The Department of Justice (DOJ) recently announced that it obtained more than $5.6 billion in False Claims Act (FCA) settlements and judgment in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in FCA history and the largest since 2014.

DOJ reports that “matters that involved the health care industry” comprised the largest portion of these FCA recoveries in FY 2021, but that “procurement fraud” recoveries, once again, were significant for DOJ this past year.

Among the more notable procurement fraud recoveries from FY 2021 that DOJ reports are:

  • A federal contractor paid $50 million to resolve allegations that it fraudulently induced the U.S. Marine Corps to enter into a contract modification at inflated prices for a suspension system for armored vehicles known as Mine-Resistant Ambush Protected vehicles.
  • A government contractor paid $25 million to settle allegations that it knowingly submitted materially false cost and pricing data for contracts with the U.S. Special Operations Command and the Navy to supply and operate Unmanned Aerial Vehicles.
  • A federal contractor paid $7.1 million to resolve allegations that it did not provide the General Services Administration (GSA) with accurate information about its commercial sales practices during contract negotiations for office furniture and subsequently violated the contract terms by failing to extend lower prices to government customers.
  • An airline company paid $32.1 million to resolve allegations pertaining to its execution of contracts to deliver mail internationally on behalf of the U.S. Postal Service.
  • A company paid $18.9 million to resolve allegations that it used unqualified labor and overcharged the government for health care and IT services provided to federal agencies under two GSA contracts.
  • A government contractor paid $11 million to resolve allegations that it knowingly failed to maintain helicopters in accordance with Department of Defense contract requirements and that the helicopters were not airworthy and should not have been certified as “fully mission capable.”
  • A prime government contractor paid $12.7 million to resolve allegations that the owner of two subcontractors paid kickbacks to prime-contractor senior managers in return for favorable treatment for those subcontractors on government contracts. The government also alleged that the prime contractor misstated compliance with woman-owned small business subcontracting requirements and knowingly obtained protected competitor bid information on the government contract to gain an advantage in bidding on task orders.
  • A company paid more than $9 million to resolve allegations that one of its senior project managers solicited kickbacks from subcontractors and that the company fraudulently charged the government for design costs by disguising those costs and spreading them across unrelated pricing components.

In light of DOJ’s recent FCA report, as well as recent activity from DOJ’s Procurement Collusion Strike Force, procurement fraud undoubtedly will continue to be a significant focus for DOJ in 2022.

If you have any questions about how your company can potentially prevent or resolve procurement fraud-related matters, please do not hesitate to contact Aron Beezley.