News and Press Releases

United States and Applied Research Associates Settle Alleged Billing Fraud Matter

FOR IMMEDIATE RELEASE
September 25, 2012

Burlington, VT – The Office of the United States Attorney for the District of Vermont stated today that it has settled a False Claims Act matter involving billing by Applied Research Associates, a defense contracting firm headquartered in New Mexico, with two Division offices in Randolph, Vermont—the New England Division (NED) and Vertek Division. The billing practices in question related to work performed by NED and Vertek that was billed to a Department of the Army research and development contract. Under the terms of the agreement, Applied Research Associates (ARA) agreed to pay a sum of $1,100,000.00 to the United States.

The Government's investigation arose in 2010 following an audit by the U.S. Department of Defense's Defense Contract Audit Agency. During the course of that audit, several employees at the NED complained that labor and materials unrelated to a particular Army research and development contract were being improperly billed to that contract. One of those individuals, Brent Boerger, an engineer at ARA, filed a qui tam complaint in federal court in which he alleged that ARA fraudulently billed the Army for work performed by its employees that was unrelated to a government contract for a project known as "Nemesis." The Nemesis project was a multi-year, successive contract project that has spanned approximately ten years. The specific contract at issue in Mr. Boerger's complaint was the 2007 contract. That contract's scope of work pertained to research and development of certain demining systems to be used in humanitarian demining efforts. ARA billed under the contract for work performed on a number of other projects. Mr. Boerger alleged that the work on other projects was not pertinent to research or development of the humanitarian demining systems identified in the contract.

The Government's investigation revealed that for a portion of the contract period, specifically between September 2007 and June 2009, approximately $1 million in billing under the 2007 Nemesis contract related to other projects. (The total amount paid to Applied Research Associates under the 2007 Nemesis contract was over $11 million.) The Government determined that some of the work in these other projects covered technology that overlapped with the Nemesis contract scope of work, although determining the precise amount of overlap was difficult due to lack of detailed documentation. Nonetheless, as a result of its investigation, the United States agrees with Mr. Boerger that at least some of the work in question was unrelated to the Nemesis project and that billing the Army for such work constituted reckless disregard and/or deliberate ignorance under the False Claims Act. ARA denies any liability and the parties have settled to avoid the burden, expense and risks inherent in litigation and a trial.

The United States acknowledges ARA's cooperation throughout the investigation, including the burden of engaging in significant document production and numerous witness interviews. The United States also notes that the quality of the research and development provided by ARA that is believed to have been appropriate under the contract is not in question. The issue in dispute was whether the full amount billed under the contract was appropriate.

The federal qui tam statute, 31 U.S.C. § 3730, part of the federal False Claims Act, allows a whistleblower to file a civil complaint on behalf of the United States. The filing of such a complaint initiates an investigation by the United States to determine whether to proceed with the action, and allows a whistleblower, such as Mr. Boerger, to share in a percentage of the Government's recovery. Pursuant to federal law, and by court order, Mr. Boerger's complaint in this case remained sealed while the United States conducted its investigation to determine whether to intervene in the action. On Monday, September 24, 2012, the United States elected to intervene for the purpose of settling the matter. The U.S. District Court has now unsealed the complaint, the Government's notice of intervention in the lawsuit, and in light of the settlement, the notice of dismissal filed by Mr. Boerger and the United States.

Tristram J. Coffin, United States Attorney, commended Mr. Boerger for coming forward and reporting his employer's billing practices on the Nemesis contract. "Addressing federal program fraud is a key priority of this Office. The qui tam provisions of the False Claims Act encourage individuals to bring to light conduct that they believe constitutes the filing of false claims with the United States. We recognize that bringing such conduct to our attention by way of a qui tam complaint requires an individual such as Mr. Boerger to assume litigative and professional risks. His efforts led to a federal investigation that we believe furthered the integrity and accountability in federal contract programs, and his cooperation and assistance was tremendously helpful to our work." As a result of his role in reporting his concerns and providing assistance during the investigation, Mr. Boerger will receive $220,000.00 out of the settlement amount.

This matter was investigated by the United States Attorney's Office, the Defense Criminal Investigative Service, and Army Criminal Investigative Division. The United States was represented during the investigation by Civil Chief, Carol L. Shea. Mr. Boerger was represented by Jeffrey A. Newman, Esq., of the Law Offices of Jeffrey A. Newman and Associates in Boston, Massachusetts. Applied Research Associates was represented by E. Leslie (Pete) Hoffman, Esq. and Lindsay Simmons, Esq., both of Jackson Kelly, PLLC in Washington, D.C.

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