Two U.S.-based technology firms have agreed to pay $12.75 million to resolve allegations that they tasked Russian workers who lacked security clearances to carry out work on software used to manage the global telecommunications network used by the U.S. Defense Department, the Justice Department said Monday.
NetCracker Technology and Computer Sciences Corp. agreed to pay $11.4 million and $1.35 million, respectively, but made no admission of liability in settling a civil whistleblower lawsuit filed in the District in 2011 by a NetCracker executive under the False Claims Act.
According to the government and the lawsuit, from 2008 through 2013, NetCracker allegedly used employees without security clearances on a small portion of a $613 million Defense Information Systems Agency (DISA) contract when it knew the contract required those individuals to have clearances — resulting in CSC submitting false claims for payment.
It was unclear whether the alleged actions led to any security breaches, and the extent of any wider investigation remains under court seal.
In a statement, CSC spokeswoman Heather L. Williams said, “CSC believes it is as much a victim of NetCracker’s conduct as is our DISA customer and agreed to settle this case because the litigation costs outweigh those of the settlement.”
The statement added that CSC, based in Falls Church, “will continue to fully cooperate with the government regarding these and any other issues.”
Joanna Larivee, a spokeswoman for NetCracker, based in Waltham, Mass., said in a statement, that “NetCracker has cooperated fully with the Department of Justice throughout its review of this matter and explicitly denies liability for any wrongdoing,” adding, “We have decided that it is in the best interest of all stakeholders to settle the matter.”
DISA spokeswoman Cindy Your referred questions to the Justice Department.
Bill Miller, a spokesman for the U.S. Attorney’s Office for the District, said the department had no comment beyond its court filings.
The whistleblower, former NetCracker employee John Kingsley of Fairfax, will receive $2.4 million as his share of the recovery under the law, which allows individuals and groups to obtain a reward for reporting fraud against the U.S. government, officials said.
Kingsley’s attorney, Paul S. Schleifman of Arlington, declined to comment.
In February 2008, CSC became the prime contractor supporting the Defense Department’s classified and unclassified voice networks, the Defense Switched Network and the Defense Red Switch Network, as well as its network management systems, according to Kingsley’s lawsuit.
Under the contract, CSC subcontracted with NetCracker.
Kingsley, who headed NetCracker Government Services, alleged that NetCracker, with CSC’s knowledge, “delegated certain tasks to individuals located outside the United States who were not U.S. citizens” in at least two locations, and that “Code developed outside the United States was then . . . placed in U.S. Government computer networks.”
NetCracker’s work allegedly involved building and maintaining the Defense voice system’s Network Change and Configuration Management System.
Kingsley’s suit was filed in March 2011 and was amended this past April and again Oct. 22 before being unsealed Friday after the government intervened. In court papers, prosecutors wrote that other court filings regarding the extent of the government investigation remain under seal.
Although not specified in the final October complaint, Kingsley’s original lawsuit alleged that code was completed by Russian workers and placed on government networks “with no testing for back doors, time bombs, or other malicious triggers” by U.S.-cleared workers.
The settlement was announced by Benjamin C. Mizer, head of the Justice Department’s Civil Division, U.S. Attorney for the District Channing D. Phillips and Air Force Col. Bill Eger, DISA inspector general.