US Govt procurement allegations cost Booz Allen $377m

After Booz Allen paid $377m to settle allegations over billing commercial costs to US government contracts, we ask: what is the US False Claims Act?

Whistleblower evidence has led to consulting and management giant Booz Allen Hamilton paying the US government US$377.5m to settle allegations the company illegally charged it for costs arising from unrelated contracts.

Between 2011 and 2021, Booz Allen is alleged to have contravened the False Claims Act, for “improper billing” – a practice that was revealed by former Booz Allen employee, Sarah Feinberg, who alleged the company created and maintained 'indirect cost pools”. 

These, she claims, collected costs both for commercial and international contracts and government contracts. Feinberg said that this meant costs were allocated “disproportionately”.

This is a violation of the False Claims Act, which stipulates a contractor can charge to a government contract only those costs that directly relate to that contract. 

The fine is one of the largest ever recorded in the field of procurement. But what is the False Claims Act, exactly?

The Act  is a law designed to prevent companies from incorrectly charging the US Government or using taxpayers money. It also encourages whistleblowers to come forward and report a fraud they are aware is happening at the expense of the government. 

It is a federal law that acts as an essential tool in fighting fraud and ultimately protecting public finances, and violations can include overbilling, providing poor quality goods or services, and submitting false information to secure payments.

Procurement whistleblowing: the facts 

Whistleblowers in a case are known as ‘qui tam relators. The expression comes from latin, and means ‘He who sues in this matter for the king as well as for himself’. Qui tam relators can file lawsuits on behalf of the government when they have evidence of any fraudulent activities. If the government is successful in recovering money through this kind of lawsuit, the whistleblower may get paid a percentage of the amount clawed back as a reward. Feinberg will receive $69,828,832 in connection with the settlement.

Booz Allen procurement allegations

All the claims resolved in the Booz Allen settlement are allegations only, with no determination of liability. 

“This settlement, which is one of the largest procurement fraud settlements in history, shows that the United States will pursue even the largest companies and the most complex matters where taxpayer funds are alleged to have been pilfered,” said US Attorney Matthew M. Graves for the District of Columbia. 

He added: “The Justice Department is committed to ferreting out all fraud, waste, and abuse in government programs – small or large, simple or complex.”

Head of the Justice Department’s Civil Division, Brian Boynton, said: “Government contractors must turn square corners when billing the government for costs under government contracts. said 

“Today’s settlement shows our commitment to hold accountable contractors that knowingly overcharge the government and enrich themselves at the expense of the American taxpayers.”

Read more about how AI and machine learning is being used in fraud protection and four ways you can fight back against procurement fraud.  

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