The latest multi-million-dollar False Claims Act (“FCA”) settlement between the Department of Justice and Booz Allen Hamilton Holding Corporation serves as an important reminder that government contractors must guard against the appearance of commingling costs.
On July 21, 2023, Booz Allen paid $377.45 million to resolve allegations that it violated the FCA by improperly billing commercial and international costs to its government contracts. These claims arose from a qui tam whistleblower action filed by a former employee who alleged she unsuccessfully raised her concerns with company leadership before resigning. A related federal criminal investigation was closed in 2021 without charges, while a separate SEC investigation remains ongoing.
The FCA, 31 U.S.C. §§ 3729–3733, provides that any person who knowingly submits, or causes to submit, false claims to the government is civilly liable for three times the government’s damages, plus a penalty that is linked to inflation. According to the DOJ, under government contracting rules, there must be a nexus between the costs charged to a government contract and the objective of the contract. A contractor may charge to government contract costs directly related to that contract, as well as indirect costs that benefit multiple contracts, including the government contract. However, a contractor may not charge costs to a government contract that have no relationship to that contract.
The settlement sets forth DOJ’s allegations that...
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