The United States Department of Justice settled a case against an instructional systems, training, and logistics service provider to the United States Navy to resolve allegations that the government contractor failed to disclose organizational conflicts of interest (OCI) “in connection with the award and performance of task orders on government contracts.” For allegedly making false claims, Cape Henry Associates (Cape Henry) paid $425,000. Under the False Claims Act, a whistleblower could have reported this fraud against government procurement rules and shared in 15-25% of the government’s recovery.
According to the allegations, Cape Henry failed to disclose conflicts of interest with subcontractors on Navy SeaPort-e, Army, and General Services Administration (GSA) contracts. In one allegation of failure to disclose OCI, the contractor hired a subcontractor in which which one of its officers had an ownership interest. Cape Henry also worked with a subcontractor, Q.E.D. Systems Inc. (Q.E.D.) for advisory & assistance services (A&AS) on a Navy SeaPort-e contract, while at the same time subcontracting directly with one employee of Q.E.D. The same employee was simultaneously providing A&AS services to the Navy program office that administered the contract, and Cape Henry allegedly did not disclose this convoluted conflict of interest.
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