Postal Service Fraud in Virginia
Recently revealed court documents allege that Virginia-based Northrop Grumman (“Northrop”) defrauded the United States Postal Service (“USPS”) out of millions of dollars. The allegations could spell trouble for Northrop, a defense and aerospace powerhouse, which regularly contracts with the United States government.
The Complaint, filed under the False Claims Act, alleges that Northrop and sub-contractor Motor Drives & Controls, Inc. profited illegally pursuant to a 2007 contract with the USPS to deliver one-hundred Flats Sequencing System machines (“FSS”). The FSS machines were designed to sort mail to reflect delivery sequences, a process that is currently performed by manual labor. The USPS hoped to save approximately $600 million a year, by using the machines.
The whistleblower behind the claim is Maryland resident and former Northrop employee Beau Michaud. Mr. Michaud worked on the FSS project from January 2007 to February 2011 and claims his internal complaints were met with resistance. According to Mr. Michaud the contract mandated that Northrop issue efficiency reports certifying compliance with performance standards as a prerequisite to installment payments from the USPS.
Mr. Michaud alleges that Northrop made material misrepresentations to USPS regarding the FSS machine’s efficiency, reliability and speed. Moreover, the Complaint contends that the company deliberately concealed documents to hide the fact that the FSS machines were not meeting the standards of the contract. Of course if these allegations are true, these actions constituted false claims for payment against the government.
The lawsuit is seeking over $179 Million in damages. For its part, Northrop vigorously denies all liability.
What safeguards exist for Postal Service employees to prevent whistleblowing retaliation?
Despite the Whistleblower Protection Act of 1989 not having mandatory applicability to the Postal Service, many of its stipulations have been willingly embraced, along with those from the Whistleblower Protection Enhancement Act of 2012. The Postal Service has embedded this policy within its Employee & Labor Relations Manual (ELM) in Section 666.3. Furthermore, the OIG has adopted these protections through its own internal rules.