Triumph Actuation Systems and Triumph Group: One Labor Cost, Two Routes to Payment

In the Triumph Actuation Systems and Triumph Group settlement, the Connecticut company paid $478,586 to resolve allegations of duplicate labor recovery on defense contracts. The government alleged that labor costs already charged directly and paid by others also entered general and administrative rates charged to the government and higher-tier contractors.

The Justice Department announced the civil settlement on January 24, 2023. Triumph Actuation Systems – Connecticut made the payment; Triumph Group was also named in the whistleblower case. A former Triumph employee brought the allegations through a False Claims Act whistleblower case.

Triumph’s Connecticut operation, located in Windsor, designed and manufactured mechanical and actuation components for commercial and U.S. military aircraft and military systems. The government alleged that its inflated G&A rates caused it to be paid twice for the same costs between April 1, 2014 and March 31, 2020. We see no reason a paid labor bill should acquire a second life as overhead.

The Direct Charge and the G&A Rate

The alleged indirect-cost fraud depended on how Triumph recovered labor costs through different accounting routes. The government’s cost-allocation principles connect costs to the work that benefits from them.

In Triumph’s case, the government alleged that certain labor costs had already reached a payer as direct charges before the company included them in G&A rates. Following the direct bill alone would stop at the first payment. Following the same expense into the rate calculation reveals the alleged second recovery, including charges passed to higher-tier contractors working on government contracts.

The contract’s payment terms determine how a disputed cost reaches the government’s bill. For the duplicate recovery alleged here, we connect the labor expense to the rate used and the payment it affected.

What Evidence Is Needed to Prove Fraud?

For a duplicate labor allegation, the evidence connects an expense already recovered directly to the indirect calculation that charged it again. The original time record, job assignment, cost-pool reconciliation and payment request each explain a different part of that journey. We work with finance and contracts insiders to connect those records to the government’s payment and the decisions behind the charge.

A payroll entry can show a labor cost, while its job assignment identifies the work it served. Those supporting cost records matter because a real expense can still be charged to the wrong work. For the allegation against Triumph, the question was whether the company recovered an expense directly and then included it in its G&A rates.

Rates also have a history. On cost-reimbursement contracts, initial indirect billing rates are estimates, with final rates based on actual annual costs. The annual cost proposal and the bills that use those rates therefore belong in the same account of what happened. An insider who knows why a labor adjustment was made, omitted or reversed may be able to explain what the final total conceals.

A separate audit summarized in the Defense Department Inspector General’s Semiannual Report to the Congress, covering April through September 2018, shows why the adjustment itself matters. Auditors questioned direct subcontract labor costs because the contractor had left labor adjustments out of its incurred-cost proposals:

That audit’s finding turns on a specific omission in the cost proposals. For someone who prepares or reviews those proposals, the original labor entry and the adjustment history can explain a duplicate claim that the final bill alone leaves buried.

Other Defense Cases Followed the Same Cost Twice

Vector Planning and Services agreed to a $6.5 million civil settlement announced in February 2014. The government alleged that direct costs already paid entered indirect pools allocated across Navy contracts for another payment. That is the same accounting comparison raised by the Triumph allegations: the direct recovery beside the cost included in the indirect calculation.

The Vector settlement also covered allegations of billing for costs never incurred. That adds another question for an accounting insider: whether the expense behind a government charge existed in the first place.

Centerra Services International, formerly Wackenhut Services, agreed to a $7.4 million civil settlement announced in February 2016. The government alleged that Wackenhut charged managers’ salaries both directly and indirectly and double-counted holiday, vacation and sick leave in its labor rate. The alleged overcharges reached the Army through KBR’s bills under LOGCAP III.

The Centerra allegations also show why the customer chain matters. A charge originating in a subcontractor’s payroll or rate calculation can reach the government through another company’s bill. For an insider, the relevant records can span both the employer’s accounting system and the charges sent to its customer.

Who Investigated the Triumph Labor Charges?

The investigation involved the Defense Criminal Investigative Service, the Department of the Army Criminal Investigation Division, the Naval Criminal Investigative Service and the Defense Contract Audit Agency’s Operations Investigative Support Division. The U.S. Attorney’s Office for the District of Connecticut handled the matter. Their work concerned an alleged G&A overcharge reaching both government customers and higher-tier contractors.

The Payment and the Whistleblower’s Share

The Justice Department said the former employee who brought the qui tam case would receive a share of the recovery. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. If you know how a labor charge reached the government twice, we build the case with you around that knowledge.

You Know Where the Labor Went

If you saw a paid labor charge reappear in a G&A pool, speak to one of our whistleblower experts about the cost and who charged it again. We build the case with you around the work, the rate and the government payments, and bring in defense contractor fraud whistleblower lawyers who understand indirect-cost disputes. We stay beside you through the process, working toward your strongest defense contractor whistleblower case.