Air Force Contractor Pays $1.95 Million to Settle Air Force Contract Fraud Allegations

False Claims Act Violations in Defense Contracting

Government contractor Intelligent Waves, LLC will pay $1.95 million to settle False Claims Act (FCA) allegations arising from Air Force contract fraud related to two Air Force contracts. Intelligent Waves, LLC, which is based in Reston, Virginia, provided crowd-sourced flight data collection support and data analytics to the Air Force pursuant to the Crowd-Sourced Contract it entered in September 2019. The United States alleges that Intelligent Waves, LLC misleadingly provided unauthorized equipment while submitting invoices that portrayed the equipment as authorized. Additionally, Intelligent Waves, LLC allegedly misrepresented the quantities of products and/or labor it provided under the Crowd-Source Contract.

Misuse of Equipment and Labor Misrepresentation in Air Force Contracts

Intelligent Waves, LLC also entered the Special Access Program Facilities Contract in November 2020, and allegedly knowingly made false statements to induce the government to enter the contract.

In further violation of the FCA, during and prior to the award of both contracts, Intelligent Waves, LLC allegedly provided certain meals and entertainment to Air Force employees. The Plaintiff alleges that the owner of Intelligent Waves, LLC was aware of certain alleged misconduct.

Government Agencies Involved in Investigating Air Force Contract Fraud

According to the press release by the US Attorney’s Office, Eastern District of Virginia, the  U.S. Attorney’s Office for the Eastern District of Virginia, the U.S. Air Force Office of Special Investigations, the Defense Criminal Investigative Service’s Mid-Atlantic Field Office, and the Defense Contract Audit Agency coordinated to investigate and obtain the resolution.

This Air Force contract fraud whistleblower litigation was brought under seal in December 2022 by whistleblowers and former Intelligent Waves, LLC employees Nora Taylor and Marthe Lattinville-Pace, on behalf of the United States of America under the FCA’s whistleblower provision.

The Role of the False Claims Act in Combatting Defense Contractor Fraud

The FCA, 31 U.S.C. §§ 3729 – 3733, also referred to as the Lincoln Law, was enacted in 1863 following government contractor fraud during the Civil War in which a defense contractor provided faulty supplies to the Union army. The FCA has since been amended several times after its enactment. The act’s qui tam provision allows private citizen whistleblowers, otherwise known as relators, to bring suits on behalf of the government.  In qui tam lawsuits, relators play a vital role in exposing fraud against the government, including fraud stemming from government contracts.

Relators file FCA actions under seal in a US District Court and provide a copy of the complaint to the US attorney’s office. The government can then use a relator’s information to further investigate the matter.  In turn, relators are eligible to receive typically between 10 and 30 percent of the total recovered damages.  Importantly, relators are protected from retaliation under the FCA.

Lessons for Government Contractors: Compliance and Legal Risks

The Intelligent Waves, LLC settlement is one example of how the FCA can help to combat government contracting fraud, which can result in substantial recoveries due to the large size of defense contracts. The case caption for the lawsuit is United States ex rel. Marthe Lattinville-Pace et al. V. Intelligent Waves, LLC, et al. case number 1:22-cv-1463, filed in the United States District Court for the Eastern District of Virginia.

The Air Force contract fraud settlement is also a cautionary tale. Individuals and contractors should seek legal counsel to navigate compliance and reporting obligations. Government contractors face a number of FCA compliance risks in defense contracts, so a heightened vigilance in detecting and addressing fraud is necessary. Importantly, compliance programs and proactive measures can prevent fraudulent activities.  Common legal pitfalls for defense contractors include overcharging for services provided, including based on inflated hours or materials used, providing inferior products, misrepresenting services provided, falsifying results of compliance assessments, providing kickbacks to government employees, and falsifying country of origin of suppliers to conceal violations of buy American acts, among other potential risks.

The legal team at Miller Shah LLP remains dedicated to representing whistleblowers that report and combat fraud against the government. Indeed, Miller Shah has extensive experience representing FCA and other whistleblower matters, including government contractor fraud and healthcare fraud. Some examples of Miller Shah’s landmark qui tam successes include the $642 million settlement it helped secure from Novartis Pharmaceutical Corporation and the $54 million settlement it established for claims against Teva Pharmaceuticals.