Government contract work can be exceptionally lucrative for a small or medium-sized business, often comprising a large majority of its income and workload. In return for the reliability of payments, not to mention the payments themselves, under a contract with the federal government, contractors are required to adhere to certain pricing standards set forth in nearly all contracts between the federal government and private sector businesses. One requirement is that contractors must promise to offer the same low prices – or lower, if possible – as are offered to other private clients. For example, if a contractor’s private customer base is offered a certain discount or incentive on a product, the contractor must offer the same discount to the government on an identical product. Failure to do so could trigger liability under the False Claims Act, which imposes up to an $11,500 penalty per violation.
In today’s case, we review the details of an alleged fraudulent scheme involving technology provider Technology Integration Group (TIG), which maintained a contract for the provision of Dell brand computers to the National Nuclear Security Administration (NNSA).
The case[1. “FBI: Technology Integration Group Agrees to Pay $5.9 Million to Settle False Claims Act Allegations.” http://7thspace.com/headlines/515146/fbi_technology_integration_group_agrees_to_pay_59_million_to_settle_false_claims_act_allegations.html] was filed by a former employee of TIG under the qui tam provisions of the False Claims Act. His total reward was not revealed in the Department of Justice’s press release, but it is not uncommon for relators to receive up to 30 percent of the overall recovery.
Details of the allegations against TIG
Beginning in 2003 through 2013, TIG was engaged in a contract with NNSA for the provision of Dell computers, which the NNSA used in the Sandia National Laboratory located in Albuquerque, New Mexico. Allegedly, throughout the ten-year span of the contract, Dell had been offering TIG discounts and incentives to ensure it continued to purchase its products, which were not passed on to the government, resulting in inflated costs for each Dell unit.
Overall, TIG agreed to pay $5.9 million to the U.S. government and entered into a non-prosecution agreement in exchange for its termination of three employees in its branch office responsible for the intentional fraud scheme. The company also agreed to allow a corporate monitor to impose periodic reviews of the company to ensure compliance with the terms of the settlement agreement.
The U.S. Attorney General’s office said in a statement, “The resources available to achieve the important goals carried out by our national laboratories are precious and limited….Today’s settlement demonstrates that diverting funds from the critical mission of the laboratories by inflating costs and making false claims or causing others to make false claims for government funds will not be tolerated.”
The Department of Justice similarly commented, stating, “Fraud involving government contracts will be zealously pursued in New Mexico….The United States Attorney’s Office and its law enforcement partners are committed to recovering losses, preventing fraud, holding accountable those who exploit government contracts, and ensuring that the taxpayers’ monies are properly spent.”
Contact Berger Montague today
If you are aware of potentially fraudulent activity under a government contract and would like to discuss your information with a confidential whistleblower attorney, contact Berger Montague today.