Tax Day this year brought big news in the federal contracting world from the U.S. Attorney’s Office in Maryland. U.S. Attorney Rod J. Rosenstein announced that Computer Sciences Corporation (CSC) agreed to pay the federal government $1.1 million to settle allegations of defrauding the U.S. Army. (The settlement agreement is posted here.)
According to Rosenstein, between 2008 and 2012, CSC submitted false resumes to qualify its employees for higher paying positions on an information technology contract with the Army Communication Electronics Command. This allowed the company to charge the government inflated labor costs and reap an undeserved windfall.
CSC had this to say about the settlement:
As reported, CSC agreed to settle certain civil claims brought by the Department of Justice related to services provided by CSC to the U.S. Army Communications Electronics Command between 2008 and 2012. CSC paid $1.1 million in the settlement in order to avoid the expense and uncertainty of protracted litigation. There was no admission of wrongdoing by CSC and, as stated by the Department of Justice, there has been no determination of liability. CSC has a stellar reputation as a high integrity government contractor and continues to provide services of the highest quality to the U.S. government.
This wasn’t CSC’s first run-in with its federal customers. In 2000, CSC’s credit services unit paid $6.4 million to settle allegations that it made false claims for payment on federal student loan programs. A few months earlier, CSC paid $8,730 to settle fraudulent billing allegations on a contract with the Defense Commissary Agency. In that instance, CSC employees were accused of charging the government for the time they were attending college classes. In 2005, CSC reimbursed the government $1.3 million after discovering a former employee, over a nine-year period, billed NASA for payments made to fictitious companies. In 2008, CSC agreed to fork over almost $1.4 million to resolve a False Claims Act lawsuit alleging it took part in a massive kickback and bribery scheme among federal IT contractors dating back to the 1990s.
The Project On Government Oversight often hears about contractors accused of improperly inflating costs by falsifying time records or equipment and materials invoices. We infrequently come across cases like CSC’s, in which the contractor fudges labor costs by misrepresenting an employee’s status or credentials.
In 2002, top federal contractor Lockheed Martin reimbursed Uncle Sam $530,000 to settle allegations that it billed the National Imagery and Mapping Agency (now called the National Geospatial-Intelligence Agency) for the work of approximately 23 employees who did not meet the minimum qualifications for their positions. In 2009, Booz Allen Hamilton paid $325,000 to settle a whistleblower lawsuit alleging the company charged NASA for employees at higher job categories than their experience justified. And last year, SAIC coughed up nearly $12 million to resolve claims of billing the government on a grant program for full-time, full-benefit employees who were actually lower-cost, temporary employees.
Any kind of contract fraud is unacceptable, but this kind of deception strikes us as particularly brazen. Why would a “high integrity” contractor like CSC risk civil and/or criminal punishment, and possible debarment, over something that can easily be checked with a quick phone call or Internet search? Contractors often claim they are “partners” with the federal government, but if its contractor partner gets caught falsifying resumes, the government may think twice about doing business with them again.