No Defense for Defense Spending Fraud
In FY 2021, the Department of Defense’s (DOD) budget was $703.7 billion.
This is more money in absolute terms than any other Country spends on Defense. It is also more than any other NATO country spends per person on defense at $2,186 per American. Therefore, every American has a stake in ensuring that money is spent well.
The False Claims Act is an established and proven way to fight fraud, and the original purpose of the False Claims Act was to combat fraud in government contracting. It was first enacted in response to reports of fraud in the supply of goods and services to the military. But while there are examples of how the Act has worked in the past, the False Claims Act is not being deployed much now or with much success to combat defense fraud.
For 2021, the Department of Justice (DOJ) reported total settlements and recoveries of $119.6 million in Department of Defense related matters, including cases filed by whistleblowers and cases initiated by the government itself. That is approximately 17 thousands of a percent of the Defense budget. (0.0017%)
Cases related to fraud on the DoD have also become increasingly rare. Only 52 False Claims Act cases were filed last fiscal year alleging fraud on the DoD – 27 initiated by whistleblowers and 25 by the government. In comparison, during the same time, more than 9 times as many new cases were filed alleging healthcare fraud – 388 initiated by whistleblowers and 97 by the government.1
Is it possible this relative inaction in the False Claims Act is because there is no fraud, at the Department of Defense?
Anything is possible, but no one, including the Government Accountability Office (GAO), believes that to be the case. In a report from August 2021, GAO reiterated that “[t]he scope and scale of [DOD’s procurement] activity makes DOD procurement inherently susceptible to fraud.”
Like military service itself, Whistleblowing is a volunteer opportunity, and Uncle Sam needs defense contracting whistleblowers to protect both military operations and the public fisc.
Written by Renée Brooker and Eva Gunasekera of Tycko & Zavareei LLP. Edited by James King of Taxpayers Against Fraud. Fact checked by Julia-Jeane Lighten of Taxpayers Against Fraud.
1. Note: False Claims Act cases classified as related to DoD fraud may still be related to “healthcare” to the extent the fraud is perpetrated against DoD’s extensive healthcare operations, including through Tricare and the VA.