Defense contractors that knowingly bill direct costs for nongovernmental projects, such as labor and materials, to cost pools for federal projects are committing fraud.
What if you contracted to have work performed for your home or business but discovered that your contractor billed you for work that he actually performed for someone else or for unrelated business development expenses? You would either refuse to pay the invoice or, if you discover the fraud after you paid the bill, you would demand repayment and possibly take legal action if necessary.
Unfortunately, this hypothetical situation is not unlike the sort of fraudulent activities that some defense contractors commit when billing the federal government. Because military defense contracts are typically in the millions of dollars and involve complex accounting practices, contractors sometimes try to pass off costs to the government that they or their subcontractors should either absorb as the cost of doing business or bill to nongovernmental projects.
Taxpayers have the right to expect defense contractors to follow the rules and not bill the government for expenses that are not related to defense contracts. For this reason, contractors are required by law to follow certain accounting procedures and are prohibited from seeking reimbursement for certain types of costs.
Whistleblowers who are privy to contractors who violate these accounting practices can help the government recover taxpayer monies by pursuing a False Claims Act case. For their role in helping to recoup government funds and maintaining the integrity of federal defense programs, they may also be entitled to a share of the recovery.
