Defense Contractor Booz Allen Hamilton Settles $337 Million Procurement Fraud Lawsuit

A Marine Corps veteran and mother of three settled a $337 million lawsuit against her former employer Booz Allen Hamilton, alleging that the defense contractor overcharged American taxpayers to offset losing profits in foreign contracts.

Sarah Feinberg discovered the alleged fraud and filed a complaint under the Civil War eras False Claims Act, NBC News reported. Thanks to “qui tam” — a rule that allows whistleblowers to receive between 15 percent to 30 percent of a settled judgment or lawsuit —  Feinberg and her lawyer received $69 million from the settlement. Feinberg, herself will receive $40 million before taxes. 

“I’ve got three kids, and I tell them, ‘Doing the right thing is the right thing, no matter what the outcome is,’” Feinberg said. “There’s very few times in this life where you’ll actually be rewarded for doing the right thing, but this is one of those unique situations.”

In 2016, Feinberg discovered that the company’s private international contracts with clients like Saudi Arabia were unprofitable, thus prompting the company to pass on the expenses to taxpayers. 

“I realized that this was a very intentional setup,” Feinberg said. “And it wasn’t just that there was the potential to overcharge the government; the rates were built to overcharge the government. If we should have been charging $100 to the government for an hour of work, we were charging $120 for that hour of work, so that $20 could go to subsidize the international business.”

She then spent nine months trying to convince the company’s senior leadership of the fraud that was occurring; however, executives in the company simply labeled Feinberg’s concerns as a compliance risk. Seeing her concerns were falling on deaf ears, Feinberg resigned from the company.

Jessica Klenk, a spokesperson from the company, said that Feinberg’s concerns were met with “facilitated meetings for her with third-party experts as well as its financial, compliance and accounting teams to examine her concerns,” the Daily Mail reported. 

In a statement, U.S. Attorney Matthew M. Graves for the District of Columbia called the settlement “one of the largest procurement fraud settlements in history.” 

However, Booz Allen Hamilton claimed in a statement  it “has always believed it acted lawfully and responsibly — guided by its strong, century-old culture of ethics and accountability — and its position has been consistently grounded in facts.”