Employees of civilian contractors in support of U.S. military forces stationed in Iraq and Afghanistan are normally entitled to 'uplifts' to their salaries in the form of danger pay and hazardous duty pay. Without such incentives, contractors would find it extremely difficult to meet staffing requirements in those areas - their compensation plans would not be competitive with those who do offer such benefits. Typically these uplifts are based on DSSR (Department of State Standardized Regulations) criteria (e.g. 25 percent for workers in Iraq) but in other cases, the rates are contract specific. Most of these types of contracts are cost-reimbursable so whatever allowable, allocable, and reasonable costs a contractor expends is reimbursed by the Government.
Mission First is a company providing program management, systems engineering, and information technology and communications services to the U.S. Military in Iraq and Afghanistan. Its contracts allowed the company to pay and get reimbursed for 'uplift' premiums paid to its employees stationed in those countries. As the contracts progressed, Mission First did indeed bill the Government for uplifts. However, as a subsequent audit disclosed, Mission First did not make those uplift payments to its employees.
After an investigation into the matter by the DCIS (Defense Criminal Investigative Services) and the Army CID (Criminal Investigation Division), Mission First agreed to reimburse the Government $4 million to resolve those allegations of improper billings. That amount also includes FICA (i.e. Social Security) that was billed for amounts that exceeded the statutory compensation cap for FICA calculations.
The Justice Department press release on this settlement can be viewed here.