Thursday, October 15, 2015

Where Were the Auditors for Eight Years?

The Department of Justice sent out a press release yesterday announcing that Boeing had agreed to settle false claims allegations for $18 million. DoJ press releases announcing multi-million dollar settlements are not unusual. And, in this case, Boeing did not admit liability - it only paid to move some allegations behind it. What fascinated us with this case is that the practice that gave rise to the whistleblower allegations had gone on for eight years - eight years when DCAA (Defense Contract Audit Agency) and DCMA (Defense Contract Management Agency) had platoon-sized cadres scurrying around the plant making sure Boeing wasn't charging the Government too much money. What makes the situation more dismal is that it wasn't the auditors or the contracting officers that discovered the practice - it came from a Boeing insider - a whistleblower.

The essence of the allegation is that Boeing over-billed the Government for labor charged to maintenance contracts with the Air Force for the C-17 Globemaster. Employees came to work and left eight hours later and were paid for eight hours. The only problem was that withing the eight hours shifts, the employees enjoyed their lunch hour and took extended breaks. The Government did not receive eight hours of work from these employees but paid Boeing for eight hours of work.

One really has to wonder what the auditors were doing for those eight years?

Oh yes, the whistleblower received $3.2 million out of the $18 million settlement.

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