Updated at 4:34 p.m. with additional reporting.
The U.S. Department of Justice announced this afternoon that it has settled a whistleblower lawsuit against two companies under contract with the U.S. Department of State.
DynCorp International LLC and its subcontractor, The Sandi Group (TSG), were sued by two former TSG employees in a qui tam lawsuit under the federal False Claims Act.
In the settlement, DynCorp will pay $7.7 million and TSG will pay $1.01 million, according to the DOJ release. The two former TSG employees will also receive a share up to $481,710.
A copy of the lawsuit filed against the two companies was not immediately available this afternoon, but according to the DOJ release, DynCorp was accused of inflating claims made to the government for construction costs, while TSG was accused of seeking reimbursement for danger pay that it had never actually paid out to U.S. employees working in Iraq.
“The hard work of stabilizing Iraq is challenging enough without contractors and subcontractors inflating the cost of rebuilding by making false claims at taxpayers’ expense,” Tony West, Assistant Attorney General for the Civil Division, said in the DOJ release. “This case demonstrates that the Department of Justice will pursue these cases that undermine the integrity of our public contracting process.”
Stuart Bowen Jr., the Special Inspector General for Iraq Reconstruction said in a statement that “false claims filed by contractors have been a problem in Iraq.”
“While SIGIR continues to pursue a number of allegations in this regard, I am pleased to see that today one of those cases has come to just resolution,” he said.
DynCorp's attorney, Douglas Baruch of Fried, Frank, Harris, Shriver & Jacobson, could not immediately be reached for comment. DynCorp spokeswoman Ashley Burke said in a statement this afternoon that the company denies any wrongdoing.
"DynCorp International (DI) entered into a settlement agreement with the Department of Justice that resolves cost issues related to contractor personnel camps delivered by DI to the State Department in Iraq in 2004 - 2006," Burke said. "While the company believes that its actions were appropriate and allowable under the contract, we are committed to resolving this issue to the satisfaction of the U.S. government."
A TSG representative and TSG's attorney, David Barger of Greenberg Traurig, could not immediately be reached this afternoon.