BOSTON – Charles Stark Draper Laboratory, Inc. (Draper), a Cambridge-based non-profit research company and defense contractor, has agreed to pay nearly $3.5 million to resolve allegations that it improperly overcharged U.S. Navy contracts.
Draper, among other things, helps develop weapons systems for the U.S. Navy.
The settlement resolves allegations that Draper improperly overcharged the government under federal acquisition regulations for certain overhead costs. According to the settlement agreement, an audit of Draper’s 2016 fiscal year costs charged to the government found, among other things, that Draper improperly billed the government for costs associated with internal projects that Draper called “Opportunity Investments.” Many Opportunity Investment projects were not of interest to the government, or Draper lacked sufficient documentation to justify the costs.
The audit also found that Draper lacked sufficient internal accounting controls concerning Opportunity Investments. When the Department of Defense requested additional information about the costs flagged by the audit, Draper, for months, did not reveal that it lacked documentation to support charging some of the Opportunity Investments to the government.
“Contractors responsible for supplying and supporting our armed forces are required to follow many rules designed to protect both our military and the taxpayers,” said Acting United States Attorney Nathaniel R. Mendell.
“Draper Lab’s overcharging on Navy contracts wasted valuable taxpayer money and undermined the integrity of the Department of the Navy’s procurement process,” said Michael Wiest, Special Agent in Charge of the Naval Criminal Investigative Service (NCIS), Northeast Field Office.
“Protecting the integrity of the procurement process is a top priority for the Department of Defense (DOD) Office of Inspector General Defense Criminal Investigative Service (DCIS),” said Patrick J. Hegarty, Special Agent in Charge of DCIS, Northeast Field Office.
Acting U.S. Attorney Mendell, NCIS SAC Wiest and DCIS SAC Hegarty made the announcement today. Assistant U.S. Attorneys Brian M. LaMacchia and Evan Panich of Mendell’s Affirmative Civil Enforcement Unit handled the matter.
Defendant/respondent: Charles Stark Draper Laboratory, Inc.
Exact criminal charges: Improperly overcharging the government under federal acquisition regulations for certain overhead costs.
City and state: Boston, Massachusetts.
Exact date: April 29, 2023 (Date of settlement agreement).
Sentence or outcome: Draper agreed to pay nearly $3.5 million to resolve allegations.
Dollar amounts: $3.5 million.
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Key Facts
- State: Massachusetts
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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