Consulting firm Booz Allen Hamilton Holding Corp. agreed to pay approximately $377.5 million as part of a settlement with the Department of Justice (DOJ) regarding alleged False Claims Act violations stemming from improper billing of commercial and international costs in government contracts.
Booz Allen allegedly charged the government in contracts where the costs did not have a direct nexus to the contract’s objective, resulting in use of taxpayer funds for nongovernment-related work, the DOJ said in a press release Friday.
The settlement total is one of the largest in procurement fraud settlements history, said U.S. Attorney Matthew Graves in the release. It includes nearly $210 million in restitution, according to the settlement agreement.
The settlement resolves a lawsuit brought under the qui tam provisions of the False Claims Act by former Booz Allen employee Sarah Feinberg, who will receive nearly $70 million.
The details: Between 2011 and 2021, Booz Allen improperly charged costs to government contracts that should have been billed to its commercial and international contracts, the DOJ alleged.
Booz Allen also failed to disclose its cost accounting methods supporting its commercial and international businesses, resulting in reimbursement from the government for nonbeneficial commercial activities, the DOJ alleged.
“[The] settlement demonstrates our commitment to hold accountable contractors that knowingly overcharge the government and enrich themselves at the expense of the American taxpayers,” stated Principal Deputy Assistant Attorney General Brian Boynton, head of the DOJ’s Civil Division.
Compliance considerations: Booz Allen “created and maintained indirect cost pools that included commingled costs supporting both commercial and/or international contracts and government contracts and subcontracts, and by virtue of such commingling allocated indirect costs disproportionately,” according to the settlement agreement.
Booz Allen failed to comply with cost accounting standards (CAS) and the Federal Acquisition Regulation (FAR), the DOJ said.
The company “shifted employees and work relating to its commercial and/or international businesses between responsibility centers … thereby creating and maintaining indirect cost pools that were not in compliance with FAR or CAS, resulting in misallocations of indirect costs to government contracts,” the settlement agreement stated.
Company response: In a statement, Booz Allen said it “always believed it acted lawfully and responsibly” but settled to “avoid the delay, uncertainty, and expense of protracted litigation.”
“The company did not want to engage in what likely would have been a yearslong court fight with its largest client, the U.S. government, on an immensely complex matter,” the company said. “This settlement ends the DOJ’s civil investigation more than six years after it began. [The] DOJ closed its parallel criminal investigation more than two years ago, taking no action.”
Booz Allen did not admit wrongdoing in reaching settlement.
Editor’s note: This story was updated July 26 to clarify allegations in the second paragraph and remove reference to Booz Allen not denying liability.