Northrop To Pay $32M To Settle Claims It Overbilled Air Force

 In False Claims Act, Government Fraud

Northrop Grumman Systems Corp. will shell out a total of $31.6 million to end allegations, including some under the False Claims Act, that it overstated the amount of hours its employees worked to bilk the U.S. Air Force, the U.S. Department of Justice said Friday.

Northrop has already repaid some of the money, the DOJ said, and will pay an additional $25.8 million to end the FCA violations. It has also agreed to pay $4.2 million to end a criminal investigation in the Southern District of California focused on the fraudulent billing, the DOJ said.

In exchange for admitting to its employees’ misconduct, making restitution and agreeing to cooperate in the ongoing criminal investigation, Northrop will dodge criminal charges, the DOJ said.

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

According to the DOJ, the Air Force entered into two contracts with Northrop — one for a Battlefield Airborne Communications Node and one for Dynamic Re-tasking Capability — and that from 2010 to 2013, its employees stationed in the Middle East over-reported their hours.

Employees reported working exactly 12 or 13.5 hours per day, seven days a week, despite not working those hours, the DOJ said.

“NGSC admitted that its employees billed time to the BACN contract when its employees were not working and engaged in leisure activities, such as golfing, skiing, visiting local amusement parks, going out to eat or drink, shopping, and enjoying various amenities at the five-star hotels where the employees were housed,” the DOJ said.

The employees themselves made thousands of dollars they didn’t earn, the DOJ said, with one employee admitting in an email that they worked about six hours a day while charging 13.

On one site alone, Northrop admitted that its employees overcharged the government more than $5 million, the DOJ said.

“Contractors that knowingly inflate their bills to the government will face serious consequences,” Joseph H. Hunt, assistant attorney general for the DOJ’s Civil Division, said in a release. “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.”

With the exception of the actions admitted in connection with the criminal agreement, the claims resolved by the civil agreement are just allegations only, the DOJ said, and Northrop has not admitted liability.


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