Washington Metropolitan Area Transit Authority Settles False Claims Act Lawsuit for $4.2 Million

When it comes to contracts with the government, there are often a number of terms and conditions relating to the procurement of services with vendors and sub-contractors – particularly when federal grant money is involved. In today’s case, we explore a recent settlement between the Washington Metropolitan Area Transit Authority (WMATA) and the Department of Justice stemming from allegations of false claims and fraudulent contracting procedures on the part of WMATA pursuant to a systems integration contract.

The facts of the case reveal a startlingly unfair procurement procedure implemented by the defendant in favor of Virginia-based Metaformers, Inc., which was allegedly awarded a sub-contract on the project for an excessively high amount. The whistleblower in the case, a former WMATA employee, was awarded over $996,000 of the $4,240,341 settlement for his willingness to come forward with his claims.

Details of Case Against WMATA

The False Claims Act case against WMATA involves a contract entered into on or around July 10, 2010, between the transit authority and Metaformers, Inc. Under that agreement, Metaformers was to integrate WMATA’s financial and business systems – funding for which was supplied to WMATA through grant monies provided by the Federal Transit Authority. These grant resources were provided with several conditions, including the requirement that WMATA was to implement competitive procurement procedures when deciding upon sub-contractors to perform the necessary work to complete the information technology project. In other words, with the federal grant money involved, WMATA was required to find the best price possible for services – which is typically achieved by requesting bids from a number of competing companies.

According to allegations, WMATA awarded the integration project to Metaformers, and it was expected to cost around $14 million to complete — $9 million of which was supplied by the federal grant money. In addition to promising to conduct an open and competitive billing process, WMATA was also required to avoid giving any unfair advantages or rely on any biases when awarding the contracts – meaning it was to give every eligible bidder a fair consideration.

Suspicions over WMATA’s process began to arise when the 2009 contract for services was compared with the 2010 contract, revealing a startling jump in the winning bid amount. More specifically, the 2009 contract between Metaformers and WMATA was for a mere $256,000 and awarded Metaformers a contract allowing it to assess WMATA’s financial systems. The following year, the contract skyrocketed to the aforementioned $14 million agreement, without any open or competitive bidding procedures. WMATA allegedly failed to provide any other financial services company the opportunity to bid on the project, implemented an unfair bias in favor of Metaformers, and allegedly violated the terms of its contract with the government.

The whistleblower in this case also received $390,000 in a separate settlement to resolve his claims of wrongful termination.

Government’s Response

U.S. Attorney Ronald C. Machen said in a statement: “The American people have a right to know that their government is following rules and regulations in spending the taxpayers’ money… Our office has targeted government contractors who fail to meet their obligations, and this settlement shows that we expect agencies that receive federal funding to honor the integrity of the contracting process as well.”

Contact Berger Montague Today

If you are aware of fraud under a government contract and would like to discuss the details of your claim with a confidential and experienced whistleblower attorney, please contact Berger Montague today.