Case Files

Disclaimer: This booklet is for general informational purposes only and does not constitute legal, financial, accounting, or business advice, and should not be relied upon as a substitute for consultation with a licensed attorney, accountant, or qualified government contracts professional regarding your specific circumstances. Every case discussed is drawn from a public government source, such as a Department of Justice, Department of State, or inspector general press release, and every dollar figure is cited to that source. Unless a criminal outcome is stated, each figure is a settlement or agreement resolving allegations, and no court determined liability. Companies and individuals named are described only as the sources describe them. Where the public record is thin, such as for allied manufacturers, the articles say so rather than filling the gap. Regulations, clause numbers, thresholds, and agency procedures reflect publicly available guidance as of October 2026 and are subject to change without notice. and federal acquisition is presently mid-transition on several fronts. Readers should verify current requirements against the clauses in their own contracts before relying on any point here. Nothing in this booklet guarantees a contract award, a favorable audit or review outcome, or any level of compliance. Disclosure: GPS LLC is a referral partner of GovComply, which is mentioned in this booklet, and may receive compensation for referrals.

Start with Vol. 1: Contract Ready, the compliance field guide for defense manufacturers, covers what to build before award. This volume shows what the public record says happens when it isn't there.

A Note on Scope

This booklet collects 18 named federal compliance matters drawn only from public government sources. It is a reference for manufacturers, not a legal opinion, and it does not say that any named company did what was alleged. Each dollar figure is cited to the release that announced it. Unless a criminal outcome is stated, each figure is a settlement or agreement resolving allegations, and no court determined liability.

Two limits are worth stating up front. First, the public record on allied manufacturers is thin, and no named enforcement case against an Australian manufacturer supplying U.S. defense companies turned up in the research. Second, several cases are older than others, and the booklet gives the year so readers can weigh them.

Who This Is For

This booklet is written for owners, finance leaders, contracts managers, and quality leaders at manufacturers that sell to the federal government directly or through a prime. It assumes you hold or are pursuing federal work and want to see what the record shows about how things go wrong.

How It Is Organized

It is organized in four parts that mirror the series: civilian federal manufacturers, the U.S. defense supply chain, allied and foreign-owned suppliers, and federal construction. A cost summary, a checklist, and a glossary follow. Sections marked ADVANCED are for readers who want the mechanics behind the outcomes.

Prove It, Don't Claim It

One idea runs through every case: a signed statement to the government is only as good as the record behind it. Where the record was missing, wrong, or never kept, the statement became the problem.

Part 1 — Civilian Federal Manufacturers

What the Record Shows

Civilian agencies enforce too. The False Claims Act (FCA) reaches every federal dollar, and civilian contracts carry country-of-origin rules under the Trade Agreements Act (TAA) and pricing obligations such as the price reduction clause.

The Cases

• Coloplast, $14,547,347 (December 2022) — A medical products manufacturer on a Department of Veterans Affairs contract. The U.S. Attorney's Office for the District of Columbia described allegations that the company misapplied the substantial transformation standard, reported incorrect countries of origin, kept products on contract after manufacturing moved to non-designated countries, and missed price reduction clause discounts. The company self-disclosed. Type: mixed.
• Varidesk and Vari Sales Corporation, $1,100,000 (April 2025) — An office furniture maker on a General Services Administration (GSA) Multiple Award Schedule contract. The release alleges the company did not give GSA discounts it offered other customers between December 2016 and June 2019. A former sales executive filed the suit and received $187,000. Type: process.
• Fastenal, $6,250,000 (January 2011) — A hardware distributor, not a manufacturer, included because the obligations match. The Department of Justice alleged inaccurate pricing disclosures, a price reduction clause violation, and sales of Chinese-made products in violation of the TAA. Type: mixed.
• OCE North America, $1,200,000 (September 2009) — A GSA contractor. The GSA Inspector General reported allegations of TAA and pricing violations. OCE denied the allegations. Type: mixed.

What to Check

• Origin records — Does the country-of-origin statement on each catalog item match where the product is made today?
• Price reduction ownership — Who watches every discount given to commercial customers?
• Change triggers — Does a plant move or supplier change trigger a review of federal catalog statements?

