Federal contractor Science Applications International Corp. has agreed to settle a lawsuit alleging the company defrauded the Air Force by padding its bills on $24 million in contracts, the Justice Department said yesterday.
Under the agreement, SAIC will pay the government $2.5 million but will not acknowledge any wrongdoing.
The lawsuit stemmed from a former SAIC manager's claim that the company was reaping profits of 30 percent or more on environmental testing and cleanup work at Kelly Air Force base in Texas during the late 1990s by telling the government its labor costs were higher than they actually were. Its negotiated profit on several no-bid contracts was supposed to be no higher than 10 percent.
After the former manager, Michael D. Woodlee, filed the suit as a whistle-blower under the federal False Claims Act, the government decided to join the case as a plaintiff in 2004.
The suit attracted notice in December when the Air Force issued an unusual alert to its contracting officials saying the Texas case may not have been an isolated incident. "[T]he Department of Justice believes that SAIC is continuing to submit defective cost or pricing data in support of its pricing proposals," the alert said.
The Air Force has awarded SAIC at least 11 new contracts since the alert was issued, including one for $184 million this month.
Woodlee's attorney, John Clark, said SAIC's practices merit more scrutiny. "I'm always glad to see the government recover some money," Clark said. "But we would have liked to see the case encompass more than just these contracts."
SAIC has said repeatedly that it did nothing wrong in the Texas case and that its pricing practices are common in the industry. "SAIC is pleased that this matter has been resolved," the company said yesterday in a statement. "The Air Force is an invaluable customer, and it was important that this matter be put behind us, so that we can focus on the critical national defense work at hand."
SAIC was the federal government's second-largest information technology contractor last year, with $2.6 billion in IT contracts, according to a report by market research firm Input. The company had $7.2 billion in revenue last year, the vast majority of which came from the government.
