Gallup to pay millions to settle complaints of inflated contract prices

Monday - 7/15/2013, 6:42pm EDT

By Cogan Schneier
Special to Federal News Radio

Gallup will pay millions to settle allegations that it overcharged the government for contracted work, said a Justice Department statement Monday.

The statement said the polling firm agreed to pay $10.5 million to resolve allegations in a complaint that the organization inflated contract prices by overstating labor hours to both the U.S. Mint and State Department. The United States filed the complaint in November 2012, the statement said.

"Contractors must be honest and straightforward in their contract proposals to the government," Stuart F. Delery, acting assistant attorney general for the Civil Division of the Department of Justice, said in the statement. "We will pursue contractors that seek to take advantage of the government by providing estimates that do not reflect their best judgment, or by offering employment to federal officials who have a conflict of interest. This type of misconduct results in inflated contract prices and undermines the integrity of the government's contracting process."

The statement also said the settlement addressed allegations that Gallup worked with a then Federal Emergency Management Agency (FEMA) official to obtain a subcontract at inflated prices and additional FEMA funding after the subcontract had been awarded.

Separately, the statement said the official, Timothy Cannon, pleaded guilty to a violation of a federal conflict of interest statute on Jan. 15, 2013, and was then sentenced to probation. Cannon agreed to pay the government $40,000 in April for violating the Procurement Integrity Act by negotiating and accepting an offer of employment from Gallup while still being involved with Gallup's FEMA subcontract.

The FBI, inspectors general for the Department of Homeland Security and the General Service Administration conducted the investigation.

"This case exposed a cozy arrangement between a contractor and a government employee where nobody was looking out for the American taxpayer," said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia in the statement. "With this settlement, we have held the contractor accountable for overbilling the government and returned $10.5 million to the federal Treasury. This significant corporate settlement and the related criminal prosecution should send a clear message that contractors and government officials alike must operate with honor and integrity."

Michael Lindley, Gallup's former director of client services, filed the lawsuit containing allegations that Gallup violated the False Claims Act. Lindley filed the lawsuit under the whistleblower provisions of the act, which dictate that a private party may file suit on behalf of the government, who may elect to intervene and take over the case. The whistleblower provisions also state that the private party may share in any recovery.

Lindely will receive $1,929,363 of the settlement, the statement said.

Cogan Schneier is an intern at Federal News Radio.

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