Catch of the Week: Booz Allen Hamilton
This week’s catch of the week goes to Virginia-based military contractor Booz Allen Hamilton Holding Corporation. On Friday (July 21), the company agreed to pay the United States a whopping $377 million to settle charges it violated the False Claims Act by billing the government for costs unrelated to its government contracts.
Government contractors may only charge the government for costs directly related to a specific government contract or incurred to support multiple contracts that include those with the government. According to the government, however, Booz Allen Hamilton “improperly allocated indirect costs associated with its commercial and international business to its government contracts and subcontracts that either had no relationship to those contracts and subcontracts or were allocated to those contracts and subcontracts in disproportionate amounts.”
In the press release announcing the settlement, the government also claimed Booz Allen Hamilton concealed from the government the methods by which it accounted for costs supporting its commercial and international businesses. As the government ultimately framed it, Booz Allen Hamilton thus obtained reimbursement for the costs of commercial activities that provided no benefit to the United States.
The False Claims Act was enacted during the Civil War to go after profiteers trying to dupe the Union Army into buying lame mules and defective munitions. And while these days it is used most often to combat Medicare and Medicaid fraud, the government made it clear in settling this matter that using the statute to stop government contracting fraud remains a high priority:
Government contractors must turn square corners when billing the government for costs under government contracts. Today’s settlement demonstrates our commitment to hold accountable contractors that knowingly overcharge the government and enrich themselves at the expense of the American taxpayers.
The government further trumpeted the settlement as “one of the largest procurement fraud settlements in history,” and a powerful demonstration it “will pursue even the largest companies and the most complex matters where taxpayer funds are alleged to have been pilfered.” Notably, the settlement is the second nine-figure procurement fraud settlement this month. Roughly three weeks ago, KBR Services agreed to pay roughly $110 million to settle charges the company violated the False Claims Act by improperly charging the government under its contract to supply property and materials to U.S. troops in Iraq.
Both of these cases were originated by whistleblowers under the qui tam provisions of the False Claims Act, which authorize private parties to file suit on behalf of the United States for fraud committed against the government. With the Booz Allen Hamilton matter, the government joined the lawsuit and ultimately led the litigation to its successful resolution. With the KBR matter, the government declined to join the matter and as the statute allows, the whistleblowers who brought the action were allowed to pursue the litigation on their own. Constantine Cannon represented the KBR whistleblowers.
In both cases, the whistleblowers received a hefty slice of the government’s recovery. Under the statute, successful whistleblowers in matters the government joins are entitled to 15 to 25 percent of the government’s recovery. If the government does not join, the originating whistleblowers are entitled to 25 to 30 percent. The Booz Allen Hamilton whistleblower, former Booz Allen Hamilton employee Sarah Feinberg, will receive roughly $70 million for her efforts. While former KBR employees Geoffrey Howard and Zella Hemphill Anderson will receive a whistleblower award of roughly $31.5 million.
If you think you have information relating to government contracting fraud or any other fraud against the government and would like to speak to a member of the Constantine Cannon whistleblower lawyer team, please do not hesitate to contact us for a free and confidential consultation.
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