SAIC pays $22.6 million to settle qui tam suit

by Ben Vernia | September 29th, 2011

On September 29, the Department of Justice announced that SAIC, a Virginia-based contractor, had settled False Claims Act allegations originally raised in a qui tam complaint for $22.6 million. According to DOJ’s press release:

Science Applications International Inc. (SAIC); its subcontractor, Applied Enterprise Solutions LLC (AES); AES CEO Dale Galloway; and former government employees Stephen Adamec and Robert Knesel will pay the United States $22,676,000 to resolve allegations of false claims in a whistleblower suit, the Justice Department announced today. SAIC will pay $20,400,000 and AES and Dale Galloway will pay $2,166,000. Adamec and Knesel are paying $110,000.

The False Claims Act (FCA) suit, filed in June 2009 in the Southern District of Mississippi, alleges that the defendants knowingly violated the FCA when they submitted or caused the submission of false claims and conspired to submit such claims under a contract with the General Services Administration (GSA) in support of the Naval Oceanographic Major Shared Resource Center (NAVO MSRC). That contract was to provide support services for the National Center for Critical Information Processing and Storage (NCCIPS) at the NAVO MSRC. GSA awarded the NCCIPS task order in April 2004 to SAIC, which teamed with Lockheed Martin and AES to perform under the task order. SAIC was paid a total of $116 million under the contract.

The qui tam, or whistleblower, suit alleges that prior to the issuance, and once the NCCIPS solicitation had been publicized, Adamec and Knesel, then government employees, conspired with SAIC, AES, Galloway and Lockheed Martin to ensure that SAIC and its teaming partners were awarded the task order by sharing non-public, advance procurement information with the SAIC team that was not provided to other potential bidders; sharing information about the solicitation with the SAIC team before providing that information to other bidders; and choosing a type of contract and putting language in the solicitation in order to bias the selection process to favor the SAIC team.

In January, the government announced that Lockheed Martin had paid $2 million to settle allegations against it brought in the case (but in which the US did not intervene).

The government did not announce the share of the settlement that the relator would receive.

Disclosure: I represented a third-party witness in this case.

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