SAIC faces challenge in False Claims Act defense

Company is playing chicken with the Justice Department, one watchdog group says

Science Applications International Corp. could face a challenge in fighting federal bid-rigging allegations, according to a watchdog group.

The Justice Department announced July 2 that it was joining a whistle-blower’s False Claims Act lawsuit against SAIC regarding a 2004 contract worth as much as $3.2 billion, which the General Services Administration awarded to the contractor. The lawsuit claims that SAIC colluded with government officials to win the contract.

Under the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the amount recovered. Justice typically joins fewer than 100 out of about 350 False Claims Act cases filed annually, said Patrick Burns, a spokesman at Taxpayers Against Fraud, a watchdog group.

“For the Justice Department to take on a case like this is rare,” Burns said. “SAIC needs to settle this. They are playing a game of chicken with the Justice Department, and if they foolishly decide to go to a jury, good luck with that.”

SAIC spokeswoman Melissa Koskovich said the company is cooperating and the allegations are false. “We believe the government’s legal claims are without merit, and we intend to vigorously defend against them,” she wrote in an e-mail message sent July 7.

The lawsuit alleges that SAIC, its subcontractor Applied Enterprise Solutions and that company’s chief executive officer conspired with two Navy officials to rig the contract selection in favor of SAIC. The contract pertained to work for a Navy facility in Mississippi in 2004.

David Magee, a former employee at the facility, filed the original complaint.

The Project on Government Oversight, another watchdog group, said SAIC apparently was investigated for similar accusations in the past on a different contract. The group made that claim in a blog entry posted July 7.

POGO reviewed documents obtained through a Freedom of Information Act request regarding an Energy Department investigation into SAIC contract activities starting in 2001. The case involved possible violations in a $90 million SAIC contract to provide information technology services to a DOE facility in Washington state.

“The five-year investigation resulted in no punishment to SAIC, although the company probably dodged a bullet,” POGO investigator Neil Gordon wrote on the blog.

SAIC said it did nothing wrong in that case either. “The record shows that this matter was thoroughly investigated by the government and that no action against SAIC was taken,” Koskovich said. “That outcome speaks for itself.”

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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