Government Contractor Booz Allen Hamilton Enters One of the Largest Procurement Fraud Settlements with DOJ over FCA Allegations

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Eye on Enforcement

On Friday, July 21, 2023, DOJ announced it has reached a $377,453,150 settlement with Booz Allen Hamilton Holding Corporation (Booz Allen), the parent company of Booz Allen Hamilton, Inc., the large government and military contractor that also has commercial and international customers. DOJ alleged that Booz Allen violated the False Claims Act by “improperly billing commercial and international costs to its government contracts.” The relator in the matter, a former Booz Allen employee, will receive $69,828,832 in connection with her qui tam lawsuit and the settlement. According to Booz Allen’s statement, the settlement comes at the culmination of a civil investigation of over six years and a previously closed criminal investigation.

Allegations: Improper Accounting Methods Result in Improper Reimbursement

The government alleged that from about 2011 to 2021, Booz Allen allocated indirect costs from commercial and international business to government contracts and subcontracts that either had no nexus to the government contracts or were allocated in disproportionate amounts. DOJ further alleged that Booz Allen failed to disclose its accounting methods for the costs supporting its commercial and international business that were submitted for reimbursement, in violation of cost accounting standards and the Federal Acquisition Regulation (FAR). In turn, Booz Allen obtained reimbursement from the government for the costs of commercial activities that did not benefit the federal government. In its press release, DOJ noted the significance of the settlement amount and issued a warning that it will continue to combat fraud and waste in the government contracting sector by pursuing large companies and complex cases.  

A Noteworthy Settlement

The size of Booz Allen’s FCA settlement is certainly noteworthy and serves as a reminder of the large penalties available to the government in FCA investigations (and the large awards available to would-be whistleblowers), even where a party does not admit any wrongdoing in reaching a settlement. Violations based on improper accounting can lead to a mountain of unexpected penalties. This resolution demonstrates that FCA cases against government contractors can reach the large figures more typically seen in health-care-industry enforcements. It is also a reminder of the potential costs of not adequately investigating or responding to internal complaints, as the relator alleged she made here before she filed her lawsuit.