Contractors agree to $2 million settlement

The Boeing Company of Seattle, WA, and United Space Alliance ("USA") of Houston, TX, have agreed to pay $825,000 and to give up their rights to $1.2 million in unpaid invoices to settle allegations relating to false claims submitted to the National Aeronautics and Space Administration (NASA) between 1986 and 1992. The settlement is based on a civil lawsuit filed by the Department of Justice on January 11, 2000, in the Central District of California. The suit alleged that Rockwell Space Operations Company ("ROSC") knowingly passed along the fraudulent costs of its subcontractor, Omniplan Corporation, under the NASA Space Shuttle and Space Station Freedom Programs. Between 1986 and 1993, RSOC certified to NASA that all Omniplan costs were reasonable, allowable, and allocable to the space agency contracts. The United States alleged that the RSOC invoices included large amounts of fraudulent costs. Because Boeing and USA are the successors of ROSC, both contractors have now assumed legal responsibility for the fraudulent costs passed along by RSOC to NASA.

In the early 1980's and 90's, NASA contracted with RSOC, assisted by its parent company, Rockwell, to manage and operate the Space Shuttle and Space Station Programs. In 1996, Rockwell entered into a partnership with Lockheed Martin to form USA, which is turn assumed the NASA contracts. Subsequently, Boeing acquired Rockwell's former aerospace and defense units, including RSOC. In so doing, Boeing became a stakeholder in USA, and assumed Rockwell's previous NASA contracts.

Personal expenses + corporate accounts = trouble
According to the suit, Omniplan commingled personal expenses with its corporate accounts, including operating a pizza delivery company out of a building RSOC was billing to NASA. Omniplan also established phony companies in order to inflate building and equipment lease costs. RSOC also charged NASA improper costs based upon Omniplan's general and administrative rates that included significant amounts of unallowable personal expenses, such as costs relating to personal homes, a ski lodge, expensive jewelry, and numerous vacations to Argentina, Nepal, and Singapore. In 1993, the United States sued Omniplan and secured a consent judgment. In 1995, the owner of Omniplan, Ralph Montijo, pled guilty to numerous felony violations of United States laws regarding Omniplan's fraudulent practices. Montijo later served 2 years in jail.

This investigation was conducted by Special Agents of the NASA Office of Inspector General, Office of Criminal Investigations, with assistance from the Defense Contract Audit Agency; the U.S. Small Business Administration, Office of Inspector General; the U.S. Postal Inspection Service; and the Harris County Appraisal District. Trial Attorney Joel D. Hesch, Civil Division, U.S. Department of Justice, negotiated the settlement.

For more information, please call Samuel Maxey, Assistant Inspector General for Investigations at 202-358-2580.

Edited by Bob Arguero, Managing Editor, GovCon