At year’s end, the Department of Justice (DOJ) announced multi-million dollar false claims settlements with a pair of large contractors in connection with billing practices on GSA Schedule contracts.
- Iron Mountain Incorporated and Iron Mountain Information Management LLC (collectively Iron Mountain) has paid $44.5 million to resolve allegations under the False Claims Act that Iron Mountain overcharged federal agencies for record storage services , the DOJ announced Dec. 19, 2014. Iron Mountain is a records storage company headquartered in Boston.
- Lockheed Martin Integrated Systems (LMIS) agreed on Dec. 22, 2014 to repay the government $27.5 million to settle over-billing charges brought under the False Claims Act on a contract producing products and services for U.S. troops in Iraq and Afghanistan.
“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” Acting Assistant Attorney General Joyce Branda said. “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”
The settlement with Iron Mountain relates to contracts under which the firm provided record storage services to government entities from 2001 to 2014 through GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government with a streamlined process for procurement of commonly used commercial goods and services. The settlement resolves allegations that Iron Mountain failed to meet its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts. It also resolves an allegation that Iron Mountain charged the United States for storage meeting National Archives and Records Administration requirements when the storage provided did not meet such requirements.
“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” Branda said of the Lockheed Martin settlement. “The department will ensure that those who do business with the government, and seek taxpayer funds, do so fairly and in accordance with the applicable rules.”
LMIS is a subsidiary of Lockheed Martin Inc., which is headquartered in Bethesda, Maryland. The alleged labor mischarging occurred on the Rapid Response (CR2) contract and the Strategic Services Sourcing (S3) contract, both issued by the U.S. Army Communication and Electronics Command (CECOM). CECOM is located at Fort Monmouth, New Jersey, and at the Aberdeen Proving Group in Maryland. The purpose of the CR2 and S3 contracts is to provide rapid access to products and services to be provided to the Army in Iraq and Afghanistan. Individual task orders then are separately negotiated, based on these contracts, to quickly meet the needs of CECOM. LMIS allegedly violated the terms of the contracts by using under-qualified employees who were billed to the United States at the rates of more qualified employees. The overbilling allegedly resulted in greater profit for LMIS.