Defense Contractor to Pay $7.75M to Resolve False Claims Act Case
By the Constantine LLP Whistleblower Team
Defense contractor Sierra Nevada Company, LLC (“SNC”) recently agreed to pay $7.75 million to settle alleged False Claims Act violations stemming from its employment of a government official who “participated personally and substantially” in government contracts awarded to SNC.[1]
What Were the Government’s False Claims Act Allegations Against SNC?
The government alleged that SNC retained Michael Henry, a government employee with the Joint Staff/J6, as an SNC consultant from July 2019 to June 2020, a period that overlapped with Henry’s government service.[2] In particular, the government claimed that (i) as a government employee Henry “was involved in the award of three different government contracts to SNC” and “participat[ed] personally and substantially in the contracts by evaluating and obtaining approvals for SNC’s products”; and (ii) as an SNC consultant Henry “participated personally and substantially in the contracts on SNC’s behalf by recommending SNC’s products for purchase.”[3] This amounted to an alleged organizational conflict of interest under the Federal Acquisition Regulations (“FARs”) and led to alleged violations of the False Claims Act by SNC.[4] SNC agreed to pay $7.75 million to settle the allegations.
Who Alerted the Government?
The DOJ press release notes that in addition to the civil FCA allegations against SNC, Henry pleaded guilty to a criminal indictment charging him with Acts Affecting a Personal Financial Interest in violation of 18 U.S.C. § 208(a).[5] In Henry’s criminal case, the stipulated Statement of Facts describes how an industry participant informed the government of the conflict of interest:
“38. Around February 2020, while employed at [Joint Staff J6], HENRY offered the CEO of Company B his consulting services in the commercial marketplace. During the conversation, HENRY stated that he was already consulting with Company A and that he had prior approval from the government to do so.
39. A few weeks later, HENRY had another conversation [with] the CEO of Company B. During the conversation, the CEO of Company B asked to see HENRY’s contract with Company A. The CEO of Company B informed HENRY of his concerns regarding a potential conflict of interest and told HENRY that he should not be engaged in this business. The CEO of Company B then told HENRY that his consulting was inappropriate, HENRY should report this to his superiors, or the CEO of Company B would report it.
40. HENRY never reported his consultancy with Company A to his supervisor at [Joint Staff J6].
41. In June 2020, Company B disclosed to HENRY’s supervisor his conflict of interest with Company
A.”[6]
The press release does not indicate that the False Claims Act allegations were prompted by a whistleblower complaint under the qui tam provisions of the False Claims Act. Nevertheless, these facts illustrate how industry participants are often in the best position to uncover alleged misconduct and report it to the government.
Whistleblowers Can Initiate Cases Under the False Claims Act
Under the qui tam provisions of the False Claims Act, whistleblowers may bring lawsuits on behalf of the government against individuals or entities committing fraud against the government. As a reward, eligible whistleblowers can receive up to 30% of the government’s recovery.
The False Claims Act is the federal government’s most powerful enforcement tool to combat fraud and safeguard taxpayer dollars. According to Constantine LLP partner Dan Vitelli, “Defense contractors are common defendants in False Claims Act cases. The government pays defense contractors a massive amount of money each year, and the False Claims Act is the government’s primary way to recover funds lost to fraud.”
The qui tam or whistleblower provisions of the False Claims Act are a crucial feature of the law. Most new FCA matters are qui tam cases initiated by whistleblowers, and qui tam cases represent the majority of FCA settlements and judgments. As we previously analyzed, in 2025 the government recovered roughly $6.9 billion from False Claims Act enforcement actions, the bulk of which — more than $5.3 billion — came from actions originated by whistleblowers under the qui tam provisions of the statute. “Insiders at the company or other industry participants are often in the best position to report fraud to the government and initiate an enforcement action,” Vitelli added, “particularly when it comes to uncovering the increasingly complex and hidden schemes deployed by companies.”
What is Government Contract Fraud?
Government contract fraud, also known as procurement fraud, can be committed by many different types of companies or individuals and can take many different forms. It can include, for example, providing products or services that fail to meet legal or contractual specifications; materially misrepresenting or inflating costs; misallocating or improperly shifting costs between contracts; obtaining government contracts through bid-rigging, bribery, or other illegal means; or falsely representing pricing or discounts in violation of “most favored customer,” “best pricing” requirements, or price reduction clauses.
Our Firm Helps False Claims Act Whistleblowers
Constantine LLP has significant experience representing whistleblowers under the False Claims Act. If you would like to learn more about our work, Constantine LLP’s False Claims Act successes, or what it means to be a whistleblower, please contact us. We will connect you with a member of the Constantine LLP whistleblower team for a free and confidential consultation.
Speak Confidentially With Our Whistleblower Attorneys
[1] https://www.justice.gov/usao-edva/pr/defense-contractor-pay-775m-resolve-false-claims-act-allegations (press release).
[2] Id.
[3] Id.
[4] Id.
[5] Id.; see also United States v. Henry, No. 2:24-cr-111 (E.D. Va.), ECF No. 21 (Plea Agreement) at 1.
[6] United States v. Henry, 2:24-cr-111 (E.D. Va.), ECF No. 22 (Statement of Facts) ¶¶ 38-41.
Tagged in: False Claims Act,