September 17, 2023 - Navmar Applied Sciences Corporation (Navmar), headquartered in Pennsylvania, has agreed to pay $4.4 million to resolve allegations that it violated the False Claims Act by knowingly double billing and shifting certain labor and material costs under a series of contracts with the Department of the Navy (Navy) to manufacture, design and test emerging intelligence, surveillance, and reconnaissance technologies.

The United States alleged that Navmar knowingly billed certain labor and material costs on one Navy contract, subsequently billed the same costs on another contract and was therefore paid twice for the same costs. The United States further alleged that Navmar knowingly and improperly shifted material costs incurred under certain contracts to other contracts in violation of the Federal Acquisition Regulation requirement that costs incurred under a contract be allocable to that contract, resulting in Navmar recovering costs it otherwise would not have. 

“Companies that do business with the government must ensure that they are properly billing the government for the goods or services that they provide,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will hold accountable those who misuse taxpayer funds for their own self-enrichment.” 

“This settlement demonstrates the Justice Department’s commitment to take appropriate action when it determines that taxpayer dollars have been double-billed and improperly accounted for,” said U.S. Attorney Jacqueline C. Romero for the Eastern District of Pennsylvania. “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 of the DCIS Northeast Field Office. “The DCIS is committed to working with the Naval Criminal Investigative Service (NCIS) and the Justice Department 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 Greg 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 Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from the DCIS, NCIS, Defense Contract Audit Agency and Defense Contract Management Agency.

The matter was handled by Trial Attorney K.L. Grace Moseley of the Justice Department's Civil Division and Assistant U.S. Attorneys Landon Jones and Mark Sherer for the Eastern District of Pennsylvania.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Settlement: navmar_settlement_agreement_executed_sept_15_2023.pdf (466.24 KB)

Source: DOJ Release