Part 2 — U.S. Defense Supply Chain

What the Record Shows

Subcontractors are reached by the same clauses as primes. Cybersecurity implementation and origin certifications drive several of the cases.

The Cases

• Swiss Automation, $421,234 (December 2025) — An Illinois machining company alleged not to have met National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171 requirements for part drawings supplied to prime contractors. A former quality-control manager received $65,291. Type: process.
• MORSECORP, $4,600,000 (March 2025) — A defense contractor alleged to have used an email host without the required Federal Risk and Authorization Management Program (FedRAMP) baseline and to have reported a NIST score of 104 when a consultant later found negative 142. Whistleblower share: $851,000. Type: mixed.
• Aero Turbine and Gallant Capital Partners, $1,750,000 — Air Force contract cybersecurity allegations with self-disclosure and cooperation credit. Type: process.
• Tungsten Heavy Powder, $5,641,114 (April 2021) — Origin certifications on foreign military financing purchase orders, with Chinese tungsten and Mexican manufacturing alleged. Type: conduct.
• W International entities, $10,500,000 (March 2026) — Alleged overcharging for weld tables supplied to Air Force and Navy work. Whistleblower share: $1.8 million. Type: conduct.
• Frazier Aviation and its former chief executive, $4,900,000 (September 2026) — Alleged unauthorized use of a prime's Commercial and Government Entity (CAGE) code and unauthorized subcontractors. The release says the former chief executive will pay. Type: conduct.

What to Check

• Cyber evidence — Can you produce your current self-assessment score and the proof behind it?
• Certifications — Who reviews each origin or source statement before it is signed?
• Internal reports — Where does a concern from an employee go, and who answers it?

Part 3 — Allied and Foreign-Owned Suppliers

What the Record Shows

Allied suppliers carry both contract flowdowns and U.S. export controls. The cases below involve a Dutch company and U.S. subsidiaries of allied parents. They illustrate how U.S. rules cross borders. They do not show enforcement against Australian firms.

The Cases

• BAE Systems, Inc., $36,000,000 (August 2026) — A State Department settlement for 104 alleged export violations. $18 million paid, $18 million suspended, with a 36-month consent agreement. All but one violation was voluntarily disclosed. Type: process.
• Fokker Services B.V., $21,000,000 (June 2014) — A Dutch aerospace services provider with 1,153 shipments to Iran, Sudan, and Burma and a deferred prosecution agreement. Type: conduct.
• ABS Development Corporation, $2,800,000 plus $16 million in waived claims (November 2019) — An Israeli-owned subsidiary on an Army foreign military sales contract, alleged to have misrepresented who would perform the work. Type: conduct.
• Meggitt-USA, reported up to $25,000,000 (August 2013) — Reported by a trade publication. Details were limited in reachable sources, so the booklet does not characterize the failure and excludes the figure from totals.

What to Check

• Determinations — For each part shipped to a U.S. prime, is there a written licensed, exempt, or unrestricted determination?
• Exemption conditions — Does anyone check each exemption claim against its conditions?
• Disclosure decisions — Who decides whether to self-disclose, and how fast?

Part 4 — Federal Construction

What the Record Shows

Construction runs on records: test results, certified payroll, and subcontract agreements. Most cases below involve alleged gaps between what the records said and what happened on site.

The Cases

• Tetra Tech EC, $57,000,000 (August 2026) — Alleged falsified soil tests at Hunters Point Naval Shipyard from 2003 to 2014. Seven relators received about $11.97 million. Type: conduct.
• Kokosing Materials and Barrett Paving Materials, $30,000,000 (February 2026) — Alleged copied job mix data and false quality control results on federally funded Ohio roads. $17.5 million and $12.5 million. Type: conduct.
• Hensel Phelps Construction, $2,804,110 (May 2022) — An alleged set-aside subcontract arrangement at the Armed Forces Retirement Home. Relator share: $630,925. Type: mixed.
• Watry Homes, $1,660,312 (June 2015) — Wage records on public housing under the Davis-Bacon Act. The release describes a guilty plea, $659,822 in restitution, and $1,000,490 in civil damages. Type: conduct.
• Colas Djibouti, $16,442,002 (February 2021) — Alleged substandard concrete on Navy airfields, with a $3.9 million civil settlement and a $12,542,002 deferred prosecution payment. Type: conduct.

