MILITARY CONTRACTOR SETTLES ALLEGED VIOLATIONS OF FALSE CLAIMS ACT

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, July 2, 2013 
CyTerra Corporation Agrees to Pay $1.9 Million to Resolve False Claims Act Allegations 

CyTerra Corporation has agreed to pay the federal government $1.9 million to resolve civil liability arising from its failure to provide the U. S. Department of the Army with accurate, complete and current cost or pricing data for its sales of mine detectors, the Justice Department announced today. CyTerra, headquartered in Waltham, Mass., manufactures equipment, including portable mine detectors, used by the U. S. military.

“The Department of Justice will hold accountable those who undermine the integrity of the public contract process in pursuit of financial gain,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the U. S. Department of Justice. “Those who wish to do business with the government are expected to do so fairly, and those who don’t will face the consequences.”

In 2003, the Department of the Army awarded CyTerra a contract for the production and delivery of AN/PSS-14 hand-held mine detection units. The contract was modified several times to provide for the production and delivery of additional mine detection units. The government contended that, in connection with the negotiations concerning three of these contract modifications, CyTerra knowingly failed to provide the Army with the most recent cost or pricing data on the number of labor hours needed to produce a mine detector. Under the Truth in Negotiations Act, CyTerra was required to provide cost or pricing data that was “accurate, complete and current.” The government alleged that if the Army had received such information, it would have negotiated a lower price.
“Contractors who negotiate with the government must be scrupulous in their dealings with the government,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “Government contractors should be on notice that the requirements of the Truth in Negotiations and False Claims Acts will be enforced.”

The civil settlement resolves a lawsuit pending in federal court in the District of Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the U. S. and share in any recovery. The action was filed by Kevin Bartczak and Keith Aldrich, two former CyTerra executives. As part of today’s resolution, Bartczak and Aldrich will share $361,000 from the civil recovery.

The case is being handled by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Commercial Litigation Branch, with investigative assistance from the Defense Criminal Investigative Service.
“The Defense Criminal Investigative Service (DCIS) is committed to working with its partner agencies, such as the U.S. Department of Justice, the Naval Criminal Investigative Service and the Army Criminal Investigation Command, to ensure the integrity of the Defense Department’s procurement process,” said Leigh-Alistair Barzey, Resident Agent-in-Charge of the DCIS Boston Resident Agency. “This settlement agreement reflects that commitment and is a successful resolution of this investigation, which could not have occurred without the direction of the Department of Justice and the assistance of the Defense Contract Audit Agency’s Investigations Support Division.”