Utah Whistleblower Hotline

Centerra to pay $7.4 million to settle Qui Tam lawsuit

The Department of Justice (“DOJ”) has announced that Centerra Services International Inc. has agreed to pay approximately $7.4 million to settle a qui tam lawsuit in relation to alleged violations of the False Claims Act (“FCA”).  According to the DOJ, between 2008 and 2010, Centerra, formerly known as Wackenhut Services LLC, was alleged to have been involved in government programs fraud.  Specifically, Centerra was accused of routinely overbilling the government for the firefighting and fire protection services that it provided for military bases in Iraq.

Centerra, headquartered in Palm Beach Gardens, Florida, is self-described as the “world’s leading international government solutions group,” and one of the preeminent providers of security services to the United States Government.  According to its website, Centerra provides several contracted for services, including nuclear security protection, fire protection, and emergency management.  Centerra’s website also states that it has more than 300 contracts with various governmental agencies, as well as contracts with municipalities and other commercial clients.

In this case, Centerra worked with the Army’s primary contractor, Kellogg Brown & Root Inc. (“KBR”) as a subcontractor, supplying fire an emergency protection to the Army’s bases in Iraq.  Under the third contract of the Army’s Logistics Civil Augmentation Program, the bills from Centerra were passed directly from KBR to the United States government.

In response to Centerra’s alleged overbilling, Gary Reno filed a qui tam lawsuit in Texas federal court on behalf of the United States Department of Defense in August 2010.  In the complaint, Mr. Reno alleged KBR and Centerra engaged in several instances of fraud, including billing expenses for military bases that were in fact already closed, segregating overhead costs from the company’s fixed hourly rates, and submitting work invoices for 100% of their personnel when only 80% of the company’s personnel was ever-present.  As a result of its fraud, Centerra recouped approximately $28 million in overbilled expenses.  For his efforts in bringing the suit, Mr. Reno will be paid $1.3 million.

According to the head of DOJ’s Civil Division, Principal Deputy Assistant Attorney General Benjamin C. Mizer:

Our military depends on the private sector – both prime contractors and subcontractors – to provide critical services to protect the health and safety of our men and women in uniform.  Those subcontractors who knowingly inflate the costs of these services, which are passed onto the government and the taxpayer, will face appropriate consequences.  Today’s settlement demonstrates our continuing vigilance to ensure that our servicemen and women obtain the services they need at the price we bargained for.

Similarly, Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service (DCIS) Southwest Field Office stated:

Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the U.S. government.  The DCIS is committed to working with its partner agencies, such as the U.S. Department of Justice, Defense Contract Audit Agency and the U.S. Army Criminal Investigation Command to ensure the integrity of the Defense Department’s procurement process.  This settlement demonstrates that combatting fraud, waste and abuse within Department of Defense contracting remains a top priority.

As noted above, the whistleblower in this case is going to be awarded approximately $1.3 million for bringing the aforementioned lawsuit on behalf of the United States government.  The FCA allows private individuals to sue on behalf of the government those who falsely claim federal funds, or cause others to do so, and to receive a share of any funds recovered through the lawsuit.  If you or someone you know is aware of potential misconduct, you should not wait to act.  Contact our whistleblower attorneys team here.