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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

Monday, April 19, 2021

Bucks County Fluid-Dynamics and Software Development Company Agrees to Pay Almost $200k and Implement Compliance Improvements to Resolve Claims it Failed to Meet Federal Contract Obligations

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Combustion Research and Flow Technology, Inc. (“CRAFT”) based in Pipersville, PA, has agreed to pay $192,586 and implement enhanced compliance measures to resolve claims arising from its administration of Small Business Innovation and Research (“SBIR”) contracts funded through the Department of Defense and the National Aeronautics and Space Administration (“NASA”). Concurrent with its settlement with the Department of Justice, CRAFT reached an administrative agreement with the Department of Defense in which CRAFT committed to enhancing its compliance practices relating to SBIR contracts and timekeeping.

Like all federal agencies, the Department of Defense and NASA seek to support American small businesses through the award of research and technology development contracts.  Their SBIR contracts and those of other agencies form “America’s seed fund,” providing critical capital to small businesses across the United States to develop new technologies or products.  These products can be commercialized to provide small businesses with revenue streams to maintain or expand their operations for years to come.

The settlement resolves claims that CRAFT proposed that work would be performed by particular individuals – including in some cases its principal investigator on the research – who then performed little or no documented work on the contract, and that CRAFT neither sought nor received permission to substitute personnel under these contracts. Principal investigators, particularly, are supposed to have frequent contact with research personnel and have the overall responsibility for managing each project’s finances, administration, and scientific and technical direction. The United States does not allege that there was any issue with the quality or functionality of the research or other output that CRAFT produced under these contracts.

"Federally contracted researchers must account accurately for their time so that the United States knows it has received the work for which it bargained. Timekeeping obligations are especially important for the principal investigators and other key personnel upon whose qualifications the contracts were awarded,” said Acting U.S. Attorney Williams. “Whether a contractor is a small business, a major university, or a Fortune 500 company, principal investigators need to ensure that the government knows who is doing the work, and any changes in personnel must be clearly communicated to the United States before being made.” 

“The Defense Criminal Investigative Service (DCIS) is committed to protecting research and development programs funded by the U.S. Department of Defense,” said Patrick J. Hegarty, Special Agent in Charge of the DCIS Northeast Field Office.  “Today's settlement agreement is the result of a joint investigative effort and demonstrates our commitment to work with the USAO-EDPA and our law enforcement partners to ensure that claims submitted on SBIR contracts are proper.”

“SBIR/STTR program participants must accurately represent that they meet and will abide by the program’s compliance requirements,” said Special Agent-in-Charge, Mark. J. Zielinski, Eastern Field Office, NASA Office of Inspector General (“NASA OIG”). “Identifying attempts to circumvent the program requirements is one step in safeguarding access to limited government resources. NASA OIG, along with its law enforcement partners, will continue to aggressively investigate individuals and entities to ensure that American taxpayers get the work for which they contracted.”

Acting United States Attorney Williams also praised CRAFT’s agreement to enhance its compliance program: “We commend CRAFT for reacting promptly to the government’s investigation, cooperating fully, and taking serious steps to ensure this issue never recurs.  We hope the compliance measures it has undertaken will be a model for other grantees and contractors looking to meet their responsibilities to the United States.”

This investigation was conducted as part of the United States Attorney’s Office for the Eastern District of Pennsylvania’s Affirmative Civil Enforcement Strike Force’s grant fraud initiative with investigators from DCIS, NASA-OIG, the U.S. Army Criminal Investigation Command, the Naval Criminal Investigative Service, the Air Force Office of Special Investigations, and the Department of Homeland Security Office of Inspector General. Assistant United States Attorneys Paul W. Kaufman and Veronica J. Finkelstein of the Eastern District of Pennsylvania handled the investigation and settlement. 

The claims resolved by the settlement are allegations only; there has been no determination of liability.

UNITED STATES ATTORNEY’S OFFICE EASTERN DISTRICT OF PENNSYLVANIA 615 Chestnut Street, Suite 1250 Philadelphia, PA 19106 JENNIFER CRANDALL Media Contact 215-861-8300 If you have not done so already, follow @USAO_EDPA and @USAttyWilliams on Twitter to get the most up-to-date information about big cases and community news.
Updated April 19, 2021