SAIC, others pay $22.7 million to resolve contracting case

Science Applications International (SAIC), a subcontractor and two former government employees will pay nearly US$22.7 million to resolve allegations that they rigged bids for a $3.2 billion supercomputing contract with the U.S. General Services Administration, the U.S. Department of Justice announced Thursday.

Whistleblower David Magee, a former computer scientist at the U.S. Naval Oceanographic Major Shared Resource Center in Mississippi, alleged that two top-ranking employees at the center helped steer the contract to SAIC and subcontractor Applied Enterprise Solutions, owned by a former government employee.

SAIC will pay $20.4 million to resolve Magee's False Claims Act lawsuit, filed in U.S. District Court for the Southern District of Mississippi, the DOJ said in a press release. Applied Enterprise Solutions and its CEO, Dale Galloway, will pay nearly $2.2 million, and former government employees Stephen Adamec and Robert Knesel will pay $110,000, the DOJ said.

SAIC is confident its conduct was "lawful and in keeping with standard industry practice," a spokeswoman said. "But in the end the company decided it was more important to focus attention on managing the company rather than incurring the risks, costs and distractions of continued litigation."

Galloway did not return an email seeking comment.

The Mississippi center provides high-performance computing services for the U.S. Department of Defense, according to court documents. The contract, in which SAIC and Applied Enterprise Solutions teamed with Lockheed Martin, was to provide technology support services for the National Center for Critical Information Processing and Storage at the Mississippi center, the DOJ said.

SAIC was paid $116 million under the contract, the DOJ said. The DOJ joined the lawsuit against all the defendants except Lockheed Martin shortly after Magee filed the case. Lockheed Martin has previously settled the case for $2 million.

Adamec is the former director of the Mississippi center, while Knesel was deputy director, according to court documents. Magee's lawsuit alleged that the two of them worked with Galloway on the GSA contract. Galloway, former director of the DOD's Space and Naval Warfare Systems Command Information Technology Center, resigned in June 2003 and started Applied Enterprise Solutions with his wife, according to court documents.

Adamec and Knesel shared nonpublic, advance procurement information with the SAIC team, the lawsuit alleged. The two former government employees shared information with the SAIC team before providing that information to other bidders, and they wrote a contract that favored the SAIC team, the DOJ and Magee alleged.

Whistleblowers in False Claim Act contracting lawsuits can share in the money recovered by the DOJ.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.