“Sarosi indicated that plaintiff, C3PO International Ltd, and defendant had determined that the … action should be dismissed with prejudice,” Judge McBryde said in the order.

DynCorp paid no money to settle the suit, Sarosi told Law360.

“DI always viewed C3PO’s assertions as baseless,” Sarosi said.

The decision comes days after DynCrop urged the judge to toss the suit, arguing that C3PO was asking to be reimbursed for upgrades that DynCorp. didn’t request because it was hoping to entice DynCorp to resume the project after it was damaged by an explosion linked to the Taliban. DynCorp also said C3PO failed to submit an “equitable adjustment request” for more money until months after the 30-day deadline specified in their two contracts.

DynCorp canceled the contracts after a July 2013 blast at the North Gate project, which was to provide living quarters, office space, parking and other facilities for DynCorp. employees who were providing logistical support to the Afghan National Police under a U.S. Department of Defense contract.

C3PO’s claims for more money had been gradually withered down by court decisions. Last February Judge McBryde dismissed most of the claims, ruling that DynCorp properly terminated the contracts, which were set to run from May 2013 to April 2014. Early this month the judge refused to reconsider his January order denying C3PO a chance to amend the remainder of its complaint, ruling that the proposed amendment was not based on any “newly discovered facts.”

DynCorp moved its staff to a hotel after the bombing and argued that it paid all that it owed to C3PO. DynCorp staff continued using some amenities at the facility after the bombing while the second purchase order was in effect, but that order was terminated early in January 2014, according to the suit filed in July 2014.

C3PO says it lost nearly $6.6 million after DynCorp’s refusal to pay out on the $11.9 million contract, leading the subcontractor to lay off about half its workers.

Attorneys for DynCorp and C3PO did not respond to requests for comment Tuesday.

C3PO is represented by Murphy S. Klasing and Tanya N. Garrison of Weycer Kaplan Pulaski & Zuber PC and local counsel Janice Cohen.

DynCorp is represented by C. Michael Moore, Garreth A. Sarosi and Adam H. Pierson of Dentons.

The case is C3PO International Ltd. v. DynCorp International LLC, case number 4:14-cv-00564, in the U.S. District Court for the Northern District of Texas.

“Our military depends on the private sector – both prime contractors and subcontractors – to provide critical services to protect the health and safety of our men and women in uniform,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Those subcontractors who knowingly inflate the costs of these services, which are passed onto the government and the taxpayer, will face appropriate consequences.  Today’s settlement demonstrates our continuing vigilance to ensure that our servicemen and women obtain the services they need at the price we bargained for.”

Wackenhut provided U.S. military bases with firefighting and fire protection services under a subcontract with Kellogg Brown & Root Inc. (KBR), the prime contractor for the Army’s contract for logistical support in the military theater, known as LOGCAP III.  LOGCAP III is the third generation of contracts under the Army’s Logistical Civil Augmentation Program.  The government alleged 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 under LOGCAP III.

“Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the U.S. government,” said Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service (DCIS) Southwest Field Office.  “The DCIS is committed to working with its partner agencies, such as the U.S. Department of Justice, Defense Contract Audit Agency and the U.S. Army Criminal Investigation Command to ensure the integrity of the Defense Department’s procurement process.  This settlement demonstrates that combatting fraud, waste and abuse within Department of Defense contracting remains a top priority.”

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 $1.332 million as his share of the recovery.

This settlement was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Eastern District of Texas, the Department of Defense Inspector General’s Office, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

The case is captioned Reno v. Kellogg Brown & Root, Inc. and Wackenhut Services, LLC, et al., Case No. 1:10-CV-504 (E.D. Tex.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Department of Justice — http://www.justice.gov/