Lady Justice
McLean, VA – Booz Allen Hamilton Holding Corporation, a leading global consulting and engineering firm, has agreed to pay $15.8 million to settle allegations that its subsidiary, Booz Allen Hamilton Engineering Services LLC (BES), knowingly submitted fraudulent claims related to a General Services Administration (GSA) task order. The settlement resolves claims that BES manipulated the federal procurement process to secure contracts for supplying military training simulators and systems to the Department of Defense (DoD), including the U.S. Air Force.
The civil settlement, announced by the U.S. Department of Justice, comes after a lengthy investigation into the company’s actions during the bidding process for the contracts, which violated the False Claims Act. According to the Justice Department, the fraud scheme involved illegal use of confidential government information to influence and manipulate the awarding of contracts, undermining the integrity of the procurement process.
The Fraudulent Scheme
The Justice Department alleges that between 2012 and 2015, BES, under the leadership of former program managers John G. Hancock and Karen K. Paulsen, conspired with Keith A. Seguin, a civilian contracting official with the U.S. Air Force, and David J. Bolduc Jr., the co-owner of QuantaDyn Corporation, a BES subcontractor. The group used confidential government information to obtain a GSA task order for computer training simulators, which was then followed by fraudulent pricing and contract awards to QuantaDyn.
Seguin, who was working at Randolph Air Force Base, provided Hancock and Paulsen with proprietary government contracting and budget data, including competitor bid information, despite not being authorized to share such sensitive material. This confidential information was used by the pair to unfairly influence GSA’s decision to award the task order to BES. Subsequently, Hancock and Paulsen used the illicit data to submit inflated price quotes for 37 modules, which BES awarded to QuantaDyn on a sole-source basis.
The government also alleges that the claims submitted by BES for payment were fraudulent, with the company submitting prices for the modules based on confidential budget information. As a result, GSA paid the fraudulent claims. All of this led to a significant financial impact on the federal government and American taxpayers.
Criminal Charges and Civil Settlement
In addition to the civil settlement, Hancock, Paulsen, Seguin, and Bolduc have already resolved related criminal charges for their involvement in the scheme. The Justice Department highlighted the seriousness of the crime, stressing that the misuse of government contracting processes not only results in financial losses but also undermines public trust in the system.
“Government contractors that improperly receive confidential government information during the procurement process corrupt the integrity of that process,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This settlement demonstrates our continuing commitment to protecting the integrity of the government’s procurement process.”
Holding Companies Accountable
U.S. Attorney Jaime Esparza for the Western District of Texas emphasized the importance of this resolution, noting that the case marks the final chapter in a long-standing fraud scheme that involved numerous actors and impacted taxpayers. “My office has used every tool at its disposal—civil settlements, criminal prosecution, and asset forfeiture—to hold accountable those who helped a corrupt federal employee defraud the United States,” Esparza said. “I am grateful for the collaboration with our law enforcement partners to close the book on this fraud scheme.”
Robert P. Storch, Inspector General of the Department of Defense (DoD), also weighed in, praising the efforts of law enforcement to protect DoD contracting procedures. “This case demonstrates the unwavering dedication of the DoD’s Defense Criminal Investigative Service (DCIS) to pursue those who undermine the integrity of the DoD contracting process,” Storch said. “This settlement reflects our commitment to holding accountable those who jeopardize the welfare of America’s warfighters and defraud American taxpayers.”
The civil resolution was the result of a coordinated effort between the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of Texas, and several other federal agencies, including the General Services Administration (GSA) Office of Inspector General (OIG), the DoD’s DCIS, and the Defense Contract Audit Agency (DCAA). Their combined efforts led to the identification and resolution of the fraud scheme that spanned several years.
GSA Deputy Inspector General Robert C. Erickson reaffirmed the agency’s commitment to safeguarding taxpayer dollars. “The GSA Office of Inspector General will continue working with our law enforcement partners to protect taxpayer dollars and the integrity of federal contracting,” Erickson said.
Next Steps and Implications for Contractors
For Booz Allen Hamilton, the settlement represents a resolution to the allegations but does not eliminate the potential for increased scrutiny of its business practices moving forward. While the company cooperated with the investigation, it now faces an important opportunity to reinforce its commitment to ethical conduct, especially given the firm’s extensive involvement in government contracts. The settlement also serves as a reminder to all government contractors about the consequences of misconduct and the importance of adhering to federal procurement rules and regulations.
This case underscores the critical role that transparency and accountability play in maintaining the integrity of government contracting. As the U.S. government continues to rely on private contractors for a range of defense and technology services, the Booz Allen Hamilton settlement serves as a cautionary tale for firms engaging with the federal government.
For more updates on federal contracting oversight, readers can stay informed through official announcements from the U.S. Department of Justice and the General Services Administration.
