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DOJ Announces $950 Million Raytheon Settlement

November 5, 2024

Raytheon Company has agreed to a $950 million settlement with the federal government. The Raytheon settlement resolves allegations including violations of the False Claims Act (FCA), the Foreign Corrupt Practices Act (FCPA), the International Traffic in Arms Regulations (ITAR), and the Arms Export Control Act (AECA).

Raytheon’s Submission of False Claims

According to the press release, Raytheon falsely certified cost and pricing data during negotiations with the Department of Defense (DoD) for various contracts, particularly involving PATRIOT missiles and radar systems. Raytheon agreed to pay $428 million to resolve the FCA claims, the second-largest recovery for procurement fraud under the FCA.

A former Raytheon employee filed the whistleblower case under the qui tam provisions of the FCA. Raytheon was required to provide accurate cost data to ensure fairness in sole-source contracts. Raytheon admitted to failing to disclose essential labor and material costs related to weapon systems.  It also acknowledged misrepresenting costs during contract negotiations, and double billing on a DoD contract.

Raytheon Settlement Resolves Foreign Corrupt Practices Act Violations

Between 2012 and 2016, Raytheon made payments under false subcontracts related to air defense operations. These actions were intended to corruptly influence a high-ranking official within the Qatar Emiri Air Force to facilitate the awarding of contracts to Raytheon including the construction of a joint operations center.

To resolve the allegations, Raytheon entered into a Deferred Prosecution Agreement (DPA) that includes significant financial penalties. The company will pay a total of $230.4 million in criminal monetary penalties, along with $36.7 million in forfeiture.  Further, it will be monitored for compliance over the next three years. Additionally, Raytheon will pay $49 million in disgorgement and interest and a civil penalty of $75 million. The Justice Department has also agreed to credit a part of the disgorgement payment against the criminal forfeiture amount.

Failure to Disclose Information in Violation of ITAR and AECA

Based on admissions and court documents submitted in the Eastern District of New York, from around 2012 to 2016, Raytheon, through some of its employees and agents, participated in a scheme that intentionally violated the AECA and ITAR Part 130. This involved failing to report to the State Department’s Directorate of Defense Trade Controls the fees and commissions associated with two contracts related to Qatar, specifically the bribes paid to a high-ranking QEAF official via fraudulent subcontracts.

The Department of Justice Seeks to Protect the Defense Procurement Process

The multi-faceted Raytheon settlement reflects DOJ’s commitment to root out fraud and misconduct among DOD contractors.

Through deliberate and deceptive actions, Raytheon not only defrauded the U.S. government — it compromised the integrity of our defense procurement process. Our office is committed to holding accountable those who prioritize profits over national security and clear legal obligations.

 

This case underscores our unwavering commitment to pursuing justice, particularly when taxpayer dollars and DOD operations are at stake. We will continue to work tirelessly with our law enforcement partners to ensure that this type of misconduct is fully exposed and addressed with serious consequences.

-Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts.

In addition to the issues in this case, DOJ has also committed resources to ensuring contractors have good cybersecurity practices.  Failure to comply with mandatory standards could lead to liability under the False Claims Act.

Raytheon Settlement Includes Credit for Company’s Remedial Actions

Raytheon received credit for its cooperation during the investigation.  Some examples involved gathering evidence of interest to the government, proactively identifying important documents, and facilitating witness interviews to streamline the government’s interactions with them. Raytheon, however, did not receive full credit for its cooperation because it failed to provide information until the National Security Division became involved.

In addition, Raytheon engaged in remediation efforts such as hiring legal and compliance experts and creating a comprehensive strategy to improve ethics and compliance training.

We Help Whistleblowers Report Government Procurement Fraud

Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs.  Our firm represents whistleblowers who report fraud against government programs. If you know of a government contractor that has violated its contract requirements, contact us for a confidential consultation.