BearingPoint Settles Probe Into Overbilling

BearingPoint Inc. agreed to pay $15 million to settle a lawsuit filed by the Department of Justice, which had claimed that the McLean consulting firm and three other companies overbilled government customers for travel expenses.

As part of the settlement with the U.S. attorney's office for the Central District of California, Booz Allen Hamilton Inc. agreed to pay $3.37 million, Ernst & Young LLP agreed to pay $4.47 million and KPMG LLP agreed to pay $2.77 million.

A statement by the U.S. attorney's office said the four firms received rebates on travel expenses, including airlines, rental cars and hotels, but did not report those discounts to their government clients and did not reduce "reimbursement claims by the amount of the rebates," a violation of federal contracting regulations.

BearingPoint spokesman John Schneidawind said in a statement last night that the travel discount program was initiated by the company's predecessor, KPMG, in 2000. BearingPoint has since changed the way it submits travel expenses to its customers, he said.

"We are pleased to have reached an agreement with the government on this matter, recognizing that this was a liability we inherited for a program we did not create," Schneidawind said. "We believe we would have ultimately been vindicated in court. A settlement . . . without admitting wrongdoing allows us to continue to focus on our customers, rather than being distracted by prolonged litigation."

The Justice Department case is related to a 2001 class-action suit alleging that the nation's largest accounting firms, including PricewaterhouseCoopers LLC, were overcharging private-sector customers for travel expenses. BearingPoint and KMPG both paid $17 million in 2004 to settle their portions of that suit, Schneidawind said.

A whistle-blower in the Justice Department case, former PricewaterhouseCoopers partner Neal A. Roberts, will share in the latest settlement, receiving an amount that is yet to be determined.

PricewaterhouseCoopers agreed in July to pay $41.9 million to resolve allegations that it had overbilled the government for travel expenses.

In a statement released last night, the U.S. attorney's office said it dismissed the cases against the four firms, which paid their monetary settlements last week.