Weekly Spotlight: Defense Contractor Busted for Fraud and Bribery

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Raytheon Company admitted this week to defrauding the government of millions of taxpayer dollars in a price gouging scheme and to bribing a high-ranking Qatari official. They’re paying the government over $950 million to settle the investigations.

The settlement includes a $111 million recovery, the amount the company overcharged the Pentagon on weapons systems; a $146.8 million criminal penalty; and a $428 million civil settlement for “knowingly failing to provide truthful” cost and pricing data to the government in violation of the Truth in Negotiations Act (TINA), and for double billing on maintenance costs. The $428 million penalty is the second largest False Claims Act procurement recovery under the law, which dates back to the Civil War, according to the Justice Department.

The defense mega-giant is rightfully paying the price for defrauding taxpayers, but there’s only so much satisfaction to be had in this situation — the loopholes that enable this kind of conduct remain wide open. POGO testified before the House earlier this year about the necessity of reforming TINA to increase cost transparency so the Pentagon can secure fair and reasonable prices from contractors.

In an ideal world, the defense companies that defraud taxpayers of millions, and even billions, of dollars would be barred from securing business with the Pentagon. But because that’s unlikely, it’s crucial that guardrails like TINA get strengthened to protect taxpayer dollars, prevent price-gouging, and hold defense contractors accountable.

Read more about the loopholes that have weakened TINA — and how they can be closed. And many thanks to the whistleblower who stepped forward to expose the false claims. While we want to prevent fraud from the outset, there is some satisfaction when the government chases down a fraudster, even if it takes years.

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