The government relies on whistleblowers to uncover fraud in the procurement or performance of defense contracts. Some common schemes include bid-rigging, overcharging and overbilling, failing to follow contract specifications, use of inferior products, and making false statements regarding the cost of a project.
On September 29, 2011, the Department of Justice announced that Science Applications International Inc. (SAIC), Applied Enterprise Solutions (AES), and numerous individuals have agreed to pay over $22.6 million to settle a False Claims Act lawsuit alleging bid-rigging in the procurement of a Government Services Administration (GSA) contract.
In April 2004, the GSA awarded a $3.2 billion task order to SAIC to provide support services for the National Center for Critical Information Processing and Storage (NCCIPS) at the Naval Oceanographic Major Shared Resource Center (NAVO MSRC). SAIC teamed with Lockheed Martin and AES to perform work under the task order. For its part, SAIC was paid a total of $116 million under the contract.
In June 2009, David Magee, a former supercomputer specialist with NAVO MSRC, filed a qui tam lawsuit, United States ex rel. Magee v. Lockheed Martin et al., 1:09 cv 324 HSO (JMR), in the Southern District of Mississippi, alleging that defendants knowingly submitted, or caused to be submitted, false claims to the United States through their bid-rigging activities designed to procure the task order. Specifically, Magee alleged that prior to the issuance, and once the NCCIPS solicitation had been publicized, two individual defendants (then government employees) conspired with SAIC, AES, the AES CEO, and Lockheed Martin to ensure that SAIC and its partners were awarded the task order by, for example, sharing non-public, advance procurement information with the SAIC team that was not provided to the other bidders; sharing information about the solicitation with the SAIC team before providing that information to other bidders; and choosing a type of contract and putting language in the solicitation order to bias the selection process in favor of the SAIC team.
The United States intervened in Magee's lawsuit as to all defendants, except Lockheed Martin. To resolve Magee's lawsuit, SAIC agreed to pay $20.4 million, AES and its CEO agreed to pay $2.166 million, and the former government employees agreed to pay a combined $110,000. The United States previously settled with Lockheed Martin for $2 million.
For his part in uncovering the fraud, Magee received 28 percent of the Lockheed Martin settlement, and will also receive a percentage of the $22.6 million settlement with SAIC and the other defendants.
If you have information about fraudulent conduct in the procurement or performance of a defense contract, contact Andrew M. Beato, an experienced whistleblower attorney at the law firm of Stein, Mitchell & Muse in Washington, D.C.
