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Fla. Firm to Pay $7.4M| to Settle Fraud Case

(CN) - A Palm Beach Gardens, Fla. security services firm will pay $7.4 million to resolve claims it violated the False Claims Act by double billing and inflating labor costs in connection with a contract for firefighting and fire protection services in Iraq, the Justice Department announced.

According to the government, Centerra Services International Inc., formerly known as Wackenhut Services ,provided U.S. military bases with firefighting and fire protection services under a subcontract with Kellogg Brown & Root Inc.

The government said that from 2008 to 2010, Wackenhut inflated its labor costs by billing the salaries of certain managers as direct costs under the subcontract, when those salaries had already been charged as indirect costs.

The government further alleged that Wackenhut artificially inflated its labor rate by counting its costs for holidays, vacation, sick leave, rest and recuperation and other variable labor costs twice in calculating the rate.

Wackenhut billed KBR, which then passed on the costs to the government.

This settlement resolves a lawsuit filed by whistleblower Gary W. Reno under the qui tam or whistleblower provisions of the False Claims Act.

The act permits private individuals to sue on behalf of the government those who falsely claim federal funds, or cause others to do so, and to receive a share of any funds recovered through the lawsuit. Reno will receive $1.3 million as his share of the recovery.

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