Government contractor NORESCO has settled for $9.6 million over allegations of overcharging the federal government, according to an announcement from U.S. Attorney Leah B. Foley. The Westborough, Massachusetts-based company was alleged to have violated the False Claims Act in connection with 29 federally-funded energy saving performance contracts, as reported by the U.S. Department of Justice. These contracts were touted to procure energy savings and improvements with no initial expenses for a number of federal agencies.
Amidst the settlement, it's come to light that NORESCO's alleged misconduct included wrongfully inflating the project price for the U.S. Navy, and this included contingency costs that were not initially disclosed. The situation unfolded after Navy officials had only partially agreed to the initial request of contingency costs by NORESCO, when they then directed two of its subcontractors to add an additional $3.46 million to cover "potential unknown contingencies." NORESCO has repaid these costs after the investigation began, according to the U.S. Attorney’s Office.
Furthermore, the settlement also brings to close the issue of NORESCO inappropriately calculating and thus overcharging for financing costs across the board on numerous projects. In the midst of the government's investigation into the Navy transactions, NORESCO voluntarily admitted to the miscalculations which affected the total financial outcome of several contracts. Their self-reported errors indicated that they had received $1,466,180 more than due, and if left uncorrected, it would've resulted in an excess of $5,645,655 across the 29 projects, as detailed by their own calculations.
The company's actions to cooperate with the government investigation and its voluntary disclosure have been acknowledged. In repaying, they've managed to credit the entire incorrectly calculated amount back to the affected agencies. "NORESCO acknowledged and accepted responsibility for the facts which form the basis of this settlement," as the Department of Justice noted, pointing to the fact that the company has taken steps to rectify the situation. This has been seen as a significant cooperative gesture under the DOJ's guidelines which consider disclosure and remediation when evaluating False Claims Act cases.
The case was handled by Brian LaMacchia, Affirmative Civil Enforcement Unit Chief, and Senior Trial Counsel Kelley Hauser from the Justice Department, with the aid of multiple agencies including Naval Criminal Investigative Service, U.S. Department of Veterans Affairs Office of Inspector General, and the U.S. Department of Energy's Office of the Inspector General among others. Their collective efforts in the investigation and negotiation of this settlement signal a joint commitment to ensuring honest and faithful dealings in government contracts.
