This week’s Department of Justice “Catch of the Week” goes to NetCracker Technology Corp. On Monday, the Massachusetts-based telecommunications software company agreed to pay $11.4 million to settle charges it violated the False Claims Act by using individuals without security clearance on a government defense contract. As part of the settlement, Virginia-based information technology company Computer Sciences Corp. (CSC) also agreed to pay $1.35 million to settle the same False Claims Act charges. See DOJ Press Release.
According to the government, NetCracker and CSC implemented software used to help manage the telecommunications network used by the Department of Defense. The work was done pursuant to a contract with the Defense Information Systems Agency (DISA), under which CSC was the prime contractor and NetCracker was a CSC subcontractor. The government claimed that from 2008 through 2013, NetCracker used employees without security clearances to perform work when it knew the contract required those individuals to have security clearances. Doing so, the government alleged, resulted in CSC recklessly submitting false claims for payment to DISA.
In announcing the settlement, the government stressed the importance of government contractors complying with the terms and conditions of their government contracts. “Companies that do business with the federal government have a responsibility to fully meet the terms of their contracts,” said US Attorney Channing D. Phillips of the District of Columbia. And as highlighted by Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, “[p]rotecting the federal procurement process from false claims is central to the mission of the Department of Justice,” as is “ensur[ing]that the government receives what it pays for when federal monies are used to purchase services.”
The allegations first arose in a whistleblower lawsuit filed by former NetCracker employee John Kingsley under the qui tam provisions of the False Claims Act. Mr. Kingsley will receive a whistleblower award of $2,358,750 as his share from the government’s recovery in this case.
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