Reporting labor mischarging and cross-charging fraud
This article shows you how to get a reward for reporting labor mischarging or other forms of cross-charging fraud against the federal government.
About 10% of spending by the federal government is due to fraudulent billings. One common way government contractors cheat the federal government is by mischarging labor costs or cross-charging costs incurred on commercial projects to government contracts. Cross-charging fraud also occurs when costs are mischarged between government contracts.
When government contractors or sub-contractors cheat on government contracts or defraud the government it costs all of us in increased taxes.
The good news is that you are being asked to report labor mischarging fraud or cross-charging fraud against the government. This both curbs fraud and pays monetary rewards to the whistleblower for doing the right thing and reporting fraud. To be eligible for a reward and the best way to ensure that the government opens an investigation is to use an attorney to formally report the fraud and apply for a whistleblower reward for reporting labor mischarging or cross-charging.
Tips for reporting labor mischarging and cross-charging fraud
This article answers how to properly report labor-mischarging or cross-charging fraud and how to apply for a whistleblower reward for reporting mischarging fraud.
First, you can’t just call a hotline to report labor-mischarging or cross-charging fraud against the government to receive a whistleblower reward. In fact, how to get a reward for reporting labor-mischarging or cross-charging fraud requires that you use an attorney to file a qui tam suit under the False Claims Act. Your attorney, who generally is willing to work on a contingency basis consisting of the portion of any whistleblower reward, must follow the exact procedures in the reward program for you to get a reward for reporting labor-mischarging or cross-charging fraud.
Second, you must report very detailed and specific information about how the labor-mischarging or cross-charging fraud occurred. The government turns away most whistleblower reward claims, so it’s key that your attorney have experience in reporting labor-mischarging or cross-charging fraud.
How much reward for reporting labor-mischarging or cross-charging fraud?
The amount of any whistleblower reward is set by the amount the government collects based on you allegations of labor-mischarging or cross-charging fraud. Generally you receive between 15 and 25 percent of that amount.
Examples of labor-mischarging or cross-charging fraud
Labor-mischarging or cross-charging fraud is a common defense procurement fraud scheme. For instance, assume a government contractor has multiple contracts with the military or another federal agency. Also assume that one of them is a fixed‑price contract, i.e., the contractor receives a fixed price or set amount for making the product or performing the service, such as $30 million to make a set number of missiles or perhaps $25 for each carrying bag regardless of how much it costs to produce the missiles or make the bags. Here is where the labor-mischarging or cross-charging fraud comes into play. Now assume the same government contractor also has another contract that is a “cost‑plus” contract, which means the government will pay the contractors all of its actual costs for making an item, plus a reasonable profit. Cost-plus contracts typically occur when the government asks the contractor to make a new item that is not commercially available and it is uncertain how much it might cost. For instance, if the Navy needs a new submarine that is different from prior subs, it may use a cost-plus contract.
It is considered labor mischarging or cross-charging fraud when a contractor lies about which contract the costs were incurred under. Suppose the contractor underbid or underestimated how much it would cost to make the missiles or bags under the fixed-price contracts. The government prime-contractor or sub-contractor is still contractually required to keep making these items for that fixed price even if it loses money. But what if the government contractor starts to charge the labor hours of employees working on the missiles or bags from the government fixed-price contract to the submarine cost-plus contract? Clearly that is fraud, which falls under the label of labor-mischarging or cross-charging fraud.
It can be hard for the government to figure out that a contractor is charging labor or other costs from other contracts onto the cost-plus contract. Sometimes a company makes both commercial and government good that are very similar, such as aircrafts. Sometimes the two production lines are in the same building, and it would be very easy for employees working on the commercial contact to build an airplane to bill their time to the government contract. In other words, labor mischarging or cross-charging occurs when the company tells its workers to include on their time cards that they worked on the military contract when in reality they were working on the commercial contact.
How to report the labor-mischarging or cross-charging fraud
Mr. Hesch has vast experience with investigating fraud, including labor-mischarging or cross-charging fraud against the federal government, while working 15 years at the Civil Fraud Section of the U.S. Department of Justice in Washington, D.C.
The link below “Do I have a case” shows you how to ask Mr. Hesch to review your potential labor-mischarging or cross-charging fraud case and how to get a reward for reporting fraud against the government.
The link below “Report Fraud” has more information regarding how to get a reward for reporting labor-mischarging or cross-charging fraud against the government.
The rest of this website (and books written by Mr. Hesch) contain more information about reporting labor-mischarging or cross-charging fraud and obtaining a whistleblower reward.