Following accusations that it had violated the False Claims Act by failing to provide certified cost or pricing data when negotiating with the U.S. Army Corps of Engineers (USACE), PowerSecure, Inc. agreed to pay $8.4 million this week and settle the case.
PowerSecure was tapped to repair and restore Puerto Rico’s power grid following the damage caused by Hurricane Maria in September 2017. However, the federal government attested that the North Carolina company knowingly failed to disclose data regarding the rates that it used for basecamp services on a separate restoration project in Florida and Georgia following Hurricane Irma and to disclose cost or pricing data relating to labor and equipment costs.
If true, this would be a violation of the Truth in Negotiation Act (TINA) of 1962, which laid out the rules for sole source contracts – those without price competition – and mandated access to cost or pricing data offerers were supplying to government negotiators when making proposals. The Department of Justice argued that PowerSecure’s failures to disclose information resulted in the USACE agreeing to inflated rates for labor, equipment, and basecamp services.
“Where government contractors seek the award of a sole source contract, they have an obligation to be fully transparent with the government regarding the basis for their proposed pricing,” Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division, said. “This settlement demonstrates the department’s commitment to holding accountable those who knowingly violate this important safeguard against the misuse of taxpayer funds.”
As a result of the settlement, the claims against PowerSecure were settled with no determination of liability.
The case was pursued through coordination between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Puerto Rico, with assistance from the Defense Criminal Investigative Service, the Department of Homeland Security Office of Inspector General and the Defense Contract Audit Agency.
“This settlement is an example of the need for transparency and accountability in proposed pricing when negotiating sole source contracts,” Acting Department of Defense Inspector General Sean O’Donnell said. “Our auditors and investigators are committed to protecting the integrity of the procurement process through cooperation with our partners at the Department of Justice.”