Charles Stark Draper Laboratory, Inc Overcharge Scheme, Massachusetts

BOSTON – Charles Stark Draper Laboratory, Inc. (Draper), a Cambridge-based non-profit research company that helps develop weapons systems for the U.S. Navy, is shelling out nearly $3.5 million to settle allegations of a brazen overcharging scheme targeting federal contracts. The lab, a key player in defense technology, allegedly padded invoices with improperly allocated costs, lining its pockets at the expense of American taxpayers.

The feds say an audit of Draper’s 2016 fiscal year revealed a pattern of deceptive billing practices. Specifically, the lab was caught billing the government for “Opportunity Investments” – internal projects with questionable relevance to Navy contracts. Many of these projects were either of no interest to the military or lacked the necessary documentation to justify the charges. Draper also demonstrably failed to establish adequate internal accounting controls to monitor these suspect expenditures.

What’s particularly galling? According to investigators, when the Department of Defense raised red flags about these costs, Draper deliberately withheld information for months. They concealed the fact that they *couldn’t* substantiate the charges, effectively attempting to strong-arm the government into footing the bill for questionable projects. This isn’t just sloppy bookkeeping; it’s a calculated attempt to deceive.

“Contractors responsible for supplying and supporting our armed forces are required to follow many rules designed to protect both our military and the taxpayers,” stated Acting United States Attorney Nathaniel R. Mendell. “Our office monitors government contractors and – where appropriate – we will hold accountable those who fail to operate within the rules. This is our way of making sure taxpayers can trust that their money is going toward legitimate government-supported purposes and not overcharges.”

The investigation was a joint effort between the Naval Criminal Investigative Service (NCIS) and the Department of Defense Office of Inspector General Defense Criminal Investigative Service (DCIS). “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 NCIS, Northeast Field Office. “NCIS and our law enforcement partners remain committed to investigating contracting irregularities that diminish the operational readiness and warfighter superiority of the Navy and Marine Corps.”

DCIS Special Agent in Charge Patrick J. Hegarty echoed the sentiment: “Protecting the integrity of the procurement process is a top priority…The settlement agreement announced today is the result of a joint investigative effort and demonstrates the DCIS’ ongoing commitment to work with our law enforcement partners and the U.S. Attorney’s Office to investigate allegations of cost mischarging on DOD contracts.” The case was handled by Assistant U.S. Attorneys Brian M. LaMacchia and Evan Panich of Mendell’s Affirmative Civil Enforcement Unit. Draper Lab has not responded to requests for comment.