Boeing has agreed to pay $25 million to settle a procurement fraud lawsuit filed by a former employee.
The aircraft company’s subsidiary, Insitu, is a manufacturer of surveillance drones for the Department of Defense. According to allegations raised in the whistleblower lawsuit, the company systematically charged the government for new parts when it planned to use recycled parts to manufacture drones for the U.S. Special Operations Command and the Navy.
The fraud lawsuit against Boeing was filed by a man who dedicated nearly 40 years of his life to the company. For his role in the investigation, the insider, D R O’Hara, will receive a $4.6 million whistleblower award.
The DOJ said in a statement that between 2009 and 2017, the defendant “knowingly submitted materially false cost and pricing data” to the government, inflating prices and overbilling the DoD for Insitu surveillance drones.
Upon the announcement of the settlement, U.S. Attorney for Western Washington, Brian Moran, commented, “Taxpayers deserve to get what they paid for. Cases such as this one should be seen as a warning to defense contractors that false claims have no place in military purchasing.”
Whistleblower D R O’Hara filed his complaint in 2015. He tried to report the misconduct internally before contacting an attorney, but instead of fixing the problem, Boeing fired him and banned him from applying for another job at the company.
O’Hara had been a loyal employee for about 35 years when Boeing acquired Insitu. Soon after, his employer decided to assign him to work at the subsidiary, overseeing pricing and procurement. He was quickly asked to sign off on problematic DoD contracts. When he declined, other executives volunteered their signatures, and the suspicious contracts went ahead. When he called an Ethics hotline, O’Hara recalls, HR immediately informed Boeing executives, who swiftly terminated him.
Without the False Claims Act (FCA), O’Hara might have never been able to fight this injustice. The legislation enables tipsters to sue fraudsters on behalf of taxpayers and obtain rewards amounting to up to 30 percent of any resulting recoveries. The FCA also protects whistleblowers from retaliation, enabling them to sue their employers for back pay, pain and suffering, and other damages. Besides the federal False Claims Act, the majority of U.S. states have their own FCA laws. When various states have been defrauded, whistleblowers can receive multiple FCA awards.
When contractors provide substandard products for the Department of Defense, our national security can be compromised. In order to stop fraud and end the misuse of taxpayer dollars, individuals with information about fraudulent schemes need to come forward. In the past, defense contractor whistleblowers have received millions of dollars in awards.