A Criminal Case, Excluded From Totals

• Michael Angelo Padron (sentenced January 2023) — 27 months in prison and a $1.75 million fine for a service-disabled veteran-owned small business front scheme tied to over $240 million in contracts.

What to Check

• Test data controls — Who can change a result after entry, and is it logged?
• Payroll — Is certified payroll reconciled to timekeeping on every covered project?
• Set-aside subcontracts — Can you show who actually performs the work?

ADVANCED — Reading a Press Release

Settlement Versus Judgment

A release announcing an agreement to pay typically states that the claims are allegations and that no liability was determined. That is different from a judgment or a guilty plea. The booklet keeps the two distinct. Watry Homes and Padron involved criminal outcomes. The others are civil resolutions.

The Relator Share

Many cases begin when an employee or competitor files a qui tam suit under the FCA. The relator receives a share of the recovery. Where a release states it, this booklet cites it, because it signals how often these matters surface from inside.

ADVANCED — Self-Disclosure and Cooperation Credit

Coloplast self-disclosed. Aero Turbine and Gallant made multiple written self-disclosures and the release credits their cooperation. BAE voluntarily disclosed all but one violation. These facts are in the releases. What a disclosure achieved in each matter is for counsel to assess, and the booklet does not offer a formula.

ADVANCED — Individual Liability

Two matters involve individuals. The Frazier Aviation release states the former chief executive will pay the $4.9 million. The Padron matter ended in a prison sentence. Executives who sign certifications may carry personal exposure that the company's structure does not remove.

What the Totals Show

The 18 cases total $218,616,119, calculated from the figures above. Part 1 is $23,097,347. Part 2 is $27,812,348. Part 3 is $59,800,000, of which $18 million was suspended. Part 4 is $107,906,424.

By type, process cases total $39,271,234 (about 18 percent), mixed cases $29,401,457 (about 13 percent), and conduct cases $149,943,428 (about 69 percent). The totals exclude legal fees, staff time, monitors, lost business, the Meggitt-USA agreement, the $16 million in waived claims in the ABS matter, the separate $40 million environmental settlement in the Tetra Tech matter, and the Padron fine. No release quantified lost contracts or sales revenue, and this booklet does not estimate it.

Reference Figures

What a Compliance Platform Can and Cannot Do

The Honest Mapping

A purpose-built platform can help with one category of failure: obligations nobody was tracking and evidence nobody could find. GovComply, a veteran-owned platform for defense manufacturers, identifies the clauses in each contract, tracks whether supporting documentation is complete, current, or missing, manages supplier flowdown and supplier quality records, and assembles audit evidence packages. It does not make compliance determinations, does not perform CMMC assessments or manage cybersecurity controls, does not manage export control classifications or licenses, and does not process costs or pricing. (Disclosure: GPS is a GovComply referral partner.)

Where It Fits the Cases

Four cases, $22,672,691 or about 10 percent of the total, are partly within that scope: Coloplast, Swiss Automation, Frazier Aviation, and Hensel Phelps. Fourteen cases, $195,943,428, are outside it, including cybersecurity control implementation, export control, pricing, overbilling, and falsified field data.

What It Cannot Do

No release says a tool would have changed an outcome, and this booklet does not claim that. A tool cannot supply the underlying facts, such as where a product was actually made, and it cannot prevent a person from falsifying a record.

Readiness Checklist

• Origin records — Country-of-origin statements match current production. Owner: Supply Chain.
• Pricing clauses — Every price reduction clause has a named owner. Owner: Sales and Finance.
• Cyber evidence — Current score and supporting proof can be produced on request. Owner: Information Technology.
• Certifications — Each signed certification rests on a record reviewed by a second person. Owner: Contracts.
• Export determinations — Written determination for each part shipped to a U.S. prime. Owner: Trade Compliance.
• Test and payroll data — Edits are logged, and payroll reconciles to timekeeping. Owner: Operations and Finance.
• Set-aside work — Documented proof of who performs each set-aside subcontract. Owner: Contracts.
• Internal reports — A named path for employee concerns, with a response deadline. Owner: Executive Leadership.
• Disclosure plan — A written process for deciding whether and how fast to self-disclose. Owner: Counsel.

