Northrop Grumman Pays $27.5 Million Under False Claims Act

Nothrop Grumman Corp. on Friday agreed to forfeit $27.5 million under the False Claims Act while acknowledging that some employees inflated their work hours on bills for two battlefield communications contracts with the Air Force.

“Contractors that knowingly inflate their bills to the government will face serious consequences,” said Assistant Attorney General Joseph Hunt of the Justice Department’s Civil Division, in an announcement. “This settlement demonstrates, once again, that we will not tolerate those who falsely charge the armed forces or any agency of the United States to illegally profit at the expense of the American taxpayer.”

The Falls Church, Va.-based Northrop Grumman Systems Corp. agreed to settle over charges on the Air Force’s Battlefield Airborne Communications Node contract and the Dynamic Re-tasking Capability contract awarded during July 1, 2010, and Dec. 31, 2013. That action resolves allegations that the firm “billed the Air Force for labor hours purportedly incurred by individuals stationed in the Middle East who had not actually worked the hours claimed,” Justice said.

Northrop Grumman agreed to pay $25.8 million on top of earlier payments that bring the total to $27.5 million. Separately, the company entered into an agreement with the Criminal Division of the U.S. Attorney’s Office for the Southern District of California under which it has said it will forfeit an additional $4.2 million.

In a statement, Northrop Grumman stressed that it had identified the issues, investigated them and reported the matter to the government in 2013. “The improper charging was in direct violation of company policies, procedures and training,” it said. “The company offered to refund improper charges in 2013, took disciplinary action including termination of employees, and implemented corrective actions. The company has cooperated with the government investigation.” That cooperation will continue, the firm added, as the government probes other related actions by other parties as Northrop continues its role in the battlefield communications project.

“There should be no doubt, the misconduct of these former employees does not reflect the values of our company,” a spokesman said. “We are committed to our strong culture of ethics and integrity and we will continue to learn and to take the steps necessary to protect and enhance our culture.”

Justice noted that the allegations spelled out in the settlement are not proof of civil liability.

But “federal contracts are not a license to steal from the U.S. Treasury,” said U.S Attorney Adam Braverman.  “DoJ is firmly committed to vigilantly weeding out abuse and will swiftly pursue all available remedies when egregious fraud occurs.”

Jason Hein, special agent in charge of the Air Force Office of Special Investigations Office of Procurement Fraud, said his team “is dedicated to protecting the taxpayer’s interests worldwide while safeguarding the needs of the warfighter.  This investigation is a testament to AFOSI’s global reach, and to our partnerships with the [Defense Criminal Investigative Service] and the FBI, which allowed us to meticulously unravel this international conspiracy to defraud the U.S. Air Force.”

Also participating were the Defense Contract Audit Agency and the Air Force Materiel Command Law Office Fraud Division.