Two Defense Contractors Settle FCA Cases Alleging Fraud On The Air Force

Two recently-announced settlements in unrelated False Claims Act cases will result in a combined recovery of $40 million from defense contractors that defrauded the Air Force.

In the first case, the Department of Justice has entered into a $25 million settlement with Boeing Company of a qui tam whistleblower case brought by two former Boeing employees who blew the whistle on Boeing’s improper installation of “insulation blanket kits” on the KC-10 Extender plane, which is part of the Air Force’s aerial refueling fleet.  The government also learned that Boeing had inflated estimates of the hours need to perform the work, and that it charged an escessive hourly rate for the work.  The relators will receive $2,625,000 as their reward for bringing the qui tam case.

In the second case, the Department of Justice has entered into a $15 million settlement with Dynamics Research Corporation.  DRC had been hired by the Air Force to provide advice on procurement of computer equipment and services for the Theater Battle Management Core Systems.  Rather than provide impartial advice, two DRC executives, Paul Arguin and Victor Garber, steered Air Force contracts to companies owned by themselves and their spouses, and then delivered cheap and inferior equipment under those contracts.  Arguin and Garber pleaded guilty to criminal charges.  The government then went after DRC, alleging that the actions of Arguin and Garber also violated the False Claims Act.  This settlement resolves those allegations.

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