Monday, November 5, 2018

Northrup Grumman to pay $31 Million for Time-card Fraud

Northrop Grumman has agreed to pay the Government $31 million to resolve criminal and civil charges for over-billing the Air Force on a couple of contracts. The over-billings were a result of employees being paid for work not performed and occurred over a three-year period ending in 2013. In exchange for admitting its employees' misconduct, making full restitution, and agreeing to cooperate in the ongoing criminal investigation, no criminal charges will be filed against Northrup Grumman. The employees involved in the mischarging are no doubt concerned however.

According to the Justice Department press release, Northrup Grumman employees deployed to an air base in the Middle East defrauded the Air Force by over-billing time charged to a Government contract. Those employees charged exactly 12 or 13.5 hours per day, seven days a week, despite the fact that the employees were not working those hours. What were they doing? Following are some representative acts of what those employees were doing while charging time to the contract.

  • Went for ice cream and a movie
  • Went golfing
  • Watched the Super Bowl from their hotel
  • Went to a local amusement park
  • Went skiing
  • Laid by the pool
  • Did not show up for work
  • Was drunk
  • Went to a music festival
  • Couldn't get on the base because of an expired badge (yet claimed 13.5 hours of work)
  • Shopped for a Chanel purse
  • Picked up wife and children at the air port and went out to dinner

Some of the employees involved in this mischarging earned 3.6 times their base pay.

Among the corrective action that Northrup Grumman agreed to take are the following.

  1. Issue periodic reminders of the latest time-charging guidance and policies, and provide repeated training sessions to help ensure proper time-charging by employees
  2. Create a dedicated compliance manager position specifically to monitor time-charging.
  3. Install a bio-metric reader at the program site to track employees' time on base.

Additionally, Northrup Grumman must use its best efforts to make available, and encourage, the cooperation of present and former officers and employees for interviews and testimony, consistent with their rights and privileges of such individuals. Most likely however, any employee involved in this mischarging is long gone from the company.

There is no indication in the Justice Department materials as to how this fraud was uncovered. More information on this case can be found here.

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