Booz Allen settles whistleblower’s cost mischarging allegations for nearly $380 million

by Ben Vernia | August 22nd, 2023

On July 21, the Department of Justice announced that government contractor Booz Allen Hamilton had agreed to pay nearly $380 million to settle civil allegations, originally brought by a whistleblower, that the company allocated impermissible charges to government contracts. According to DOJ’s press release:

Booz Allen Hamilton Holding Corporation has agreed to pay the United States $377,453,150 to resolve allegations that it violated the False Claims Act by improperly billing commercial and international costs to its government contracts. Booz Allen, which is headquartered in McLean, Virginia, provides a range of management, consulting, and engineering services to the government, as well as commercial and international customers.

Under government contracting rules, there must be a nexus between the costs charged to a government contract and the objective of the contract. Thus, a contractor may charge to a government contract costs directly related to that contract, as well as indirect costs that benefit multiple contracts including the government contract. A contractor may not charge costs to a government contract, however, that have no relationship to that contract. This prohibition prevents government contractors from using taxpayer funds to subsidize non-government related work.

The settlement announced today resolves allegations that from approximately 2011 to 2021, Booz Allen improperly charged costs to its government contracts and subcontracts that instead should have been billed to its commercial and international contracts. In particular, the government alleged that Booz Allen improperly allocated indirect costs associated with its commercial and international business to its government contracts and subcontracts that either had no relationship to those contracts and subcontracts or were allocated to those contracts and subcontracts in disproportionate amounts. The government further alleged that Booz Allen failed to disclose to the government the methods by which it accounted for costs supporting its commercial and international businesses. As a result, Booz Allen obtained reimbursement from the government for the costs of commercial activities that provided no benefit to the United States.

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The whistleblower, a former Booz Allen employee, will receive $69,828,832 (an 18.5% relator’s share), the government announced.

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