FOR IMMEDIATE RELEASE CIV
MONDAY, AUGUST 26, 1996 (202) 616-2765
TDD (202) 514-1888
CLEVELAND FIRM PAYS U.S. $4 MILLION TO SETTLE CONTRACT DISPUTE
WASHINGTON, D.C. -- A Cleveland, Ohio, architectural and engineering firm will pay the United States
$4 million to resolve allegations it inflated contracts for designing government facilities to cover the
costs of its employee pension plan, the Department of Justice announced today.
Assistant Attorney General Frank W. Hunger of the Civil Division said the settlement agreement resolves
civil liability claims against The Austin Company under the False Claims Act, 31 U.S.C. § 3729.
According to the Department, Austin added 8 percent of direct labor costs to government
contracts to cover Austin's contributions to its employee benefit plan from 1980 through 1987,
although its actual cost was approximately 5 to 6 percent. Austin continued the practice from
1987 through 1990 even though Austin did not make any contributions to the plan because it was
changed to one that was fully funded.
Today's settlement resolves allegations in United States ex rel. Tadlock et al. v. The Austin
Company, CV-95-3565 (C.D. Cal.), a suit brought under the whistleblower provisions of the False Claims Act.
In their suit,
the whistleblowers alleged that Austin submitted inflated proposals and invoices on various government
contracts for the pension contributions. Pursuant to the False Claims Act, the whistleblowers will
receive $800,000 as their share of the $4 million settlement.
"This settlement illustrates the Department of Justice's determination to recover funds inappropriately
proposed or billed to government contracts," said Hunger.
From 1980 through 1990, The Austin Company held more than 40 federal contracts involving hundreds of
millions of dollars. Today's settlement involved a portion of each of those contracts since Austin
subcontracted out most of the construction work under the contracts.
Some of the types of buildings Austin designed for the United States included post office facilities,
Army supply depots and Air Force facilities.