US Government Giving Military Contracts to Known Fraudsters

On August 18, 2014, First RF Corporation announced a new $2.2 million contract with the US Navy “to develop enabling RF technologies for future Navy and Marine Corps systems.”

Less than a month later, on October 24, the Justice Department announced that First RF agreed to repay $10 million to resolve allegations of fraud stemming from a 2005 contract with the Army. First RF provided the Army with antennas used to combat Improvised Explosive Devices but gouged the government on the price.

“Specifically, the United States alleged that First RF knowingly submitted false data to the Army that misrepresented First RF’s cost to manufacture the antennas, and thereby inflated the price for the antennas and the payments First RF received for them,” reads the press release.

A search of a database of US government contracts issued for First RF in 2005 returns three contracts related to “electrical and electronic equipment components” totaling $21,622,308 as well as 11 contracts for “research and development” totaling $3,227,028.

The Center for Effective Government website also indicates the contracts for electrical components were not competitively bid on, while the research and development contracts were. With First RF returning $10 million, the US Army either received $11.6 million worth of goods and services, is taking the $11.6 million as a loss, or a combination of the two.

The money continues to roll in

This has not kept the government from continuing to pour money into First RF. The company has received $2.2 million in SBIR contracts for 2014 alone. SBIR’s are effectively government grants financed by federal agencies such as the Department of Defense, EPA, Department of Agriculture, and others.

Since it’s founding in 2003, First RF has received $101 million from the US government over 379 transactions. The $25 million that First RF got from the government in 2005 was bested in 2009 when the company won $27 million worth of contracts.

Over their history, 87.5 percent of the money that was given to First RF were not competitively bid on, totaling $878.8 million. A 2009 book included a case study on First RF and put their annual revenue at $25 million and stated that “The firm’s recent growth has been based on revenues from its contracts and retained earnings,” meaning they spend less than they charge their customer, primarily the US government.

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