Aside from healthcare fraud, defense contractor fraud remains the most costly form of financial abuse faced by the U.S. government. The False Claims Act, which was originally enacted to defend against wartime fraud and false claims, allows relators to recover up to 30 percent of any settlement or verdict recovered pursuant to a defense contract whistleblower case.
In today’s case, we examine a long-alleged scheme involving a defense contractor tasked with providing radio equipment to the U.S. Air Force.[1. “AWACS supplier settles false claims charges,” C4ISR&Networks, August 8, 2015. http://www.c4isrnet.com/story/military-tech/communications/2015/08/24/awacs-supplier-settles-false-claims-charges/32275901/] The defendant, a subsidiary of Dover Corporation called PoleZero, agreed to pay $2.8 million to resolve claims it defrauded the government. The whistleblower, a former employee in the repairs department of the company, will receive $504,000 in exchange for his willingness to come forward. The settlement came about following a detailed investigation by the U.S. Attorney’s Office for the District of Maryland, U.S. Department of Justice, DCIS, Air Force Office of Special Investigations, and NCIS.
PoleZero is a military equipment company located in West Chester, Ohio, and a subsidiary of Dover Corporation since 2007. According to the details of the settlement, the company maintained a contract with the U.S. Air Force for over a decade wherein it provided radio frequency filters, which filter out unwanted radio signals and other interference, and integrated co-site equipment to support this filtering for E-3 Airborne Warning and Control System (AWACS) aircraft (pictured above).
In the press release offered by the Department of Defense, PoleZero is alleged to have knowingly provided said radio frequency filters and additional equipment that did not meet the specifications of the contract. Billing the DOD for these items triggered False Claims Act liability.
While the DOD’s press release did not provide extensive details as to the issues with the radio frequency equipment, the relator’s complaint alleged persistent overheating. The equipment, which is designed to lessen radio wave interference, was also alleged to have failed several pre-sale inspections. After returning the defective products to PoleZero, the DOD alleges it implemented “band-aid” type fixes to the equipment that did not actually correct the underlying problem, and that these quick fixes ultimately helped the company avoid the hassle of re-qualifying the products with the military.
The U.S. Attorney’s Office said in a statement, “Defense contractors are expected to ensure that the equipment they provide meets the expectations of the contract. The military needs to be able to depend on the quality of the products it purchases.”[2. “PoleZero Corporation Agrees to Pay $2.8 illion to Resolve False Claims Act Allegations,” U.S. Department of Justice, August 20, 2015. http://www.dodig.mil/IGInformation/IGInformationReleases/PoleZeroSettlementPR_082015.pdf]
The DCIS also commented, stating, “Getting what you pay for is something we all should expect….DCIS and its law enforcement partners remain steadfast in expecting contractors to adhere to agreements made with the government when providing products and services.”
Notwithstanding the settlement, PoleZero is slated to complete several lucrative military contracts, including one recent agreement for the provision of equipment in support of the Navy and the government of Australia.[3. “Contracts,” U.S. Department of Defense, accessed October 7, 2015, http://www.defense.gov/News/Contracts/Contract-View/Article/606879]
Contact Berger & Montague, P.C. today
If you are aware of fraud pursuant to a government contract, particularly within the defense realm, we encourage you to contact Berger & Montague, P.C. right away. Our dedicated and confidential whistleblower attorneys will ensure your case is handled with the utmost care and attention to detail.