What Is In Flux

• Revolutionary FAR Overhaul. The Federal Acquisition Regulation (FAR) is being rewritten, with a proposed rule on Part 44 published September 18, 2026, and comments open through October 19, 2026. Read the clauses in your own contracts.
• CMMC Phase 2. The Cybersecurity Maturity Model Certification (CMMC) Phase 2 requirement was suspended by the Department of War on July 13, 2026, with a 60-day review. As of late September 2026, no restart date had been announced. The Phase 1 self-assessment, the Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012 clause, and NIST SP 800-171 obligations remain.
• Australia, United Kingdom, and United States exemption. Effective December 30, 2025, with conditions and exclusions. Read the conditions before relying on it.
• Threshold changes. The certified cost or pricing data threshold rose to $10 million for Department of Defense (DoD) contracts entered into after June 30, 2026, and new Cost Accounting Standards thresholds took effect October 1, 2026. Higher thresholds do not remove False Claims Act exposure.

Glossary

• Qui tam — A suit brought by a private person on the government's behalf under the False Claims Act, with a share of any recovery.
• Relator — The person who brings a qui tam suit.
• Deferred prosecution agreement — An agreement under which prosecution is deferred, and ultimately dropped, if the company meets conditions.
• Price reduction clause — A schedule contract clause requiring the contractor to pass on certain discounts to the government.
• Trade Agreements Act — A law limiting federal purchases to U.S.-made or designated-country end products.
• Davis-Bacon Act — A law requiring payment of prevailing wages on covered federal construction.
• Service-disabled veteran-owned small business — A small business set-aside category requiring ownership and control by a service-disabled veteran.
• CAGE code — A Commercial and Government Entity code that identifies a supplier to the government.

Sources

Part 1 — Civilian Federal Manufacturers

1. U.S. Attorney's Office, District of Columbia, Press release, United States Settles False Claims Act Allegations Involving Medical Product Manufacturer (December 12, 2022) — justice.gov
2. U.S. Attorney's Office, Northern District of California, Press release, Office Furniture Supplier VARI Agrees to Pay $1.1 Million to Resolve Allegations of False Claims (April 15, 2025) — justice.gov
3. U.S. Department of Justice, Office of Public Affairs, Press release, Fastenal Pay $6.25 Million to Resolve False Claims Act Allegations (January 13, 2011) — justice.gov
4. General Services Administration Office of Inspector General, News release, $1.2M Settlement With GSA Contractor for Trade Agreements Act Violations (September 8, 2009) — gsaig.gov
5. Acquisition.gov, Federal Acquisition Regulation 52.225-5, Trade Agreements — acquisition.gov
6. Cornell Law School Legal Information Institute, 31 U.S. Code Section 3729, False Claims — law.cornell.edu

Part 2 — U.S. Defense Supply Chain

1. U.S. Department of Justice, Office of Public Affairs, Press release, Illinois Precision Machining Company Agrees to Pay $421,234 to Resolve Alleged False Claims Act Violations (December 5, 2025) — justice.gov
2. U.S. Department of Justice, Office of Public Affairs, Press release, Defense Contractor MORSECORP Inc. Agrees to Pay $4.6 Million to Settle Cybersecurity Fraud Allegations (March 26, 2025) — justice.gov
3. U.S. Attorney's Office, Eastern District of California, Press release, California Defense Contractor and Private Equity Firm Agree to Pay $1.75M to Resolve False Claims Act Allegations — justice.gov
4. U.S. Attorney's Office, Southern District of California, Press release, Tungsten Heavy Powder of San Diego Agrees to Pay $5.6 Million to Settle False Claims Act Allegations (April 29, 2021) — justice.gov
5. U.S. Department of Justice, Office of Public Affairs, Press release, W International Companies Agree to Pay $10.5M to Settle False Claims Act Allegations of Overcharging (March 17, 2026) — justice.gov
6. U.S. Attorney's Office, Eastern District of Virginia, Press release, Defense Contractor's Former Chief Executive to Pay $4.9M to Resolve False Claims Act Allegations (September 29, 2026) — justice.gov
7. Acquisition.gov and eCFR, Defense Federal Acquisition Regulation Supplement 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting — ecfr.gov
8. National Institute of Standards and Technology, Special Publication 800-171 Revision 2 — csrc.nist.gov
9. FedRAMP, Federal Risk and Authorization Management Program — fedramp.gov

