Defense Procurement Fraud

Information on Plea Agreements and Settlements

Gao ID: GGD-92-135FS

September 17, 1992

As part of a February 1990 plea bargain agreement, the Northrop Corporation pled guilty to procurement fraud charges in exchange for dropping other criminal investigations pending against the company in California. Part of the plea agreement was sealed from the public, and both the Central District of California and Northrop agreed not to issue a press release or make any public statements on the U.S. Attorney's decision to decline prosecution in the pending investigations. This fact sheet contains information on procurement fraud cases resulting in a criminal conviction or civil settlement that the Justice Department brought against the 100 companies receiving the largest Defense Department contracts in 1991. For each case, GAO provides the (1) name of the contractor, (2) judicial district, (3) case type, (4) case disposition, (5) disposition date, and (6) amount of any monetary award to the government. GAO also obtained information on the Justice Department's policy on sealing the plea agreements and settlements of defense procurement fraud cases from the public.

GAO found that from October 1981 through June 1992: (1) 28 of the top 100 defense contractors or their subsidiaries had 38 criminal convictions, which consisted of 35 guilty pleas, 1 no-contest plea, and two trials; (2) fines exceeded $167 million, and restitution orders exceeded $64 million; (3) individuals were also charged and convicted; (4) 38 of the top 100 companies or their subsidiaries were involved in 92 civil fraud cases, of which 58 were settled without litigation, 27 were settled before trial, 3 resulted in partial judgments, and 4 were awards in the government's favor; and (5) civil awards totalled more than $631 million. GAO also found that Justice: (1) does not have readily available the number of sealed plea agreements and settlements; (2) does not have a formal policy on sealing court cases; and (3) only files criminal plea agreements under seal for certain litigation needs, and although some civil actions may initially be sealed, settlements are usually not.

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