For a nuclear plant contractor, the submission of false timekeeping entries over a six-year period proved to be far more serious than a simple documentation issue. On Tuesday April 23, the U.S. Department of Justice (DOJ) announced that Consolidated Nuclear Security LLC (CNS) had agreed to pay $18.4 million to resolve timecard fraud that occurred from 2014 to 2020.
CNS is a Tennessee-based company that managed and operated nuclear weapon assembly and disassembly facilities under contract with the U.S. Department of Energy, National Nuclear Security Administration (NNSA). The settlement alleges that CNS submitted false claims to NNSA for time that employees did not actually work at NNSA's Pantex plant near Amarillo, Texas. More specifically, certain CNS product technicians at the plant recorded (and submitted) hours that they never worked, meaning that CNS overcharged the federal government for work it did not perform in violation of the False Claims Act (FCA).
Under the terms of the settlement, restitution will account for approximately $16.6 million of the total $18.4 million to be paid.
Notably, CNS asserted that it uncovered the noncompliant timekeeping activities and disclosed the issue to the government. According to CNS, it "initially discovered suspicious activity as it implemented process efficiencies and improved payroll systems." The company said it cooperated with the government's investigation, by taking actions that included identifying individuals with awareness of relevant information, providing information to the government relating to the improperly charged hours and the personnel involved, undertaking new measures to protect against similar misconduct, and terminating the employees responsible.
The DOJ also acknowledged the importance of the remedial efforts undertaken by CNS, including termination of employees involved in the alleged misconduct and its cooperation with the agency's investigation.
CNS' actions underscore the significance of timely disclosure to, and cooperation with, government agencies. Because the FCA allows for the government to impose up to treble damages, CNS could have faced a far greater penalty than the $18.4 million it paid without such cooperation.
For government contractors responsible for tracking time records under government procurement contracts—and for federal grantees responsible for submitting time and effort documentation to their federal funding agencies—CNS' settlement proves, yet again, that accurate timekeeping records are crucial. With personnel costs being one of the most substantial cost categories in cost-reimbursement agreements, compliant time records continue to be an area of compliance focus and common findings by federal agencies. Both grant recipients and federal contractors should prioritize developing and implementing a compliant personnel activity reporting methodology that ensures, via internal checks and audits, that employees are not fraudulently submitting time records.
Originally published April 26, 2024
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