Drone Manufacturing Company To Pay $25 Million To Settle False Claims Act Lawsuit

Insitu Inc. (Insitu), a wholly owned subsidiary of The Boeing Company, has agreed to pay $25 million to settle whistleblower claims that they knowingly misrepresented the costs of building and operating Unmanned Aerial Vehicles (UAVs) under contracts with several branches of the military. The lawsuit was originally filed by a whistleblower, D R O’Hara, under the qui tam provisions of the False Claims Act. The U.S. Department of Justice (DOJ) claims that Insitu planned to build drones with old parts but told the military that they would build them with new parts, artificially inflating what they could charge the military for, according to a January 12 DOJ press release. Insitu is a Seattle, WA based company that primarily designs and manufactures UAV’s for the U.S. Special Operations Command (SOCOM) and the Department of the Navy. 

O’Hara, a former executive at Insitu, claims that Insitu acquired the seven non competitively-bid defense contracts in question by falsely claiming that they would use new materials to make the UAVs, or drones. The government claims that Insitu knowingly used less expensive recycled and refurbished materials to make the drones, which significantly brought down the cost of the entire project. The government alleges that Insitu planned to use the recycled materials the whole time, even while they told the government a different story. 

In some qui tam cases, the government decides after reviewing the available evidence, that the lawsuit is strong enough for the government to assume control of litigation. This is generally a favorable sign for the success of the lawsuit, with far more government controlled cases ending in settlements, fines, or admissions of responsibility. After O’Hara filed his qui tam complaint, the government quickly decided to take it over. 

For O’Hara’s part in revealing the allegedly false claims, he will receive a whistleblower award of over $4.6 million. This award is based on a percentage of the total settlement amount that the government will reclaim from Insitu. In successful False Claims Act settlements, the whistleblower is entitled to an award of between 10 and 30% of the total award. 

Read the Department of Justice’s press release here.

Read the full settlement here.

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