Government contractor fraud costs taxpayers billions annually, but whistleblowers armed with the False Claims Act are fighting back to recover stolen funds and protect the public interest

Government contractor fraud represents one of the most significant threats to taxpayer dollars and national security. In the fiscal year ending September 30, 2024, the Department of Justice secured over $2.9 billion in settlements and judgments from civil cases involving fraudulent and false claims against the government. This staggering figure underscores the pervasive nature of fraud in government contracting and highlights why understanding your rights and protections as a whistleblower is crucial.

Understanding the False Claims Act: America’s Premier Anti-Fraud Weapon

The False Claims Act (FCA) is America’s first whistleblower law and one of the strongest whistleblower laws in the United States. It was originally signed into law in 1863 by President Abraham Lincoln during the Civil War. In the midst of wartime, it had become clear that many suppliers were providing substandard goods and services to the troops. In an effort to counter this, the FCA was passed to target fraud in government contracting and against the government.

The Act’s effectiveness is undeniable. According to the DOJ, in Fiscal Year 2020 alone, the government recovered over $2.2 billion in FCA settlements and judgements. Over $1.6 billion of that can be attributed to whistleblower-initiated cases. The government recovered $62.1 billion under the False Claims Act between 1987 and 2019 and of this amount, over $44.7 billion or 72% was from qui tam cases brought by relators.

Common Types of Government Contractor Fraud

Government contractor fraud takes many forms, ranging from sophisticated schemes by major corporations to smaller-scale deceptions. Varieties of fraud found in government contracting include: Fraudulently providing products or services that do not match the contract or regulatory specifications or products that have failed or not been through required quality assurance and testing procedures. Making misrepresentations regarding costs, prices and discounts in violation of “most favored customer” or “best pricing” requirements, price reduction clauses, and Truth in Negotiation Act requirements.

Recent high-profile cases demonstrate the scope of the problem. On June 21, the DOJ announced that Sikorsky Support Services Inc. (SSSI) and Derco Aerospace Inc. (Derco) agreed to pay $70 million to settle allegations of improper markups on spare aircraft parts sold to the U.S. Navy. Raytheon, a major defense contractor, has agreed to pay over $950 million to settle allegations of fraud and corruption. The company admitted to defrauding the U.S. government by providing false and fraudulent information on contracts for military systems, including the PATRIOT missile system and a radar system. Additionally, Raytheon was found guilty of bribing a foreign official to obtain lucrative defense contracts in Qatar.

Your Role as a Whistleblower: Rights and Protections

This important provision allows any individual or non-governmental organization to file a lawsuit, in U.S. District Courts, on behalf of the United States government. Under this provision, whistleblowers can be rewarded for confidentially disclosing fraud that results in a financial loss to the federal government. If the government intervened in the case, the FCA sets the relator’s share between 15 and 25% of the amount recovered. If the government did not intervene, the relator’s share is higher: between 25 and 30% of the amount recovered. The actual whistleblower share depends on many factors, including the quality of information provided by the whistleblower, and the assistance provided by the whistleblower and whistleblower’s counsel.

The False Claims Act also provides robust protection against retaliation. The False Claims Act protects employees, contractors, or agents who are discharged, demoted, suspended, threatened, harassed, or discriminated against in any other way because of lawful acts taken to stop violations of the FCA. These protections ensure that individuals can come forward without fear of losing their jobs or facing other forms of retaliation.

The Legal Process: What to Expect

A case under the False Claims Act is filed in federal district court “under seal.” The complaint and evidence in support of the whistleblower’s claims are provided only to the United States Department of Justice, including the local United States Attorney, and to the assigned judge of the district court. While the complaint is under seal – a time period that is often extended multiple times – DOJ will investigate the allegations. DOJ, sometimes along with other law enforcement agencies, will ordinarily interview the relator, and may subpoena documents, interview other witnesses, and consult with agency personnel and other experts.

Timing is critical in False Claims Act cases. If multiple FCA cases based on the same facts are filed and pending, only the first whistleblower to file a case is entitled to proceed. The first-to-file rule makes it important that a whistleblower with knowledge of fraud speak with experienced qui tam counsel as soon as possible.

Why Legal Representation Matters

Navigating a False Claims Act case requires specialized legal expertise. The complexity of government contracting law, combined with the procedural requirements of qui tam litigation, makes experienced legal representation essential. When seeking counsel, it’s important to find attorneys who understand both the technical aspects of government contracts and the nuances of whistleblower law.

For those in the New York area dealing with government contractor fraud, consulting with a knowledgeable whistleblower lawyer Manhattan, NY can provide the guidance needed to protect your rights and maximize your potential recovery. Experienced attorneys can help evaluate your case, ensure proper filing procedures, and provide ongoing support throughout the investigation process.

The Current Enforcement Climate

In fiscal year 2024, the DOJ secured more than $2.9 billion in settlements and judgments under the FCA. In its January 15, 2025 press release, the DOJ reported a historic number of whistleblower, or qui tam, lawsuits, with 979 filed in fiscal year 2024—the most in a single year, but a “record” that seems to be broken with each new year. These actions led to 558 settlements and judgments, marking the second-highest annual total.

The Department of Justice continues to prioritize False Claims Act enforcement across multiple sectors. Government contractors, particularly those involved in defense and infrastructure projects, remain under scrutiny. The DOJ is actively investigating cases where contractors misrepresented compliance with the Trade Agreements Act and the Buy American Act and allegations of providing false cost and pricing data during contract negotiations with the DOD.

Taking Action: Your Path Forward

If you have knowledge of government contractor fraud, time is of the essence. Without insiders and whistleblowers exposing fraud in government contracts, most would go undetected. The False Claims Act provides both the mechanism and the incentives for individuals to come forward and help recover taxpayer funds while protecting themselves from retaliation.

Remember that to be eligible to recover money under the Act, you must file a qui tam lawsuit. Merely informing the government about the violation is not enough. You only receive an award if, and after, the government recovers money from the defendant as a result of your suit. This underscores the importance of working with experienced legal counsel who can properly evaluate your case and guide you through the complex legal process.

Government contractor fraud undermines not only fiscal responsibility but also national security and public trust. By understanding the False Claims Act and your rights as a whistleblower, you can play a vital role in holding fraudulent contractors accountable while potentially receiving significant financial compensation for your courage in coming forward. The law is designed to protect and reward those who help safeguard taxpayer dollars – ensuring that justice serves both individual whistleblowers and the broader public interest.