Part 3 — Allied and Foreign-Owned Suppliers

1. U.S. Department of State, Bureau of Political-Military Affairs, Press release, U.S. Department of State Concludes $36 Million Settlement Resolving Export Violations by BAE Systems, Inc. (August 13, 2026) — state.gov
2. U.S. Attorney's Office, District of Columbia, Press release, Fokker Services B.V. Settlement (June 5, 2014) — justice.gov
3. Law360, Defense Co. Meggitt Strikes $25M Deal In US Export Review (August 2013) — law360.com
4. U.S. Department of Justice, Office of Public Affairs, Press release, ABS Development Corporation Agrees to Pay $2.8 Million to Settle False Claims Act Allegations (November 13, 2019) — justice.gov
5. Federal Register, International Traffic in Arms Regulations: Exemption for Defense Trade and Cooperation Among Australia, the United Kingdom, and the United States (December 30, 2025) — federalregister.gov
6. Code of Federal Regulations, Title 22, Chapter I, Subchapter M, International Traffic in Arms Regulations — ecfr.gov
7. U.S. Department of State, Directorate of Defense Trade Controls — pmddtc.state.gov
8. Cornell Law School Legal Information Institute, 22 U.S. Code Section 2778, Control of Arms Exports and Imports — law.cornell.edu

Part 4 — Federal Construction

1. U.S. Department of Justice, Office of Public Affairs, Press release, Tetra Tech EC Inc. Agrees to Pay $57M to Settle False Claims Act Allegations of Falsifying Soil Test Results (August 24, 2026) — justice.gov
2. U.S. Attorney's Office, Southern District of Ohio, Press release, Asphalt Companies Agree to Pay $30 Million to Settle False Claims Act Allegations (February 11, 2026) — justice.gov
3. U.S. Attorney's Office, Northern District of New York, Press release, Construction Company Agrees to Pay $2.8 Million to Resolve Allegations of Small Business Contract Fraud (May 12, 2022) — justice.gov
4. U.S. Attorney's Office, Eastern District of Wisconsin, Press release, New Berlin Contractor Agrees to Plead Guilty to Scheme to Underpay Wages, Will Pay $1.6 Million (June 15, 2015) — justice.gov
5. U.S. Department of Justice, Office of Public Affairs, Press release, Concrete Contractor Agrees to Settle False Claims Act Allegations for $3.9 Million (February 17, 2021) — justice.gov
6. U.S. Department of Justice, Office of Public Affairs, Press release, Construction Company Owner Sentenced for Fraud in Securing Millions of Dollars in Contracts Intended for Service-Disabled Veterans (January 18, 2023) — justice.gov
7. U.S. Department of Labor, Wage and Hour Division, Davis-Bacon and Related Acts — dol.gov
8. Cornell Law School Legal Information Institute, 42 U.S. Code Chapter 103, Comprehensive Environmental Response, Compensation, and Liability — law.cornell.edu

Cost and Tool Scope

1. GovComply, GovComply — govcomply.ai
2. Acquisition.gov, Federal Acquisition Regulation — acquisition.gov
3. Acquisition.gov, Defense Federal Acquisition Regulation Supplement — acquisition.gov

Program Status

1. Federal Register, Federal Acquisition Regulation: Revolutionary FAR Overhaul Parts 8, 12, 13, 15, 38, 44, and 51 (Proposed Rule, September 18, 2026) — federalregister.gov
2. Crowell & Moring, Department of War Immediately Suspends CMMC Phase II Requirements, Launches 60-Day Reform Review — crowell.com
3. Vigilant Cybersecurity, CMMC Weekly Briefing, September 2026 — vigilantcybersecurity.net

© 2026 GPS LLC. All rights reserved.

This copyright covers the original writing, analysis, and structure of this booklet. The underlying facts, figures, and government publications cited and linked throughout are public record and not owned by GPS LLC or anyone else.

© 2026 GPS LLC. All rights reserved.