Boeing Agrees to Pay $18 Million in Response to Allegations of Defense Fraud

Boeing defense fraud allegations settlement

The Boeing Company has agreed to pay $18 million to settle allegations that it submitted inflated invoices for labor.
Image source: Wikimedia Commons

One of the founding goals of the False Claims Act was to root out fraud among Civil War-era defense contractors. The False Claims Act was first proposed over 150 years ago to help military leaders navigate questionable weapon contracts, but fraudulent defense claims still pose a problem today. The fraud that plagued Civil War contractors in the nineteenth century continues on an even broader scale, leaving government agencies scrambling to respond.

In today’s case, we examine a recent settlement between the Boeing Company, one of the largest aircraft manufacturers in the world, and the US Department of Justice (DOJ). This case alleges that the airline company grossly overbilled the government for labor under a maintenance contract for the military transport aircraft called the C-17 Globemaster.

The case was originally brought to light by a former Boeing employee. While the most recent settlement details do not disclose the amount of his reward, it is not uncommon for qui tam plaintiffs to receive up to 30 percent of the ultimate settlement amount, or up to $5.4 million in this case.

Details of the allegations against Boeing

Based in Chicago, Illinois, the Boeing Company is one of the preeminent global names in passenger, cargo, and military aircraft manufacturing. The company also maintains several lucrative contracts with the federal government, and it maintains a steady stream of work not only building aircraft for the military, but also maintaining planes and component parts.[1.  Corporate Crime Reporter. “Boeing Pays $18 Million to Settle Allegations of False Claims for Labor Charges.” http://www.corporatecrimereporter.com/news/200/boeing-pays-18-million-to-settle-false-claims-charge/ (Retrieved October 20, 2015).]

According to the recent allegations against Boeing, the company violated various terms in an ongoing contract for the maintenance of the C-17 Globemaster, a cargo plane used primarily by the U.S. Air Force. Specifically, the complaint involves maintenance and repairs of C-17 planes at the Long Beach Depot Center in Long Beach, California, a Boeing-owned facility where government planes are often sent for repairs and updates.

Despite explicit contract terms that narrowly defined labor as time spent in direct contact with the planes, Boeing is alleged to have invoiced the government for hundreds of labor hours that included personal breaks and lunch hours. Neither of these is defined as compensable per any interpretation of the government’s contract terms. Furthermore, the lawsuit alleges that Boeing knew – or should have known – that billing for employee break time was a violation of the terms of the agreement, meaning they acted with the requisite level of intent when it committed the fraud.

The Department of Justice said in a statement, “Defense contractors are required to obey the rules when billing for work performed on government contracts….Today’s settlement demonstrates that the Justice Department will ensure that government contractors meet their obligations and charge the government appropriately.”[2. “Boeing Pays $18 Million to Settle False Claims Act Allegations.” Aviation Pros. http://www.aviationpros.com/press_release/12126976/boeing-pays-18-million-to-settle-false-claims-act-allegations (Retrieved October 20, 2015).]

Contact Berger Montague today

If you are aware of fraud within the defense contracting sector, please do not hesitate to contact Berger Montague today.

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By | 2018-03-25T13:33:56+00:00 October 16th, 2015|Military Contractor Fraud|