This week’s Department of Justice “Catch of the Week” goes to Centerra Services International Inc. (formerly known as Wackenhut Services). On Monday, the Florida-based military contractor agreed to pay $7.4 million to resolve allegations it violated the False Claims Act by double billing and inflating labor costs on its firefighting and fire protection services contract with the Army in Iraq. See DOJ Press Release.
Wackenhut provided these services to U.S. military bases under a subcontract with Kellogg Brown & Root, the prime contractor for the Army’s contract for logistical support in the military theater known as LOGCAP III. According to the government, from 2008 to 2010 Wackenhut inflated its labor costs by billing the salaries of certain managers as direct costs when those salaries had already been charged as indirect costs. The government further charged that Wackenhut artificially inflated its labor rate by counting its costs for holidays, vacation, sick leave, rest and recuperation and other variable labor costs twice in calculating the rate. Wackenhut billed KBR, which then passed on the costs to the government under LOGCAP III.
In announcing the settlement, DOJ Civil Division Chief Benjamin C. Mizer stressed the importance of military contractors dealing honestly with the government: “Our military depends on the private sector . . . to provide critical services to protect the health and safety of our men and women in uniform. . . . Today’s settlement demonstrates our continuing vigilance to ensure that our servicemen and women obtain the services they need at the price we bargained for.” Special Agent Janice M. Flores of the Defense Criminal Investigative Service concurred, noting “that combatting fraud, waste and abuse within Department of Defense contracting remains a top priority.”
The allegations first arose in a whistleblower lawsuit filed by Gary W. Reno under the qui tam provisions of the False Claims Act. He will receive a whistleblower award of $1,332,000 as his share from the government’s recovery.
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