Northrop Grumman Subsidiary Agrees to Pay $31.65 Million for Overbilling U.S. Air Force in Civil and

https://www.justice.gov/usao-sdca/pr/northrop-grumman-subsidiary-agrees-pay-3165-million-overbilling-us-air-force-civil-and

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Friday, November 2, 2018

Northrop Grumman Subsidiary Agrees to Pay $31.65 Million for Overbilling U.S. Air Force in Civil and Criminal Settlements

NEWS RELEASE SUMMARY – November 2, 2018

SAN DIEGO – Northrop Grumman Systems Corporation (“NGSC”), a subsidiary of the Northrop Grumman Corporation, with offices in San Diego, California, agreed today to pay a total of $31.65 million to settle civil and criminal investigations into fraud arising out of its Battlefield Airborne Communications Node (“BACN”) and Dynamic Re-tasking Capability (“DRC”) contracts with the United States Air Force. NGSC agreed to pay $27.45 million to settle civil allegations that it violated the False Claims Act by overstating the number of hours its employees worked on the BACN and DRC contracts with the United States Air Force. Additionally, NGSC agreed to forfeit $4.2 million in a separate agreement to resolve a criminal investigation into fraudulent billing on the BACN contract. 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 NGSC.

In the agreement resolving the criminal investigation of NGSC, the company admitted that its employees deployed to an air base in the Middle East defrauded the Air Force by overbilling time charged to the BACN contract. Specifically, from January 2011 to October 2013, NGSC 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. NGSC admitted that its employees billed time to the BACN contract when its employees were not working and engaged in leisure activities, such as golfing, skiing, visiting local amusement parks, going out to eat or drink, shopping, and enjoying various amenities at the five-star hotels where the employees were housed.

By inflating their time, the employees working on the BACN contract personally profited and were paid thousands of dollars that they did not earn. In an email, one NGSC employee summed up the billing practices by saying that they “work[ed] about 6-8 hours and charge[d] 13.” NGSC admitted that its employees working on the BACN contract overbilled the United States by more than $5 million at one site alone.