Northrop Grumman To Pay $11.4 Million To Resolve FCA Allegations

Northrop Grumman, one of the nation’s largest defense contractors, agreed to pay $11.4 million to resolve allegations that it violated the Federal Acquisition Regulations (“FAR”) and the FCA.  According to the allegations, Northrop failed to comply with its 2002 settlement agreement with the Defense Contract Management Agency (“DMCA”) by charging deferred compensation awards to key employees to its federal contracts, in violation of its 2002 settlement agreement.

The case arose when the government contracting officer found that Northrop after learning that it failed to abide by the 2002 agreement by charging the government for the costs of its deferred compensation awards and ordered Northrop to pay a penalty of twice the amount of unallowable costs.  After Northrop challenged the decision, the U.S. counterclaimed for violating the FCA by charging the government the unallowable costs.