Thursday, December 3, 2015

Mandatory Disclosure Program Nets the Government $1 Million

Back in 2008, FAR was amended to require contractors to disclose credible evidence of fraud and overpayments on contracts. This requirement is commonly referred to as the mandatory disclosure requirement and applies to contracts (and subcontracts) of more than $5 million and a performance period greater than 120 days. See "Mandatory Disclosure Requirements - A Reminder" for more details on the regulation.

Yesterday, the Department of Justice (DOJ) issued a press release announcing the resolution of just such a disclosure.

DRS Technical Services, Inc., was performing an internal compliance audit when it discovered that some of its employees working in Kuwait on Government contracts were directed to record more hours on their time sheets than they actually worked. As a result of this discovery, DRS took immediate corrective action and made a timely disclosure to the U.S. Government under the Contractor Business Ethics Compliance Program and Disclosure Rule (a.k.a. the Mandatory Disclosure Rule).

DRS calculated the mischarging resulted in overcharges of $544 thousand. Following an investigation by the Government, DRS agreed to pay $1 million to settle the case.

Incidentally, DRS was the defense contractor we reported on earlier who paid $13.7 million last October to settle another labor mischarging false claims allegation. See "Defense Contractor Pays $13.7 Million to Settle False Claims Allegation". That case was uncovered by a routine DCAA (Defense Contract Audit Agency) audit and not a voluntary disclosure.

The full DOJ press release can be viewed here.

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