Major defense contractor Science Applications International Corporation (SAIC ) agreed to pay the U.S. government nearly $6 million to settle allegations that it circumvented the bidding process and induced the Air Force to award the company lucrative contracts. The settlement is the result of a rare case of an active duty military officer blowing the whistle on an improper deal condoned by his superiors. Air Force Lieutenant Colonel Timothy Ferner, a career military man who is represented by the James Hoyer Law Firm, filed the whistleblower suit in 2010.
“This was a case of fraud, waste and abuse involving taxpayer money that one military officer refused to accept. It’s been a frustrating and life changing ordeal for Lt Col Ferner, but we salute his effort to expose wrongdoing, even though it put his career on the line by bucking the chain of command,” said James Hoyer Partner Elaine Stromgren. “We’re hopeful that shining a light on these issues will help to deter this from continuing to happen in the future.”
Rare Case of Military Officer Blowing the Whistle
Lt Col Ferner was Chief of Staff for the Coalition and Irregular Warfare Center at Nellis Air Force Base in Las Vegas when SAIC was awarded a multi-million dollar contract in 2007 to help CIWC develop enhanced warfare capabilities in the fight against terrorism. Lt Col Ferner became suspicious that normal contract procedures were bypassed and was alarmed that his military supervisors condoned and wanted to cover up the violation.
Misrepresentations centered on a middleman based in Tampa, Florida, used by SAIC to arrange and manage the CIWC contract. The broker agent claimed to be a high ranking government official who had authority to bypass the bidding process, none of which was true. As a result, SAIC inappropriately obtained the contract, submitted more than 360 invoices, and received millions of dollars in improper government funding.
In addition, Lt Col Ferner continued to witness waste and abuse by SAIC in executing the contract. “We were basically paying guys to sit around at computers and play games,” he said. “The more contractors that came in, the less work that got done. And the more that that occurred, the angrier I got, because we were not being good stewards of the taxpayers’ money. It was wrong. It was illegal and it was immoral.”
Lt Col Ferner reported his concerns up the chain of command, but his efforts to expose the wrongdoing were rebuffed. He was told to keep quiet. When he wouldn’t, he eventually faced retaliation. His superiors threatened to deploy him to Afghanistan while he was undergoing cancer treatment. Ultimately, Ferner was fired from his job and relegated to a menial position with little to no responsibility.
“There was no honesty and integrity in the whole process that I was observing. I didn’t know if I was going to die when I had cancer, but I wasn’t going to allow my name to be tarnished and potentially associated with this fraud.” Ferner said.
Revolving Door from Military to Defense Contractors
Lt Col Ferner says he believes the revolving door between military leaders and government contractors contributed to the atmosphere that made this waste and abuse possible. “If you keep your mouth shut, you can set yourself up for a high paying job at one of these, giant, defense, contracting companies– especially when you’re close to retirement. We call them ‘ROADY’S,’ he explained. “Retired on Active Duty. Don’t make any waves. Just coast until you retire and you’re all set.”
The whistleblower suit, U.S. ex rel. Ferner v. SAIC, et al., was filed in U.S. District Court in the Middle District of Florida and was joined by the Department of Justice. As a reward under the False Claims Act for exposing fraud against the government, Lt Col Ferner received a portion of the nearly $6 million SAIC paid back to the government.
“Lt Col Ferner chose to reject silence and do the right thing and his actions have made a difference. As a result of this, the government has made changes to prevent this from happening again,” said Attorney Stromgren.
Lt Col Ferner retired early from the Air Force in 2010 and moved to New Zealand, his wife’s native country. Today, he lives on a 25 acre alpaca farm and is taking classes at a local university there.
UPDATE: September, 11, 2013— The U.S. government has announced a settlement with the middleman at the center of a wide-ranging scheme to obtain defense contracts by circumventing the bidding process. Steven Stallings acted as a broker agent inappropriately securing government contracts for major defense contractor SAIC without going through required contract procedures. Stallings, who worked for the New Mexico Institute of Mining and Technology at the time, but was based in Valrico, Florida, has agreed to pay the government $105,000 for his role in the fraud. Stallings settlement comes on the heels of a larger settlement for nearly $6 million with SAIC.
Click here to read more about the Stallings settlement.