Northrop IT subsidiary pays $5.2 million to settle Postal Service labor cost mischarging case

by Ben Vernia | February 18th, 2019

On January 28, the Department of Justice announced that Northrop Grumman Systems Corp. has agreed to pay $5.2 million to settle civil allegations that the company mischarged the Postal Service for labor. According to DOJ’s press release:

The Justice Department announced today that Northrop Grumman Systems Corporation (NGSC) has agreed to pay $5.2 million to resolve its alleged False Claims Act liability for falsely billing labor under contract with the United States Postal Service (USPS).  NGSC, which is headquartered in Falls Church, Virginia, provides information and technology services to commercial and government customers, including the USPS.

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The settlement concerns the Enterprise Technology Services Contract (ETS Contract) between NGSC and USPS.  The ETS Contract required NGSC to provide qualified labor and management services to augment information technology services at USPS data centers around the country.  The ETS Contract began in 2009 through a predecessor entity, Northrop Grumman Information Technology Inc., which merged with NGSC in 2010.

Under the ETS Contract, NGSC billed USPS for personnel performing information and technology services using hourly rates established for each of more than 100 labor billing categories.  The United States alleges that NGSC knowingly billed certain personnel working under the ETS Contract for which they did not have the education and/or experience identified by these categories.

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The case apparently arose from a government investigation, and not from a whistleblower’s complaint.

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