$377M Booz Allen Hamilton Settlement

[WifWaf]

A whistleblower led DCAA and DOJ to allege under the False Claims Act that Booz Allen Hamilton (BAH):

1. Allocated indirect costs that supported Booz Allen’s commercial and/or international businesses to Government contracts and subcontracts that should have been allocated to commercial and/or international contracts or should have been treated as unallowable costs…;

2. Created and maintained indirect cost pools that included commingled costs supporting both (i) commercial and/or international contracts and (ii) Government contracts and subcontracts, and by virtue of such commingling allocated indirect costs disproportionately between commercial and/or international contracts and Government contracts and subcontracts, and thus were not in compliance with the CAS or FAR, including but not limited to the homogeneity and proportionality requirements in CAS 418 and the allocability requirements in FAR 31.201-4;

3. Used costs and cost rates that included indirect costs supporting Booz Allen’s commercial and/or international businesses to seek inflated payments and reimbursements under its Government contracts and subcontracts, and failed to disclose current, accurate, and complete cost or pricing data related to such costs resulting in inflated prices for Government contracts and subcontracts;

4. Submitted inaccurate and/or misleading statements (including but not limited to in its CAS Disclosure Statements) regarding the methods by which it accounted for, and the nature of, indirect costs supporting its commercial and/or international businesses; and

5. Shifted employees and work relating to its commercial and/or international businesses between Responsibility Centers in violation of the requirements of the FAR and CAS, thereby creating and maintaining indirect cost pools that were not in compliance with FAR or CAS resulting in misallocations of indirect costs to government contracts.

A9ciwbp5_sjmaca_bro.tmp (justice.gov)

The resulting settlement was for $377,453,150 covering 10 years of alleged noncompliance.

These allegations happen a lot at the DCMA Cost and Pricing Center in my experience, but they don't usually result in a settlement remotely close to this sum.  Recommend DCAA auditors and DCMA Cost Monitors examine their audit report findings for similar allegations, and coordinate with the BAH CACOs and DACOs to learn the details of why this case worked out in the Government's favor.

veritas numquam perit

[WifWaf]

For perspective, BAH consistently falls in the top 25 of the Defense News Top 100 Defense Companies each year, with about 70% Defense revenue.  Total revenues of $8.4B in 2021.

[formerfed]

Didn’t seem to hurt BAH much.  Their stock is up 6% over the past five days and 20% for the year.  They previously set aside a $350M reserve for the settlement.

[here_2_help]

Let's note that the qui tam relator (whistleblower) received $69 million as part of the settlement. I don't know how much of that goes to the attorneys, but I imagine it was still a very nice payout.

[General.Zhukov]

27 minutes ago, here_2_help said:

the qui tam relator (whistleblower) received $69 million

The whistleblower isn't being secretive, the settlement is stickied to the top of her LinkedIn profile. 

(48) Sarah Feinberg | LinkedIn