Ways Defense Contractors Try To Cheat The Government
Darren Chow
August 04, 2011
The False Claims Act allows litigation when two parties do not deal with one another in good faith. Currently, the most common occurrence of this is in the government and defense contractor relationship. When it comes to military weaponry and warfare, there are very specific stipulations and ways of billing that must be followed or else fraud has been committed. Defense contractor companies, one would think, may find fraud too intimidating when the government is involved, but the reality is that it happens quite often. Just how are many of these firms attempting to defraud the government? Well, for starters, they:
Cross Charge Government Sources
The cross charge is born from two very specific payment methods that the government uses to fill these contractors demands. On the one hand, there is a fixed fee paid for the overall project. No matter how long the project takes, that one fee stands unchanged. There is also a cost plus form of payment that the defense contractor will collect. Cost plus incorporates the actual cost of production of the final product. Some companies will take the hours worked on the fixed price portion and attribute those hours to the finished price of the cost plus contract, thus inflating their numbers and getting a larger profit at the expense of the government. This is not considered a good faith agreement.
Substitute Products
Some defense contractors will enter into jobs where the specific parts to be used are not spelled out, and they will obtain parts from an unauthorized source. As a result, they end up making a lesser quality product at the original price that was quoted while going behind the government's back.
Account Costs Creatively
When a defense contractor knowingly and willfully charges the government parts of a private contract, they can profit from the government while lowering their prices to meet the demands of private contracts over their competitors. This results in an unfair advantage that makes the defense contractor very difficult to compete with.
Cutting Corners and Inflating Prices
All government jobs come with a deadline that must be met in order to properly complete the transaction. Sometimes the defense contractor will knowingly cut corners or inflate prices associated with the project to get the government to extend deadlines, pay more for a product, and generally defraud.
When it comes to lethal weaponry, there is understandably a large degree of red tape to cut through. After all, a poorly constructed product can cost many lives and result in unnecessary damages. Good faith is of the utmost importance when dealing with these projects on both sides, so it is important to get things right the first time and deal with each other fairly and in good faith.
Marcia Davis has substantial experience litigating whistleblower protection services on behalf of employees nationwide. She has studied and examined every aspect of the whistleblower protection act.
Cross Charge Government Sources
The cross charge is born from two very specific payment methods that the government uses to fill these contractors demands. On the one hand, there is a fixed fee paid for the overall project. No matter how long the project takes, that one fee stands unchanged. There is also a cost plus form of payment that the defense contractor will collect. Cost plus incorporates the actual cost of production of the final product. Some companies will take the hours worked on the fixed price portion and attribute those hours to the finished price of the cost plus contract, thus inflating their numbers and getting a larger profit at the expense of the government. This is not considered a good faith agreement.
Substitute Products
Some defense contractors will enter into jobs where the specific parts to be used are not spelled out, and they will obtain parts from an unauthorized source. As a result, they end up making a lesser quality product at the original price that was quoted while going behind the government's back.
Account Costs Creatively
When a defense contractor knowingly and willfully charges the government parts of a private contract, they can profit from the government while lowering their prices to meet the demands of private contracts over their competitors. This results in an unfair advantage that makes the defense contractor very difficult to compete with.
Cutting Corners and Inflating Prices
All government jobs come with a deadline that must be met in order to properly complete the transaction. Sometimes the defense contractor will knowingly cut corners or inflate prices associated with the project to get the government to extend deadlines, pay more for a product, and generally defraud.
When it comes to lethal weaponry, there is understandably a large degree of red tape to cut through. After all, a poorly constructed product can cost many lives and result in unnecessary damages. Good faith is of the utmost importance when dealing with these projects on both sides, so it is important to get things right the first time and deal with each other fairly and in good faith.
Marcia Davis has substantial experience litigating whistleblower protection services on behalf of employees nationwide. She has studied and examined every aspect of the whistleblower protection act.
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