Government Contractors Pay Over $16 Million in Settlements for False Claims Act Violations

In the past 24 hours, two government contractors have agreed to settle False Claims Act (FCA) allegations with the U.S. Department of Justice (DOJ), paying a combined total of more than $16 million. These cases shed light on fraudulent practices that undermined the integrity of government procurement processes, leaving taxpayers footing the bill for inflated costs.

The first settlement involves Booz Allen Hamilton, which will pay $15.875 million to resolve allegations stemming from its subsidiary, Booz Allen Hamilton Engineering Services LLC (BES). According to the DOJ, BES submitted fraudulent claims connected to a General Services Administration (GSA) task order for military training simulators and systems for the Department of Defense (DoD). The misconduct reportedly took place when BES’s program managers, John G. Hancock and Karen K. Paulsen, used confidential government contracting information they weren’t supposed to have access to—information that was shared with them by a civilian Air Force employee and a subcontractor. The duo allegedly manipulated the process to secure a task order award and submitted false claims for 37 modules awarded to a subcontractor, QuantaDyn Corporation.

“Government contractors that improperly receive confidential government information during the procurement process corrupt the integrity of that process,” noted Principal Deputy Assistant Attorney General Brian M. Boynton, who leads the DOJ’s Civil Division. This settlement, he added, underscores the department’s firm commitment to safeguarding the integrity of government contracting.

The second case centers around Johnny Buscema Jr. of New Port Richey, Florida, and his two companies, S.A.F.E. Structure Designs and U.S.A. Manufacturing. These businesses have agreed to pay $1 million to resolve allegations that they conspired with others to rig bids for contracts under the Defense Logistics Agency’s (DLA) Maintenance, Repair, and Operations (MRO) program. From 2016 to 2023, the companies allegedly submitted non-competitive bids, coordinated with other vendors to inflate bids, and even submitted multiple bids from Buscema’s own companies to give the appearance of a competitive process. These actions, the DOJ claims, resulted in the government being overcharged for supplies and services intended to support military operations.

“Contractors who manipulate the bidding process to secure improper advantages defraud American taxpayers and undermine the integrity of the procurement system,” said U.S. Attorney Joshua S. Levy for the District of Massachusetts. “This settlement sends a clear message that such anticompetitive practices will not be tolerated.”

Both settlements reflect the DOJ’s ongoing commitment to holding accountable those who engage in fraudulent activity in federal contracting. The department’s Civil Division worked closely with several law enforcement agencies, including the Defense Criminal Investigative Service (DCIS), to bring these cases to a close. In both instances, the settlements serve as a strong reminder that the government will not tolerate efforts to game the system, and those who do will face significant financial consequences.

As the DOJ continues to take action against fraudulent contracting schemes, these two cases stand as stark reminders of the lengths to which some will go to secure unjust financial gain—at the expense of taxpayers and the integrity of the federal procurement system.

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