Intelligent Waves pays $1.95M to settle False Claims Act allegations

Reston-based defense contractor Intelligent Waves agreed to pay $1.95 million to settle False Claims Act allegations involving two U.S. Air Force contracts. And in a separate case, Fairfax-based government contractor General Dynamics Mission Systems agreed to pay $600,000 to settle allegations that a company that it acquired made false statements in federal government contract proposals.

The U.S. Attorney’s Office for the Eastern District of Virginia announced Intelligent Waves’ settlement last week. The settlement stems from a lawsuit filed in December 2022 by two former Intelligence Waves employees, Nora Taylor and Marthe Lattinville-Pace of Fredericksburg, under the whistleblower provision of the False Claims Act. In their suit, they claimed Intelligent Waves tried to defraud the U.S. government. Taylor was vice president of contracting and compliance at the contractor, while Lattinville-Pace was senior vice president of human resources.

Federal prosecutors said Intelligent Waves entered into a contract with the Air Force in September 2019 where the company provided crowd-sourced flight data collection support and data analytics to the 59th Test and Evaluation Squadron at Nellis Air Force Base.

However, the federal government alleged that Intelligent Waves knowingly sold equipment to the Air Force that was not authorized under the contract and submitted invoices to the Air Force that wrongly characterized the equipment as authorized. Intelligent Waves was also accused of billing the Air Force products and labor that it did not deliver in the specific quantities stated in its invoices and that the company didn’t provide a credit to the Air Force for undelivered products and services.

The lawsuit also alleges that Intelligent Waves made false statements in order to win a contract to build special access program facilities at Edwards Air Force Base.

In a news release from Intelligence Waves, the defense contractor said it “acted lawfully, transparently, and in good faith” throughout the inquiry and that the company’s decision to settle “does not reflect any admission of wrongdoing but rather a practical and strategic business determination made to avoid the time, expense and disruption of protracted litigation.”

“We take immense pride in our longstanding commitment to integrity, accountability, and client service, especially in support of our nation’s most vital missions,” Intelligent Waves CEO Tony Crescenzo said in a statement. “While we believe our actions were always responsible and aligned with applicable guidance, we opted to resolve this civil matter to move forward without the uncertainty and distraction of extended legal proceedings.”

Whistleblower suits brought through the False Claims Act are initiated by individuals filing a complaint under seal in the U.S. District Court and providing a copy of the complaint and evidence to the U.S. Attorney’s Office. The federal government then has an opportunity to investigate the claims.

A judge ordered a redacted complaint against Intelligent Waves to be unsealed on April 2. The lawsuit says Taylor and Lattinville-Pace were terminated after raising concerns about the contracts. Both Taylor and Lattinville-Pace will receive a share of the government’s recovery in the lawsuit as part of the False Claims Act.

On Monday, the U.S. Attorney’s Office for the Eastern District of Virginia announced in a separate case that General Dynamics Mission Systems agreed to pay $600,000 to settle allegations that a company that it acquired made false statements in federal government contract proposals.

In July 2022, General Dynamics Mission Systems acquired Manassas-based defense contractor Progeny Systems. Before the acquisition, Progeny entered into teaming agreements with Quality Support and Minimum Entropy to help with drafting and submitting proposals for Small Business Innovation Research contracts, which are awarded to small businesses to develop and commercialize new technology. The U.S. attorney’s office said the contracts are reserved for businesses that have fewer than 500 employees, including employees of any affiliated companies.

Federal government said that Progeny provided Quality Support with personnel and that a Progeny employee formed, owned and operated Minimum Entropy. In return, the office said both companies selected Progeny as their sole subcontractor on all of their SBIR proposals, including six SBIR contracts from four federal agencies.

The U.S. attorney’s office noted that the civil claims settled by the False Claims Act agreement for both the Intelligent Waves case and General Dynamics case are allegations and that there has been no determination of civil liability in either situation.