US Attorney – Defense Contractor Pays Over $1.7 Million To Settle Air Force Fraud Allegations

EG&G Technical Services, Inc., a national defense contractor based in Germantown, Maryland, has paid the United States $1,765,164.46 to settle allegations that it defrauded the United States Air Force.

EG&G, which is a subsidiary of URS Corporation, an international engineering design service firm headquartered in San Francisco, was accused in a “whistleblower” lawsuit of overbilling the Air Force for various aircraft parts and services.

United States District Judge George Wu approved the settlement and dismissed the case when he unsealed the lawsuit on May 19. The United States Attorney’s Office was informed late Thursday that the court had approved the settlement. EG&G paid the $1.7 million settlement on May 12.

The lawsuit was filed in June 2007 by former EG&G employee James D. Steffes pursuant to the qui tam provisions of the federal False Claims Act. Mr. Steffes had been employed by EG&G as a logistician who was responsible for ordering and maintaining aircraft parts. The lawsuit alleged that EG&G paid Danco Aerospace Consulting, Inc., an aircraft parts broker in Florida, for parts that were already in EG&G’s stock or were never delivered. EG&G allegedly then submitted fraudulent claims to the Air Force under a cost-reimbursable, fixed-fee-plus-award-fee contract. From July 1997 through July 2004, EG&G paid Danco $776,140.82 in 98 separate checks covering approximately 144 purchase orders. EG&G then submitted to the Air Force monthly statements that included these payments to Danco, which allegedly caused the Air Force to pay for the fictitious purchases.

A qui tam lawsuit is a civil action, commonly called a “whistleblower” lawsuit, that is filed on behalf of the United States by a private party called a relator. Qui tam lawsuits are filed under seal by the relator under the False Claims Act and must allege that the defendant filed false claims seeking payment from the government. The U.S. Department of Justice is given an opportunity to review the allegations to decide whether to intervene and prosecute the case on behalf of the United States. The United States elected to intervene in Mr. Steffes’ lawsuit for the purpose of settling it. Pursuant to the settlement negotiated in this case, the United States agreed to dismiss the lawsuit. As a result of the resolution of the case, Mr. Steffes will receive $317,729.

EG&G has not admitted any wrongdoing as part of the settlement in the case.

The investigation of the allegations against EG&G was conducted by the Air Force Office of Special Investigations. A related criminal matter is being prosecuted by the United States Attorney’s Office in Las Vegas, Nevada (see:

CONTACT: Assistant United States Attorney John E. Lee

Civil Fraud Section

(213) 894-3995

Release No. 09-066

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