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Wackenhut whistleblower awarded $1.3 million for Iraq firefighting overcharges

Image courtesy of CenterraCenterra Services International Inc., formerly known as Wackenhut Services LLC, agreed to pay $7.4 million to resolve allegations that Wackenhut violated the False Claims Act by double billing and inflating labor costs under a contract for firefighting and fire protection services in Iraq, the Department of Justice said Monday.

Centerra is a security services company headquartered in Palm Beach Gardens, Florida.

This settlement resolved a lawsuit filed by whistleblower Gary W. Reno under the qui tam or whistleblower provisions of the False Claims Act.

The FCA permits private individuals to file suits on behalf of the government against those who falsely claim federal funds, or cause others to do so, and to receive a share of any funds recovered through the lawsuit. 

Reno will receive $1.332 million as his share of the recovery, the DOJ said.

Wackenhut provided U.S. military bases with firefighting and fire protection services under a subcontract with Kellogg Brown & Root Inc. (KBR), the prime contractor for the Army’s contract for logistical support in the military theater.

The government alleged that from 2008 to 2010, Wackenhut inflated its labor costs by billing the salaries of certain managers as direct costs under the subcontract, when those salaries had already been charged as indirect costs. 

The government said Wackenhut artificially inflated its labor rate by counting its costs for holidays, vacation, sick leave, rest and recuperation and other variable labor costs twice in calculating the rate. 

Wackenhut billed KBR, which then passed on the costs to the government.

The settlement was the result of a coordinated effort among the DOJ’s Civil Division — Commercial Litigation Branch, the U.S. Attorney’s Office of the Eastern District of Texas, the Department of Defense Inspector General’s Office, the Defense Criminal Investigative Service, and the Defense Contract Audit Agency.

The case was Reno v. Kellogg Brown & Root, Inc. and Wackenhut Services, LLC, et al., Case No. 1:10-CV-504 (E.D. Tex.). 

The claims resolved by the settlement were allegations only and didn’t determine liability, the DOJ said. 

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. Wackenhut is a well established company. But that should not come as a surprise. Ten international player in safety.

    What is unusual is a pattern that is developing. Wakenhut was acquired sometime back by an international company from the Netherlands, Falck A/S. An international player in safety, security firefighting and Emergency Medical Services.

    Another of Falck's subdivisions, Lifestar Response has been named in a U.S. Federal False Claims Act Lawsuit regarding Medicare and other governmental health care funding programs. Although in its infancy as litigation, it involves multiple states and spans a number of years in its scope. The potential implications could be staggering both on a financial basis, but also on an industry wide scope.

    Lifestar Response is the second largest private providers of EMS ( Emergency and non-emergency) ambulance transportation with substantial operations in nine U.S. States as well as Washington D.C. with aggressive expansion plans in store.

    I hope that this is an isolated occurrence and not indicative of our corporate citizenship. But looking at statistics and history, I am concerned this will continue before it subsides.

    See: Unted States of America, ex Rel. V. Lifestar Response Corporation, et. Al
    Federal Court: Northern District of Alabama


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