Monday, September 18, 2023

Navmar Applied Sciences Corporation Agrees To Pay $4.4 Million To Resolve Claims Of Double-Billing And Cost-Shifting Under U.S. Navy Contracts

The US Attorney’s Office in Philadelphia released the below information:

PHILADELPHIA – United States Attorney Jacqueline C. Romero announced today that Navmar Applied Sciences Corporation (NASC), headquartered in Warminster, Pennsylvania, has agreed to pay $4.4 million to resolve allegations that NASC violated the False Claims Act by knowingly and improperly double-billing and shifting certain labor and material costs under a series of contracts with the U.S. Department of the Navy. Separately, NASC has also agreed to resolve administrative claims arising out of an audit by the Defense Contract Audit Agency of NASC’s incurred cost proposals for Fiscal Years 2011, 2012, and 2013.

The United States’ allegations under the False Claims Act arise from a series of contracts, awarded by the Navy to NASC between 2010 and 2012, for enhanced intelligence, surveillance, and reconnaissance systems, hardware, maintenance technical support services, and the development and rapid deployment of various advanced sensors and Unmanned Aerial Systems.

The United States alleged that under those government contracts, NASC knowingly and improperly billed the Navy for certain labor and material costs on one contract, and then billed the same costs on another contract, and was improperly paid twice. The United States further alleged that in multiple instances, NASC knowingly and improperly shifted the costs of materials from one contract to another, to avoid cost ceilings and maximize payments from the government to which NASC was not entitled.

“This settlement demonstrates the Justice Department’s commitment to take appropriate action when it determines that taxpayer dollars have been doubled-billed and improperly accounted for,” said U.S. Attorney Romero. “Cases such as this one should be seen as a warning to defense contractors that false claims have no place in military purchasing.”

“Investigating allegations of cost mischarging on Department of Defense (DoD) contracts is a top priority for the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the DoD Office of Inspector General,” stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “The DCIS is committed to working with the Naval Criminal Investigative Service and the Department of Justice to protect the integrity of the DoD procurement process. The Defense Contract Audit Agency’s Operations Investigative Support Division provided valuable expertise during this investigation.”

“Procurement fraud threatens military readiness and therefore poses a significant threat to our national security,” said Special Agent in Charge Gregory Gross of the NCIS Economic Crime Field Office. “NCIS remains committed to ensuring the good stewardship of U.S. taxpayer dollars by thoroughly investigating all allegations of fraud that damage the integrity of the Department of the Navy procurement process.”

The resolution obtained in this matter was the result of a coordinated effort between the United States Attorney’s Office for the Eastern District of Pennsylvania, the U.S. Department of Justice Civil Division, Commercial Litigation Branch, Fraud Section, with investigative assistance from the Defense Criminal Investigative Service, the Naval Criminal Investigative Service, the Defense Contract Audit Agency, and the Defense Contract Management Agency.

The matter is being handled in the U.S. Attorney’s Office by Assistant U.S. Attorneys Landon Y. Jones and Mark J. Sherer, and Auditor Dawn Wiggins.

Note: For a good number of years, I did security work for a Defense Department command in Philadelphia that oversaw contractors like Navmar for the U.S. Navy and the other military buying commands. 

As I noted in my Counterterrorism magazine piece on the Philadelphia Quartermaster bribery and procurement fraud case, I was involved in several investigations of contractor fraud and other crimes. 

You can read about the Quartermaster case via the below link:    

Paul Davis On Crime: A Look Back At The Multi-Million Dollar Defense Contract Fraud and Bribery Case At The Philadelphia Quartermaster

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