Raytheon to Pay $950M to Settle Federal Fraud Allegations

Raytheon agrees to a $950 million settlement for fraud and overcharging the DOD, the U.S. Attorney’s Office announced.Photo byOo JifliponUnsplash

Raytheon, a subsidiary of RTX (formerly Raytheon Technologies Corporation), has agreed to pay over $950 million to settle government investigations into allegations of defective pricing on federal contracts and violations of the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA), the U.S. Attorney’s Office for the District of Massachusetts announced today.

According to the department, Raytheon will pay more than $574 million to resolve both criminal and civil liabilities related to overcharging the Department of Defense (DOD) on several contracts.

The company has entered into a three-year deferred prosecution agreement (DPA) to resolve two counts of major fraud against the United States, according to the department.

Raytheon will pay $147 million in criminal penalties and $428 million to settle civil allegations, including providing false cost and pricing data during contract negotiations and double-billing the DOD on a weapons maintenance contract.

Separately, Raytheon has agreed to a three-year DPA with the Eastern District of New York, resolving charges of conspiracy to violate the FCPA.

The department says the company admitted to bribing a government official in Qatar and failing to disclose these bribes in export license applications, as required by the International Traffic in Arms Regulations (ITAR).

Raytheon will pay $146.7 million in criminal fines and $111.2 million in compensation to victims.

Under both agreements, Raytheon will retain an independent compliance monitor for three years, enhance its compliance program, and report any future misconduct, the department stated.

The civil settlement also resolves allegations under the False Claims Act. The department states that Raytheon knowingly provided false cost and pricing data during negotiations for numerous contracts between 2009 and 2020.

This resulted in inflated prices on government contracts, including the supply of PATRIOT missile systems and radar operations. The department also stated that Raytheon admitted to double-billing the DOD on a maintenance contract.

A whistleblower lawsuit, filed by a former Raytheon employee under the False Claims Act, contributed to the investigation. As part of the settlement, the whistleblower will receive $4.2 million, the department says.

“Raytheon engaged in criminal schemes to defraud the U.S. government in connection with contracts for critical military systems and to win business through bribery in Qatar,” said Deputy Assistant Attorney General Kevin Driscoll of the Justice Department’s Criminal Division.

“ Today’s resolutions, with criminal and civil penalties totaling nearly $1 billion, reflect the Criminal Division’s ability to tackle the most significant and complex white-collar cases across multiple subject matters.”