Defense Contracting: Contractor Claims for Legal Costs Associated WithStockholder Lawsuits

摘要

This report responds to A Congressman's inquIry concerning the allowability oflegal costs resulting from stockholder derivative lawsuits associated with defense contractor wrongdoing. As his letter indicates, the wrongdoing involves fraudulent activities engaged in by the defense contractor named in the stockholder lawsuit. Specifically, the Congressman requested current information on the (1) defense procurement fraud cases, as previously reported on by us;1 (2) Defense Contract Audit Agency's (DcAA) policy on the allowability of legal fees associated with stockholder derivative lawsuits; and (3) number of stockholder lawsuits associated with defense contractor wrongdoing. He also asked whether reimbursement for these costs has been a common practice. (KAR) P. 2.