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Defense contractor settles cost-padding civil suit for half-million dollars

Integral Consulting Services (ICS) has agreed to pay over $500,000 in damages to the United States over allegations that it inflated indirect costs while working on a contract with the Army, according to a Justice Department announcement.

ICS, which provides IT solutions including multimodal biometrics, was awarded an Army contract in 2012, W911W5-12-D-0002, to provide identity intelligence analysis support to the Army’s National Ground Intelligence Center’s Biometric Intelligence Program. The federal government alleged that between May, 2012 and June, 2014, the company included costs and expenses from litigation relating to a teaming agreement with another company in its General and Administration (“G&A”) cost pool. The G&A cost pool was spread amongst various ICS government contracts, including the Army contract.

The civil settlement resolves a lawsuit filed in Maryland, where ICS is based, by a relator under the whistleblower provision of the False Claims Act.

Acting U.S. Attorney Stephen M. Schenning commended the work of the Defense Criminal and Civil Investigative Service and the Army Major Procurement Fraud Unit on the case.

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2 Replies to “Defense contractor settles cost-padding civil suit for half-million dollars”

  1. Interesting case that isn’t that unusual at all. A little surprised that the case was processed given the amount. Hats off to the Government team ! Well done ! Padding of indirect cost pools is a very easy approach for contractors given the extremely low degree of government audit oversight at small business entities in the current era. Excessive indirect cost recovery for contractors working at government sites is another example for government consideration ………. full steam ahead !

    1. Well its now almost a year since I read and commented on the above article. Minimal or more accurately stated … no audit oversight by the cognizant Defense Contract Audit Agency office in the area of “forecasted and actual indirect rate structures” at small business contractors cost the Navy significant dollars every year since about 2015. More government audits pay for themselves …. proven fact just read the annual DCAA Report.

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