In The News

Huntington Ingalls Industries Inc. to Pay More than $9 Million to Settle False Allegations

Once again the government has proven that fraud and bribery are not victimless crimes. They impact taxpayers in every way. It proved this last week when it announced that Huntington Ingalls Industries (HII) – a defense contractor based in Newport, Virginia – has agreed to pay a $9.2 million settlement to resolve allegations that it violated the False Claims Act by deliberately overbilling for labor completed on U.S. Navy and Coast Guard ships. Under the settlement, HII will pay $7.9 million which will be combined with an earlier payment it made of $1.3 million. “Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement demonstrates, once again, that we will not tolerate defense contractors who falsely charge the armed forces or any agency of the United States.”

The settlement resolves allegations that HII mischarged for labor it performed on various U.S. Navy and Coast Guard contracts dating back to 2003. HII is alleged to have

  1. Charged for labor on particular contracts even though the costs were not incurred by those contracts
  2. Billed for driver operations to support ship construction for work that did not occur.

“The Southern District of Mississippi will remain vigilant in identifying and prosecuting those involved in nefarious activities and fraudulent billing, which ultimately result in substantial cost overruns on Navy and Coast Guard shipbuilding projects,” said Acting U.S. Attorney Harold Brittain. Brittain also noted three earlier guilty pleas in a related criminal matter in the Southern District of Mississippi (United States v. N. R. Holden & R.G. Gardner, Criminal No 1:15-cr-42 HSO-RHW, United States v. R.M. Wilson, Criminal No 1:16-cr-34-LG-RHW.) “Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the Department of Defense (DOD),” commented John F. Khin, Special Agent in Charge, Southeast Field Office, and Defense Criminal Investigative Service. “This settlement is the culmination of hard work by DCIS, our investigative partners, the Department of Justice, Civil Division, Commercial Litigation Branch, and the U.S. Attorney’s Office for the Southern District of Mississippi; and clearly demonstrates that combatting fraud, waste and abuse within DOD contracting remains a top priority.”

The labor mischarging allegations resolved by this settlement were originally raised in a lawsuit brought by Byron Faulkner, a former HII employee, under the qui tam, or whistleblower provisions of the False Claims Act. Under these provisions, private citizens are able to sue on behalf of the federal government for false claims and to share in any subsequent recovery. Mr. Faulkner will receive more than $1.5 million as his share of the settlement. If you know of abuse that has been committed against the government or one of its agencies, you are encouraged to report it and to contact a qui tam law firm. Qui tam law firms will be able to put you in contact with an attorney who will be able to advise you on such matters.