Federal government contractors and subcontractors should take to heart the lesson Navmar Applied Sciences Corporation (“Navmar”) is paying $4.4 million to learn about aggressive billing for labor and other costs on government projects.
Under a resolution agreement announced September 14, Navajar agrees to pay $4.4 million to resolve allegations that it violated the False Claims Act by knowingly double billing and shifting certain labor and material costs under a series of contracts with the Department of the Navy to manufacture, design and test emerging intelligence, surveillance and reconnaissance technologies.
The United States alleged that Navmar knowingly billed certain labor and material costs on one Navy contract, subsequently billed the same costs on another contract and was therefore paid twice for the same costs. The United States further alleged that Navmar knowingly and improperly shifted material costs incurred under certain contracts to other contracts in violation of the Federal Acquisition Regulation requirement that costs incurred under a contract be allocable to that contract, resulting in Navmar recovering costs it otherwise would not have.
Agency officials say the settlement sends a warning for other government contractors and suppliers.
According to Special Agent in Charge Patrick J. Hegarty of the Defense Criminal Investigative Service (“DCIS”), Northeast Field Office, investigating allegations of cost mischarging on Department of Defense (DoD) contracts is a top priority for the DCIS, the law enforcement arm of the DoD Office of Inspector General.
“Companies that do business with the government must ensure that they are properly billing the government for the goods or services that they provide,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will hold accountable those who misuse taxpayer funds for their own self-enrichment.”
Accordingly, U.S. Attorney Jacqueline C. Romero for the Eastern District of Pennsylvania says, “Cases such as this one should be seen as a warning to defense contractors that false claims have no place in military purchasing.”
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