There are typically two types of government defense contracts, fixed-price contracts and cost-plus contracts. In a fixed-price contract, the contractor receives a fixed price for the goods or services provided, and is not compensated based on the costs incurred in filling the contract. In a cost-plus contract, the contractor is paid a fixed amount for the goods or services provided, but also receives an additional percentage based on their costs of production.
Often, companies will fill various fixed-price and cost-plus contracts simultaneously. Sometimes, contractors will shift the costs and expenses associated with fixed-price contracts to a cost-plus contract in order to increase their profit.
Cross charging can also take place during the bidding for new contracts. Some companies will lower their bid for a fixed-price contract for a private company, or for a foreign government, and allocate some of their costs from that contract to a cost-plus contract held with the United States Government.
Under the False Claims Act, whistleblowers who know of a company defrauding the government by cross charging on contracts may bring a qui tam lawsuit on behalf of the government, and are eligible for 15-30% of the government’s recovery in the case and protection from employer retaliation.
If you have information concerning cross charging or other types of defense contractor fraud, please fill out the form to the right or call toll-free (866) 981-4800 to speak with one of our whistleblower attorneys.
Girard Gibbs is a national litigation firm representing consumers, investors, employees, and small businesses in cases involving consumer protection, personal injury, securities, antitrust, and employment laws. The firm’s senior partners, Daniel Girard and Eric Gibbs, have been selected for inclusion in The Best Lawyers in America® 2012 and Northern California Super Lawyers, and have earned AV-Preeminent ratings from Martindale-Hubbell, recognizing them in the highest class of attorneys for professional ethics and legal skills.
