Earlier this month, the Justice Department announced a settlement with a Defense subcontractor near Sacramento, CA surrounding allegations that it inflated its indirect costs that were used in negotiating subcontracts with prime contractors including Boeing and Raytheon.
The settlement requires the subcontractor, Alpha Research & Technology, Inc. (ART) to pay $1 million to the Government to resolve allegations that it violated the False Claims Act by knowingly submitting inflated contract pricing to the Government.
According to the Justice Department, ART included millions of dollars in personal expenses of its owners which ART knew were unallowable in Government contracting. Those expenses included payments for the design and construction of the owner's luxury personal residence, luxury cars, a personal caretaker, and a weekend at a luxury hotel in San Diego. ART was able to perpetuate its alleged fraud for quite some time - at least six years - before the company was caught.
ART is a woman-owned company that develops and manufactures airborne-related command, control, communications and surveillance systems (according to its website). In 2015, the subcontractor employed about 87 people. It is not clear how the allegations were brought forward. Since ART is primarily a subcontractor and prime contractors are responsible for ensuring the reasonableness of subcontract costs passed along to the Government under their prime contracts, it would seem likely that someone at Boeing or Raytheon took note and passed the information along to investigators. There is no mention of a whistle-blower in the Justice Department press release.
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