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About POGO's Federal Contractor Misconduct Database (FCMD)

The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »

Ranking: 10

BAE Systems

BAE Systems is the premier transatlantic defense and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, information technology solutions and customer support services. With more than 100,000 employees worldwide, BAE Systems’ sales exceeded $28 billion in 2005.

Federal Contract $: $7385.8m

Total Number of Instances: 8

Total Misconduct dollar amount: $ 507.9m

Instances of Misconduct

1. Hornet Aircraft Components (False Claims Act)

Lockheed and BAE Systems settled allegations of violating the False Claims Act, 31 U.S.C. § 3729, et seq., in a contract to provide components for Hornet aircrafts. “The government alleged that from 1987 through 1994, GE and Martin Marietta manufactured and delivered for installation in Hornet aircraft more than 1,300 Accelerometer Sensor Assemblies that did not comply with electromagnetic interference contractual requirements.” See Lockheed Martin misconduct instance "Hornet Aircraft Components (False Claims Act)."... more»

2. EEOC v. BAE Systems Simula (Age/Sex Discrimination, Retaliation)

BAE Systems Simula, Inc. agreed to pay three temporary female workers $110,000 to settle sex and age discrimination claims under the Age Discrimination in Employment Act (ADEA), the Equal Pay Act (EPA) and Title VII of the Civil Rights Act. Laura Box, Margaret Chavez and Christine Hanson, who worked for Simula Inc.(acquired in 2003 by Armor Holdings, which was acquired by BAE in 2007), claimed that, during 2004 and 2005, they were paid less than male employees who performed the same duties and were not given permanent jobs. Chavez also claimed age discrimination and Box alleged retaliation. BAE Systems Simula, which did not admit liability, paid compensatory damages in the amount of $40,000 to Chavez, $63,000 to Box, and $7,000 to Hanson. The company also agreed to implement policies and training programs aimed at ensuring a work environment free from sex and age discrimination and retaliation.... more»

3. OSHA Violations at Sealy, Texas Facility

The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) cited BAE Systems with 16 alleged serious and two alleged repeat violations of health and safety regulations at the company's facility in Sealy, Texas, and proposed $138,000 in penalties. Serious violations included failing to ensure walking working surfaces remained clear, failing to provide safe clearances for material handling equipment, failing to provide machine guarding and violations related to the control of hazardous energy, welding and electrical hazards. Repeat violations included failing to guard press brakes and to ensure compressed air used for cleaning had pressures reduced below 30 psi.... more»

4. Lancashire Factory Explosion

BAE Systems Land Systems (Munitions and Ordnance) Ltd. pleaded guilty to violating a U.K. occupational health and safety law for an explosion at its Lancashire factory in March 2005 that killed one worker. Investigators could not determine the exact cause of the explosion but found the company allowed unsafe working procedures to develop at the site by providing too little supervision and monitoring. In addition to the guilty plea, BAE was ordered to pay £118,000 (approx. US$192,000) towards the cost of the prosecution and was fined £80,000 (approx. US$130,000) by the Health and Safety Executive.... more»

5. HMNZS Canterbury Settlement

The government of New Zealand reached a NZ$84.6 million (approx. US$59 million) settlement with BAE Systems to fix problems with the multi-role ship HMNZS Canterbury. The Canterbury has had issues with its rigid hull inflatable boats, and a court of inquiry found various design flaws.... more»

6. Air Quality Violations (Maricopa County, Ariz.)

BAE Systems, which owns three armored vest production factories in Phoenix, Arizona, was fined $1.2 million by the Maricopa County Air Quality Department for the release of toluene, a glue solvent, into the air and for other violations. The violations occurred between 2004-2006, when the factories were owned by Simula, Inc., a subsidiary of Armor Holdings, Inc. Armor Holdings was acquired by BAE Systems in July 2007. A spokesperson for BAE Systems told the local press the company became aware of Simula's violations when it conducted an emissions audit of the factories a few months before the acquisition.... more»

7. Foreign Corruption Global Settlement

In June 2007, the U.S. Department of Justice launched a Foreign Corrupt Practices Act (FCPA) investigation into allegations that BAE Systems, using American banks, made up to $2 billion in secret payments to the former Saudi Arabian ambassador to the United States, Prince Bandar bin Sultan, in the years after securing a multi-billion dollar arms deal with Saudi Arabia (the al-Yamamah deal). In February 2010, BAE entered into a settlement with the Department of Justice and the UK Serious Fraud Office (SFO), which launched an investigation in 2004 of alleged bribery by BAE in Saudi Arabia and other countries. Under the agreement with the Department of Justice, the company pleaded guilty to one charge of conspiring to make false statements to the U.S. government in connection with certain regulatory filings and agreed to pay a fine of $400 million. Under the agreement with the SFO, the company pleaded guilty to one charge of breach of duty to keep accounting records in relation to payments made to a former marketing adviser in Tanzania and agreed to pay a penalty of £30 million (approx. US$47 million) consisting of a fine and a charitable payment for the benefit of Tanzania.... more»

8. Wales Health and Safety Breaches

It was reported that the Wales Health and Safety Executive (HSE) fined BAE Systems Land Systems (Munitions and Ordinance) Ltd. £50,000 (USD$ 88,954) and ordered it to pay £15,000 (USD$ 26,692) in costs and £5,000 (USD$ 8,897) in compensation for health and safety breaches for an incident in which an employee was injured handling hazardous material at its site in Glascoed, Monmouthshire in August 2004. HSE found that the disposal procedures did not comply with BAE's own approved control procedures, and that management and supervision of the procedure was inadequate.... more»