer is that if your job is ferreting out fraud, don’t expect to get an award for doing your job.
What Happened with the $24 Million Air Force One Refrigerator?
We couldn’t end this post without a bit of laughter. We are not big fans of the military industrial complex that pumps millions of dollars in campaign coffers.
One of the ways they get away with their fraudulent scheme is by developing their own lingo. The mini fridges on Air Force One? They aren’t refrigerators. The public would get incensed if they knew Boeing was charging taxpayers $24 million for mini fridges. (Igloo has a pretty nice one on sale at Walmart for $105.00.)
Instead of calling them a refrigerator, we call them a custom “cold chiller units” for a VC-25 aircraft. Suddenly we are fooled and think that this is some necessary part to keep our military planes in the air!
And what does the Airforce say about the broken presidential refrigerators? They are exploring “mitigation options… to ensure food security.” In other words, they plan to just call the refrigerator repairman and fix them.
And we wonder why taxes are so high!
How to Claim Your Defense Contractor Whistleblower Reward
The False Claims Act has a very strict protocol that must be filed to obtain a reward. Simply calling a government toll free hotline is not enough. You must actually file a lawsuit under seal in federal court. Unfortunately, that scares away hundreds of people – and it shouldn’t.
Because you are prosecuting a case in the government’s name, you must have a lawyer.
Many lawyers see big dollar signs when they hear that you have a potential False Claims Act case against a defense contractor. They file the case hoping that the Justice Department will swoop in, do all the work and mail a big check. That happens in a small percentage of the cases.
Hiring a lawyer means finding one that handles False Claims Act cases for a living. And a law firm that has the experience to take on huge, powerful corporations when the government doesn’t intervene. It also means finding a law firm that understands how to investigate and with experience in whistleblower anti-retaliation laws.
And it means being quick when time counts. Generally only the first person to file gets the award.
The whistleblower lawyers at Mahany Law have years of experience that we are ready to put to work for you. For more information, contact us online, by email or phone at 414-704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept completely confidential. You can also visit our defense contractor fraud page for general information about defense contracting fraud and whistleblower awards.
MahanyLaw – Dedicated to Defending Our Defense Contractor Whistleblowers and Freedom Fighters