Thursday, September 5, 2019

Self-Disclosure Law - Contractor Returns $2.6 Million to the Government

Last month, we posted an article about the requirement for contractors with "credible evidence" of violations of criminal law, violations of the False Claims Act and significant overpayments on Government contracts to self-disclose that evidence to the Office of Inspector General (OIG). The Defense Department's OIG had just reported that over the ten years since inception of that law, Government contractors had returned more than $200 million to the Government based on these mandatory disclosures. (See DoD Contractors Return $200 Million to Government through Mandatory Disclosure Program).

Well, DoD just added another $2.6 million to that total.

Yesterday, the Justice Department announced that it had reached agreement with a Defense contractor in New York after it self-disclosed over-billings to the Government and to its prime contractors.

The contractor, Arkwin Industries, detected errors in its accounting system that resulted in double-counting worker hours spent performing inspections of its products. Arkwin then self-disclosed the discovery to the Government and then undertook an internal investigation using the outside services of a forensic accounting team. After concluding its investigation, Arkwin reported its findings to the Government.

After receiving Arkwin's findings, the Government made its own independent investigation including a determination of whether the over-billing had been intentional or accidental. Arkwin cooperated fully throughout the investigation, providing documents, making witnesses available for interviews and responding to Government inquiries. Following this investigation, the Government concluded that the over-billing was accidental and negotiated the $2.6 million settlement.

This resolution demonstrates how the self-disclosure process should be working, according to the Justice Department. "When a Government contractor self-discloses billing errors and cooperates in the Government's investigation, (the Government) will work with them to arrive at a fair and just resolution".

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