Defense Contracting Fraud

Defense contracting fraud initially prompted Congress to pass the False Claims Act during the Civil War.  While much has since changed in the area of defense contracting, fraud remains a major problem.  National Defense Spending accounted for $778.57 billion in FY 2012, approximately one-fifth of all government spending.  A large portion of this spending can be linked to the approximately 235,000 defense contractors with which the federal government enters into contracts with.  In FY 2011, the top 100 defense contractors accounted for $236.4 billion in federal spending.  The top 5 largest contractors, Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman, accounted for $102.14 billion alone.

Although the government has taken efforts to eliminate fraud among defense contractors, government spending in this area remains highly prone to fraud.  Whistleblower lawsuits under the qui tam provisions of the False Claims Act have proven an effective tool at detecting and prosecuting instances of defense contractor fraud.  Types of fraud in this area include the substitution of inferior or otherwise prohibited products, as well as billing schemes that overcharge the government.

Cross Charging

Product Substitution

Iraq

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