On January 24, 2001, United States District Court Judge Walter J. Gex
III issued a ruling that Sverdrup Technology, Inc., a former technical
support contractor at NASA’s John C. Stennis Space Center, in Bay St.
Louis, Mississippi, violated the False Claims Act. The government
contended that Sverdrup submitted false claims to NASA in order to get
indirect and material costs paid that exceeded the budgeted ceilings
for those costs. The Court ruled that after the government warned
Sverdrup about charging these costs, Sverdrup conspired to hide the
true nature of the costs by developing a complex benchstock accounting
scheme that disguised the costs and left them unauditable, in reckless
disregard of the contract terms and NASA’s repeated protestations. The
Court specifically found that Sverdrup employees, the former Director
of the Engineering and Sciences Division, the then-leader of the Gas
and Materials Analysis Laboratory, and the former manager of the
Sciences Laboratory, coordinated and launched the benchstock scheme to
avoid charging restrictions imposed by NASA.

The Court also found that Sverdrup made misrepresentations to NASA
regarding labor costs, which inflated Sverdrup’s staffing at Stennis.
The Court found that Sverdrup engaged in a pattern of deception that
indicated a guilty state of mind. Sverdrup employees were
nonresponsive to demands for records, and attempted to alter or destroy
records, including the erasure of a computer hard drive.

The Court awarded the government $54,464 in False Claims Act damages.
The government asserted that it mistakenly paid Sverdrup $107,227 in
legal fees to which Sverdrup was not entitled, and suffered $1,221,350
in other damages. The Court directed the government to submit a
detailed accounting of legal fees and breach of contract damages by
February 13, 2001.

The NASA Office of Inspector General and the Federal Bureau of
Investigation investigated this case. United States Department of
Justice Commercial Litigation Branch attorneys Diana Younts, Michael
Granston, John Henebery, and Assistant U.S. Attorney Stephen R. Graben
of the Southern District of Mississippi handled the civil prosecution.

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