Safeguarding national security from fraud in an era where defense budgets are under intense scrutiny relies heavily on the integrity of the industrial base. In this environment, prosecuting false claims, under the False Claims Act (“FCA”), has become a critical tool for deterring fraud and ensuring taxpayer dollars support the Department of War (“DOW”) according to contractual terms. Recent developments, including President Trump’s Executive Order on “Prioritizing the Warfighter in Defense Contracting” (January 7, 2026), which ties executive compensation to performance and curbs stock buybacks discussed in our earlier blog—amplify the stakes: any misrepresentation in billing, performance, or compliance can trigger civil penalties and even criminal prosecutions under the FCA.
The FCA, codified at 31 U.S.C. §§ 3729–3733, imposes liability for knowingly submitting false or fraudulent claims to the government and carries penalties up to three times the damages plus fines per claim. In defense contracts, this can surface, for example, through a contractor’s practice of over billing for substandard materials, falsifying test data on critical systems, or misrepresenting compliance with statutes like the Buy American Act (“BAA”) or Cybersecurity Maturity Model Certification (“CMMC”). A concrete example is the 2023 settlement with General Electric, which paid $9.4 million to resolve FCA allegations for delivering defective aircraft engine components to the military, where falsified testing records endangered pilots and compromised readiness. Such fraud not only drains resources but also erodes trust in critical supply chain, where vulnerabilities could lead to mission failures against adversaries.
The DOJ has ramped up enforcement, with whistleblower qui tam actions driving many cases, especially post the 2025 shutdown’s disruptions that exposed billing and programmatic irregularities during delays. Historically, however, the government has robustly prosecuted FCA actions in government contracting. For example, in a well-known and high-profile 2021 case, Boeing agreed to pay $2.5 billion to resolve criminal charges and FCA allegations related to the 737 MAX crashes, including false statements to the FAA about aircraft safety—issues that indirectly impacted defense variants. Similarly, in 2024, Raytheon settled for $428 million over FCA claims involving defective pricing and improper cost accounting on DoD contracts for missile systems, where overstated costs inflated bills. These cases, a representative few, demonstrate DoJ’s focus on FCA claims in defense, in particular.
The Oready, LLC decision (December 8, 2025) underscores how agencies enforce stringent requirements, like key personnel resumes, to prevent downstream false claims. If a contractor submits inflated qualifications leading to award, then fails to deliver, they risk FCA exposure for implied false certifications. Similarly, the Castro & Company, LLC ruling (B-423689, November 13, 2025) on Organizational Conflicts of Interest (“OCIs”) warns that undisclosed biases in proposals could be deemed fraudulent, particularly in audit or technology contracts considered essential to national security.
Export controls intersect here, interestingly, as well. As noted in our blog on publication limitations under ITAR (November 19, 2025), misrepresenting technical data as public domain to evade licenses can trigger FCA suits especially if it results in unauthorized exports of defense technologies, aiding foreign threats. The shutdown’s impacts (November 12, 2025) compounded this, with halted approvals leading to rushed submissions prone to errors—and potential prosecutions, even for inadvertent mistakes.
The FCA serves as a flexible weapon in the DoJ’s arsenal—much like the adaptable tools available to the warfighter—to combat fraud and protect national interests. Whether you’re a prime contractor navigating complex DoW solicitations, a subcontractor managing pass-through risks, or a GSA schedule holder ensuring compliance across federal agencies, proactive steps are key risk mitigation: Document everything, certify accurately, and consult with counsel before making certifications to the government to steer clear of enforcement crosshairs. Don’t wait for a qui tam whistleblower or DoJ investigation—work with counsel early and deploy compliance strategies that safeguard your business and support national interest.
