CDI Corporation: Half-Hour Charges on the Military’s Bill
In the CDI engineering labor settlement, CDI Corporation agreed to pay $1.95 million to resolve allegations that it charged the military for aircraft-engine work employees never performed. The government alleged that the company entered the charges in increments of half an hour or less to evade detection. If you know the engineering assignment behind a time entry, you may recognize the gap between the project someone worked on and the purchase order that paid for it.
The Justice Department announced the settlement on November 24, 2010. The allegations concerned CDI’s regional office in Sharonville, Ohio, where the Philadelphia-based engineering-services supplier worked under subcontracts with General Electric. The case puts a specific billing practice behind defense contractor labor fraud: small entries directed to military projects that allegedly received none of the billed work.
What CDI’s Sharonville Office Allegedly Charged
The government alleged that CDI directed employees’ labor costs onto purchase orders reimbursed by the U.S. military. Its civil investigation examined labor and billing records from January 15, 2001, through December 31, 2006. According to the Justice Department, employees did not perform the work billed to those military projects.
CDI supplied engineering services to GE Transportation and Aviation divisions under time-and-materials subcontracts covering both commercial and military projects. The work an employee performed and the project charged for it are separate facts, and the allegation was that CDI directed the charge to a military purchase order without the corresponding work.
The size of the entries was part of the alleged concealment. We see nothing small about billing taxpayers for work they never received, even when the alleged charges arrive half an hour at a time.
How the Labor Bill Reached Military Money
Under time-and-materials payment terms, qualifying labor hours are billed at fixed rates for the relevant labor category. Those rates include wages, overhead, general and administrative expense, and profit. The Federal Acquisition Regulation’s time-and-materials rule makes those hours part of the price of the engineering service.
In CDI’s case, the government identified the link from the subcontracted service to public money: purchase orders that the military would reimburse. The question for an insider is which engineering work supported those charges. Someone who knows the task can explain whether the time assigned to a military purchase order belonged there.
The underlying records answer different parts of that question. A time sheet states the hours, a job code assigns the work, and payroll connects the labor cost to an employee. The subcontract and purchase order identify the work being bought, while the billing record carries the charge toward payment. We examine that connection with the person who knows what happened inside the business.
Who Investigated the CDI Allegations
Special agents of the U.S. Air Force Office of Special Investigations at Wright-Patterson Air Force Base conducted the civil investigation. The Defense Contract Audit Agency provided audit support, and the Justice Department negotiated the settlement. Their work reached back into CDI’s labor and billing records, where the government said the allocation decisions appeared.
A former CDI employee brought the False Claims Act lawsuit in federal district court in Cincinnati. The settlement provided a share of the recovery for that whistleblower. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.
What Evidence Is Needed to Prove Fraud?
For allegations like CDI’s, the evidence connects the hours claimed, the work actually performed, the purchase order charged and the government’s payment. We examine the records behind the government’s bill with you, including the instructions behind the allocation. The government’s account of CDI described directed mischarging, making who chose the billed project part of the story.
An engineering employee may know the assignment behind an entry. Someone in payroll or billing may understand how that entry became a labor charge. A supervisor may know the instruction that put it against a particular purchase order. Those different views can explain the same charge from the work through to the bill.
You Know the Work Behind the Entry
If you saw engineering hours assigned to a military project that never received the work, tell our whistleblower experts how the charge was directed. We build your case around the work, the billing decision and the government money, bringing in defense contractor whistleblower lawyers who understand labor mischarging. We stay with you through the case, with your knowledge of the assignment at its center.
