Defense Contractor Sierra Nevada Corporation Pays $10 Million to Settle Allegations of Overcharging Federal Agencies

SACRAMENTO, Calif. — United States Attorney Phillip A. Talbert announced today that Sierra Nevada Corporation (“SNC”), a company that provides various services to federal agencies pursuant to defense and space contracts, has paid a total of $10 million to resolve two matters alleging the company violated the federal False Claims Act. As more fully described below, SNC is alleged to have knowingly overcharged labor costs and inflated rates in two separate matters.

 The improper charges resulted from SNC knowingly: (1) charging duplicate labor hours, premium rates, and unauthorized extended hours under the Army’s Multi-Sensor Aerial Intelligence Surveillance Reconnaissance (MAISR) program; and (2) erroneously accruing and expensing certain bonus costs, resulting in application of inflated rates more broadly charged to contracts with several federal agencies. The government relies on contractors to accurately charge costs, and to classify both the nature and timing of contract costs to properly calculate rates and appropriately pay for work on government programs.

“The U.S. Attorney’s Office is committed to protecting the integrity of federal procurement contracting,” said U.S. Attorney Talbert. “We will vigorously pursue federal contractors who fail to comply with the highest standards of accuracy to ensure federal agencies are appropriately charged for goods and services.”

“The announced settlement is a victory for the Department of Defense (DoD) and the American taxpayer in that it restores integrity into the contracting process by recovering inappropriate payments made based on unjustified claims by the contractor," said Bryan D. Denny, the Special Agent in Charge of the DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office. ”Along with our law enforcement partners, DCIS will use all tools available to safeguard the integrity of the Defense contracting process and taxpayer resources.”

“This settlement further demonstrates the resolve of the Department of the Army Criminal Investigation Division (DACID) and our law enforcement partners to protect and defend the assets of the United States Army,” stated Special Agent in Charge L. Scott Moreland of the DACID’s Major Procurement Fraud Field Office.

This matter was handled by Assistant U.S. Attorney Catherine J. Swann, in a coordinated effort with the Defense Contract Management Agency, the Defense Contract Audit Agency, the Defense Criminal Investigative Service, and the Department of the Army Criminal Investigation Division.  The claims settled by the two governing settlement agreements are allegations only, and there has been no determination of liability.