The Department of Justice (DOJ) recently announced that it obtained more than $2.9 billion in False Claims Act (FCA) settlements and judgments in the fiscal year ending Sept. 30, 2024.
DOJ reports that matters that involved the healthcare industry comprised the largest portion of these FCA recoveries in FY 2024, but that “procurement fraud” recoveries, once again, were significant for DOJ this past year.
Among the more notable procurement fraud recoveries from the past year were:
- A large government contractor paid $428 million to resolve allegations that it knowingly provided false cost and pricing data when negotiating with the Department of Defense for numerous government contracts and double billed on a weapons maintenance contract, leading to the company receiving profits in excess of negotiated rates. This is the second largest government procurement fraud recovery under the False Claims Act in history.
- A large federal contractor paid $70 million to resolve allegations they overcharged the U.S. Navy for spare parts and materials needed to repair and maintain the primary aircraft used to train naval aviators. The government alleged that these entities, which were owned by the same parent company, entered into an improper subcontract that resulted in the Navy paying inflated costs for parts.
- A federal contractor paid $811,259 to resolve allegations that it knowingly supplied valves that did not meet military specifications. The government alleged that, under a U.S. Navy contract, the company invoiced for military-grade valves to be installed on certain combat ships when the company knew the valves had not met the testing requirements to be deemed military grade.
- DOJ brought claims against a federal contractor and an individual estate of the founder, majority owner and chief operating officer of the company for allegedly causing the submission of false claims to the Department of Defense under contracts to provide Army combat uniforms. The government alleged that the company and the founder falsified the results of the insect repellant testing to conceal failing test results, including by inappropriately combining results from different rounds of testing, re-labeling test samples to hide the true origin of the samples, and performing re-tests of uniforms in excess of what the contract permitted.
- A government contractor paid $55.1 million to satisfy a judgment that it made knowingly false claims to the United States when it misrepresented its commercial sales practices during the negotiation and subsequent performance of a General Services Administration (GSA) contract. The court found that the false disclosures induced GSA to accept and then continue to pay higher prices than it would have had it known of the company’s actual commercial pricing practices. The court also found that the company continuously violated the Price Reduction Clause, “a standard term in these types of contracts that requires the contractor throughout performance of the contract to maintain GSA’s price position in relation to an identified customer or category of customer agreed upon in contract negotiations.”
- The City of Los Angeles paid $38.2 million to resolve allegations that it failed to meet federal accessibility requirements when it sought and used Department of Housing and Urban Development (HUD) grant funds for multifamily affordable housing. The government alleged that the city failed to make its affordable multifamily housing program accessible to people with disabilities. The government also alleged that the city failed to maintain a publicly available list of accessible units and their accessibility features, and the city, on an annual basis, falsely certified to HUD that it complied with related grant requirements.
- A federal contractor paid $26.8 million to resolve allegations that Hahn Air failed to remit to the United States certain travel fees collected from commercial airline passengers flying into or within the United States.
- A government contractor paid $18.4 million to resolve allegations that it billed for time not worked at the National Nuclear Security Administration’s Pantex Site near Amarillo, Texas.
- A large federal contractor paid $11.8 million to resolve allegations that it submitted false claims to the Federal Emergency Management Agency for the replacement of certain educational facilities located in Louisiana that were damaged by Hurricane Katrina. The government alleged that the contractor submitted to FEMA fraudulent requests for disaster assistance funds and did not correct applications that included materially false design, damage and replacement eligibility descriptions. Combined with settlements with other entities involved in the alleged conduct, the government recovered over $25 million in connection with the disaster assistance applications prepared by the contractor.