Last week, the Department of Justice (DOJ) announced a $15.875 million settlement with Booz Allen Hamilton over alleged False Claims Act (FCA) violations involving a scheme to rig Department of Defense (DoD) bids using insider information.
The alleged fraud centered on a Booz Allen subsidiary, Booz Allen Hamilton Engineering Services (BES), which supplied military training simulators to the DoD under a General Services Administration (GSA) contract. According to the DOJ, BES employees John Hancock and Karen Paulsen, along with David Bolduc from BES subcontractor QuantaDyn, received insider information from Air Force contracting official Keith Seguin. Seguin allegedly provided confidential budget and procurement data to Hancock, Paulsen, and Bolduc, enabling them to manipulate the procurement process. This led to the GSA awarding a task order for training simulators to BES, which subsequently subcontracted the work to QuantaDyn. The government further alleged that the four colluded to submit price quotes to the GSA for 37 task orders, all of which were awarded to QuantaDyn.
This isn’t the first time Booz Allen or QuantaDyn has faced scrutiny for this kind of fraud. In 2023, Booz Allen settled another FCA case regarding improper billing of commercial and international costs on government contracts for $377.5 million. In 2020, the DOJ settled alleged bribery claims against QuantaDyn for $37.8 million. That case involved allegations that QuantaDyn bribed another Air Force contracting information to provide sensitive procurement information to QuantaDyn, that it used to submit false invoices to the Government.
Defense contracting fraud has long plagued the government. In fact, the False Claims Act was enacted to create a remedy for the frauds committed by unscrupulous contractors during the Civil War. The FCA has been updated many times since it was first passed in 1862, and it continues to be one of the government’s strongest tools in recovering funds lost or tainted by procurement fraud, and particularly in fraud against the DoD.
Whistleblowers are critical to recovering these misappropriated taxpayer dollars and, in fact, have instigated important defense contracting fraud enforcement actions. For example, Geoffrey Howard and Zella Hamphill Anderson brought an FCA case against KBR for allegedly over-billing the government for unneeded supplies and materials. The government recovered $108 million in the settlement of that case, and awarded Howard and Anderson a $31.5 million relator share award from that recovery.
Another whistleblower brought a False Claims Act case against the five largest oil companies in South Korean for bid riggings on fuel contracts for military bases. Their whistleblowing led to a $363 million recovery for the government and prompted the creation of the Procurement Collusion Strike Force—a DOJ tip program dedicated to this kind of fraud. The government also awarded the whistleblower $37 million as a relator share from this recovery.
If you have questions about whether you’ve witnessed procurement fraud or whether you should file a False Claims Act case, we can help you decide how to move forward. If you would like more information or to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.
