The Boeing Company agreed Friday to pay $23 million to resolve allegations that it submitted false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft, and four current and former Boeing employees will share a whistleblower reward of nearly $4 million from the settlement.
Boeing, the aerospace and defense industry giant, is headquartered in Chicago.
“Today’s settlement demonstrates that the Justice Department vigilantly ensures that companies meet their contractual obligations and charge the government appropriately,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.
“Government contractors who seek illegal profit at the expense of taxpayers will face serious consequences,” she said.
The settlement resolved allegations originally brought in a lawsuit by present and former Boeing employees Clinton Craddock, Fred Van Shoubrouek, Anthony Rico, and Fernando de la Garza in federal court in San Antonio under the False Claims Act.
The False Claims Act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. The government can join the suits, as it did in this case.
The four Boeing whistleblowers will receive a total of $3,910,000 as their share of the settlement, the DOJ said.
The complaints alleged that Boeing improperly charged labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft at Boeing’s Aerospace Support Center in San Antonio, Texas.
The C-17 Globemaster aircraft, which is both manufactured and maintained by Boeing, is one of the military’s major systems for transporting troops and cargo throughout the world.
“The government alleged that the company knowingly and improperly billed a variety of labor costs in violation of applicable contract requirements, including for time its mechanics spent at meetings not directly related to the contracts,” the DOJ said.
The settlement was the result of a coordinated effort by the DOJ’s Civil Division, the U.S. Attorney’s Office for the Western District of Texas, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency, and the Defense Contract Management Agency, according the DOJ’s release Friday.
The claims resolved by the settlement “are allegations only — there has been no determination of liability,” the DOJ said.
The case is United States ex rel. Craddock v. Boeing, Case No. SA-07-CA-0880FB (W.D. Tex.).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.