Numerous Defense Contractors Agree to Pay over $22.6 Million to Settle False Claims Allegations

On September 29, 2011, the Department of Justice announced that numerous defense contractors and individuals will be paying $22,676,000.00 to the United States Government in order to settle allegations brought against them under the False Claims Act.  Involved in this case are: Science Applications International Inc. (SAIC), Applied Enterprise Solutions LLC (AES), CEO of AES Dale Galloway, Director of the Navy Oceanographic Office (NAVO), Stephen Adamec, Deputy Director of NAVO, Robert Knesel, and Lockheed Martin Corporation.

The qui tam case was filed in June of 2009 in the Southern District of Mississippi.  According to the allegations, Adamec and Knesel plotted with SAIC (and its subcontractors, Lockheed Martin Corp and AES) to ensure that these companies would win the bidding process for a specific government contact.  They did this by unjustly sharing private information with SAIC that was not shared with the other bidders, sharing information with SAIC before they shared it with other bidders, and wording the contract so that the selection process favored SAIC.  The contract, which paid SAIC a total of $116 million, was to create a new National Center for Critical Information Processing and Storage (NCCIPS) at the NAVO Major Shared Resource Center (NAVO MSRC).

The whistleblower in this case was a former supercomputer specialist at the NAVO MSRC, David Magee.  According to the settlement, SAIC paid $20,400,000, AES and Galloway paid $2,166,000, and Adamec and Knesel paid $110,000 jointly.  Lockheed Martin settled with the government in January, 2011 and paid $2 million.  Magee received 28% of the $2 million settlement with Lockheed.  The amount he will receive from the settlement with SAIC and its alleged co-conspirators is still undetermined. 

In defense contract fraud cases, it is often employees and former employees who have the most knowledge and are the best whistleblowers.  It is not an easy task to accuse your employer of fraud and Magee’s actions are incredibly commendable.  Furthermore, in light of anticipated cuts in defense spending, the Government can ill afford fraudulent activity to go unchecked.  The whistleblower plays a vital role in ensuring that taxpayer dollars are not wasted.  Unfortunately, defense contract fraud is one of the most common types of fraud committed today.  It can come in many different forms and the government relies heavily on whistleblowers to help expose new schemes and fraudulent actions.  Bid-rigging is only one type of defense contract fraud.  Other forms of defense contract fraud include:  misrepresenting the cost of a project, overcharging/over-billing, omitting resources available to the company for a project, contract-negotiation fraud, use of cheap or inferior products on the project, and failure to follow contract specifications.  To find out more information about the types of defense contract fraud frequently committed, please click on the following link:  http://www.fraudfighters.net/false-claims-act-fraud/defense-contract-fraud/

Since qui tam lawsuits can be complicated, it is important to have experienced attorneys on your side.  Our firm has experience representing whistleblowers in qui tam cases that expose a variety of different kinds of fraud against the Government.  If you have information about fraud committed against the Government or would like more information, please see our website: www.fraudfighters.net.

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