Science Applications International Corporation (SAIC), now known as Leidos Holdings Inc., will pay $1.5 million to resolve a False Claims Act lawsuit alleging that it knowingly engaged in prohibited conflicts of interest as a contractor for the U.S. Nuclear Regulatory Commission (NRC) between 1992 and 2000.
SAIC provides scientific, engineering and other technical services for government and commercial customers and is headquartered in Reston, Virginia.
“Organizational conflicts of interest undermine the integrity of the federal procurement process,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Even more importantly, where the conflicts relate to a government program aimed at protecting the public health, work biased by conflicts of interest can put the public’s health at risk. This resolution, reached after a long and difficult litigation, demonstrates that the Justice Department will ensure that contractors who put their financial interests above the good of the American public will be held accountable.”
Between 1992 and 2000, SAIC held two contracts with the NRC to provide scientific and technical services, including assisting the NRC in its consideration of a rule that could have permitted the release or recycling of certain types and quantities of material with very low levels of radioactivity below regulatory safety limits.
The NRC decided in 2005 not to proceed with such a rule. The United States alleged that, under these contracts, SAIC was required to avoid conflicting business relationships that could bias SAIC’s work for the NRC.
The United States alleged that SAIC repeatedly and falsely certified that it had no such conflicting business relationships, when SAIC actually engaged in multiple business relationships with entities that had a financial interest in the outcome of the NRC’s rulemaking effort.
“The NRC’s unique status as an independent agency dedicated to the protection of public health, safety, and the environment means that decision-making must be free from even the potential for bias,” said Mark A. Satorius, Executive Director for Operations at the NRC. “This resolution shows that the NRC and Justice Department will work together to ensure that contractors who undermine the NRC’s commitment to decision-making that is free from bias will be held accountable.”
In July 2008, after a five-week jury trial, the jury returned a verdict in favor of the United States that SAIC violated the False Claims Act and breached its contract with the NRC by engaging in undisclosed conflicts of interest.
On appeal, in December 2010, the U.S. Court of Appeals for the District of Columbia Circuit affirmed judgment for the United States on the breach of contract claim, but partially reversed the judgment on the False Claims Act claims based on two instructions given to the jury and remanded the case for a new trial on those claims.