Whenever a private company or individual agrees to perform contract work for the federal government, there are certain highly-specific boilerplate contract terms that must be followed during the completion of the work.
One such term requires contractors to always offer the government a rate on goods or services that is as low as, or lower than, the rate offered to other companies or the general public. The reason for this contract term is to ensure that the government (i.e., taxpayers) are not overpaying for products that could be obtained at a cheaper rate in the general marketplace.
In today’s case, we explore the details of a contractor having failed to uphold this requirement, resulting in a near $2 million settlement with the government amid False Claims Act allegations.
DHS Technologies, LLC Case Details
DHS Technologies, LLC, is an Orangeburg, New York-based operation specializing in a number of different technologies designed to assist and support government operations.
More specifically, under the contract in question, DHS Technologies had agreed to supply trailer-mounted and mobile shelter systems for the U.S. military, as well as medical and governmental operations around the world.
According to the allegations, DHS Technologies supplied support systems to the Tobyhanna Army Depot in Pennsylvania for a period ranging from 2007 through 2013.
In 2007, when contract re-negotiations took place between DHS Technologies and the General Services Administration, DHS Technologies failed to reveal that it was offering its support services to a commercial company at a rate lower than it was offering the U.S. government. Therefore, this amounted to the submission of false claims to the U.S. government for the time period in question, thereby triggering possible liability under the False Claims Act.
The lawsuit was filed by a former employee in 2011, and the amount of the whistleblower reward has not been disclosed at this time.
Government’s Comments on the DHS Technologies Fraud
Military contractor fraud is the oldest form of fraud addressed by the False Claims Act, and actually gave rise to the ratification of the statute during the Civil War era.
The director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit said in a statement, “Companies doing business with the U.S. government should do their part to ensure that the military is guaranteed a fair price for the goods and services it needs to support our military men and women….Those companies who abuse their contracts will find our special agents ready to hold the companies accountable for their illegal activities.”
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