Booz Allen Agrees to Pay $377.45 Million to Settle False Claims Act Allegations
WASHINGTON - Booz Allen Hamilton Holding Corporation has agreed to pay the United States $377,453,150 to resolve allegations that it violated the False Claims Act by improperly billing commercial and international costs to its government contracts. Booz Allen, which is headquartered in McLean, Virginia, provides a range of management, consulting, and engineering services to the Government, as well as commercial and international customers.
Under government contracting rules, there must be a nexus between the costs charged to a government contract and the objective of the contract. Thus, a contractor may charge to a government contract costs directly related to that contract, as well as indirect costs that benefit multiple contracts including the government contract. A contractor may not charge costs to a government contract, however, that have no relationship to that contract. This prohibition prevents government contractors from using taxpayer funds to subsidize non-government related work.
The settlement announced today resolves allegations that from approximately 2011 to 2021, Booz Allen improperly charged costs to its government contracts and subcontracts that instead should have been billed to its commercial and international contracts. In particular, the government alleged that Booz Allen 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. The government further alleged that Booz Allen failed to disclose to the Government the methods by which it accounted for costs supporting its commercial and international businesses. As a result, Booz Allen obtained reimbursement from the government for the costs of commercial activities that provided no benefit to the United States.
“This settlement, which is one of the largest procurement fraud settlements in history, demonstrates that the United States will pursue even the largest companies and the most complex matters where taxpayer funds are alleged to have been pilfered,” said U.S. Attorney for the District of Columbia Matthew M. Graves. “The Justice Department is committed to ferreting out all fraud, waste, and abuse in government programs—small or large, simple or complex.”
“Government contractors must turn square corners when billing the government for costs under government contracts,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “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.”
“DCAA appreciates the opportunity to support the Justice Department and our law enforcement partners by providing expert financial assistance regarding enforcement of the False Claims Act,” said Director Terri Dilly for the Defense Contract Audit Agency. “This interagency cooperation provides a strong safeguard for appropriate use of taxpayer dollars.”
The settlement resolved a lawsuit filed under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the Government’s recovery. The qui tam lawsuit was filed by Sarah Feinberg, a former Booz Allen employee, and is captioned United States ex rel. Feinberg, v. Booz Allen Hamilton, Inc., Civ. A. No. 16-1911 (D.D.C.). Ms. Feinberg will receive $69,828,832 in connection with the settlement.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the District of Columbia, the Defense Contract Management Agency’s Contract Integrity Center, and the Defense Contract Audit Agency’s Operations Investigative Support Division, with assistance by agents from the Defense Criminal Investigative Service and Federal Bureau of Investigation, and Inspector Generals from the Central Intelligence Agency, National Security Agency, U.S. Postal Service, U.S. Army, U.S. Air Force, National Reconnaissance Office, Department of Homeland Security, and National Geospatial Intelligence Agency.
The case was handled by Trial Attorneys Dan Schiffer and Chris Reimer of the Civil Division and Assistant U.S. Attorney Brian Hudak with the U.S. Attorney's Office for the District of Columbia, with assistance from the Defense Contract Audit Agency's Operations Investigative Support Division, in particular DCAA Auditors Igor Yegoroff, Myron Antoniw, and Tim Chase.
The case is captioned United States ex rel. Feinberg v. Booz Allen Hamilton, Inc., Civ. A. No. 16-1911 (ACR) (D.D.C.). The claims alleged in the case are allegations only, and there has been no determination of liability.