North Carolina company pays $8.4 million to settle fraud allegations arising from Puerto Rico power repair contracts

by Ben Vernia | December 5th, 2022

On November 29, the Department of Justice announced that North Carolina-based PowerSecure, Inc., had agreed to settle defective pricing allegations relating to contracts it held with the Army Corps of Engineers to assist with the reconstruction of Puerto Rico’s power grid following Hurricane Maria. According to DOJ’s press release:

The Department of Justice announced today that PowerSecure, Inc. (PowerSecure), located in Durham, North Carolina, has agreed to pay $8.4 million to resolve allegations that it violated the False Claims Act arising from its failure to provide certified cost or pricing data when negotiating rates with the U.S. Army Corps of Engineers (USACE) in connection with a sole source contract for the repair and restoration of Puerto Rico’s power grid following the damage caused by Hurricane Maria in September 2017.

The Truth in Negotiations Act (TINA) was enacted in 1962 to help level the playing field in sole source contracts – where there is no price competition – by making sure that government negotiators have access to the cost or pricing data that the offeror used when developing its proposal. Here, the United States alleged that PowerSecure violated the False Claims Act by knowingly failing to disclose cost or pricing data, as required by the TINA, regarding the rates that PowerSecure had used for “basecamp services” on a recent restoration project in Florida and Georgia following Hurricane Irma. The United States further alleged that PowerSecure failed to disclose cost or pricing data relating to labor and equipment costs in violation of TINA. The settlement resolves allegations that PowerSecure’s failures to disclose this information caused USACE to agree to inflated rates for labor, equipment and basecamp services. 

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The case apparently arose from a Government investigation, rather than from a whistleblower’s qui tam complaint.

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