INovex Information Systems: Employees Without Required Qualifications

In the iNovex Information Systems NSA settlement, the company agreed to pay $962,747 to resolve allegations that it knowingly billed for system administrators who had not obtained a required certification in time. The alleged overbilling ran from November 9, 2012 through April 14, 2016. The Justice Department alleged that iNovex put those employees into labor categories whose rates depended on that certification, and the National Security Agency paid the invoices. For someone who knows the staffing records, the question is concrete: did the employee qualify for the category the government paid for?

What the NSA Contract Required

The NSA contract tied personnel qualifications to particular labor categories and hourly rates. The Justice Department’s account of the contract describes an appendix prescribing the experience, education and specialized certifications required for the classes of employees billed under each category.

iNovex, based in Annapolis, Maryland, provided information-technology consulting, engineering, development and integration services. The NSA, a component of the Department of Defense, awarded the contract in March 2012. Because of the work’s complexity, the agency required personnel with the training, qualifications and clearances needed to perform the contract’s tasks.

The allegation concerned the certification required for System Administrator-IV and System Administrator-III positions. The government alleged that employees billed in those categories had not obtained that certification on time. Those category names appeared on the invoices iNovex presented to the NSA, connecting a staffing qualification directly to the government’s bill. That is the payment issue in underqualified labor on defense contracts.

How a Missing Certification Reached the Invoice

The missing certification mattered because it was required for payment at the billed rates. The Justice Department alleged that iNovex knowingly billed the NSA under the system-administrator categories before the employees obtained that certification.

The timing matters as much as the credential. A certification record and an invoice describe different things: one records the employee’s qualification, while the other identifies the category charged to the customer. Putting the qualification date beside the period billed shows whether the company’s claim to that rate matched the employee’s status at the time.

The hourly rate also matters because a government labor charge can cover more than the worker’s wages. In time-and-materials contracting, the federal acquisition rule describes fixed hourly rates that include wages, overhead, general and administrative expenses, and profit.

We see the absurdity in the alleged bargain: the qualification remained a condition of the price, while the invoice charged that price before the qualification was in place. The people checking credentials and the people approving bills can each see a different half of that contradiction. Connecting the halves is what makes the staffing issue a question about taxpayer money.

What the Settlement Resolved

The Justice Department announced the civil settlement on July 20, 2020. iNovex agreed to the payment to resolve federal False Claims Act allegations concerning the specialized qualifications of employees billed to the NSA.

The U.S. Attorney’s Office for the District of Maryland, the NSA Office of Inspector General and the Defense Criminal Investigative Service’s Mid-Atlantic Field Office announced the settlement. The NSA inspector general and the Defense Contract Audit Agency worked on the investigation.

Other Defense Contracts, the Same Qualification Problem

A separate CACI Technologies matter also concerned employees supplied to the NSA. The Defense Department Office of Inspector General’s semiannual report covering April through September 2018 describes an investigation conducted jointly with the NSA Office of Inspector General into allegations that CACI billed for labor services that failed to meet contract requirements. The allegations concerned underqualified employees supplied between 2010 and 2014.

CACI agreed on July 6, 2018 to pay approximately $1.5 million to resolve breach-of-contract allegations. The shared issue is the promised qualification behind the labor charge.

DRS Technical Services agreed to a $13.7 million settlement announced in October 2014 over alleged qualification-based overbilling on Army and Coast Guard work. The government alleged that personnel did not satisfy the qualifications for the rates charged. The mismatch again sat between the employee supplied and the category billed.

Lockheed Martin Integrated Systems agreed to a $27.5 million settlement announced in December 2014 over allegations involving Army task orders supporting Iraq and Afghanistan. The government alleged that the company billed underqualified employees at rates for more qualified staff. For a staffing or billing insider, these cases point to the same useful comparison: the qualifications promised, the person assigned and the rate the government paid.

What an Insider’s Records Can Show

The useful evidence of defense contractor fraud connects the contract requirement to the person, the billing period and the payment request. In a qualification case, the category appendix identifies the promise, and the credential record supplies the comparison. Work records connect the employee to the assignment, while the invoice identifies the category the contractor charged. Any relevant contract modification belongs alongside those documents because it can change the requirement being compared.

The iNovex allegation also concerned what the company knew. In examining a similar matter, we would want to understand who checked the certification, who assigned the billing category and what happened when someone identified a mismatch. A staffing specialist may know when a credential was obtained. A billing employee may know when the corresponding rate first appeared on an invoice. Together, those observations can explain a discrepancy that either person sees only in part.

That is the connection we examine with you when assessing a defense contractor whistleblower claim. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Your knowledge of the qualification and the billing decision is where we start building your strongest case.

You Know When the Qualification Was Missing

If you know why an NSA or other defense contract was billed at a rate the assigned employees did not qualify for, speak to one of our whistleblower experts about how the rates were billed. We work beside you to build your strongest case around the requirement, the credential and the government payment, and bring in defense contractor fraud whistleblower lawyers with experience in labor billing. You bring the view from inside the business, and we stay with you as your partners throughout the case.