SAIC / Leidos: Independent Advice With Business on Both Sides

SAIC / Leidos agreed to a $1.5 million settlement of allegations that it concealed conflicts of interest while advising the Nuclear Regulatory Commission. The NRC conflict-of-interest case ended after partial reversal of the False Claims Act judgment. The government was buying independent advice about releasing or recycling material with very low levels of radioactivity. It alleged that its adviser also worked with businesses that had a financial interest in the answer. If you know the technical work and the customer relationships behind a no-conflict certification, this case reaches directly into your working day.

In its October 21, 2014 settlement announcement, the Justice Department identified Science Applications International Corporation as now known as Leidos Holdings Inc. The company provided scientific, engineering and other technical services to government and commercial customers. The United States brought this case, and the Justice Department’s Civil Division handled it in cooperation with the regulator.

What SAIC Was Advising the Nuclear Regulatory Commission About

The Nuclear Regulatory Commission hired SAIC under contracts signed in 1992 and 1999 for technical assistance on a possible rule allowing certain low-radioactivity material to be released or recycled. The agency was considering what could leave regulatory control and return to use.

The court’s account of the contracts makes the assignment concrete. Under the earlier contract, SAIC was to prepare an options paper setting out possible approaches to rulemaking. The later contract called for assessing regulatory alternatives for releasing reusable materials.

That work overlapped with a commercial question: what could businesses do with contaminated material after cleanup? A contractor advising the regulator could also have customers pursuing recycling work affected by the regulator’s decision. The government alleged that SAIC occupied both positions without making the required disclosures.

The Nuclear Regulatory Commission decided in 2005 not to proceed with the proposed rule.

The Business Relationships Behind the Conflict Allegations

The government alleged that SAIC repeatedly certified it had no conflicting business relationships while maintaining ties to entities financially interested in the rulemaking. These conflict certifications concerned the independence of the work the government was paying for. Both contracts also required SAIC to disclose conflicts it discovered after the work began.

Recycling Work for Other Customers

British Nuclear Fuels hired SAIC as a subcontractor on a Department of Energy project to decommission and decontaminate buildings in Oak Ridge, Tennessee. The government argued that the recycling and release of radioactive material from that project created a potential conflict with SAIC’s work for the regulator: material leaving the Energy Department facility and entering interstate commerce would become subject to Nuclear Regulatory Commission regulation.

Bechtel Jacobs also hired SAIC for a dose assessment and cost-benefit analysis involving recycling contaminated material. The court described the government’s allegation about how closely the assignments overlapped:

U.S. District Court for the District of Columbia, memorandum opinion, July 22, 2013

We see the problem in that alleged copy-and-paste. One assignment helped the regulator assess recycling policy. The other helped Bechtel Jacobs assess a recycling project. The reports could share technical material while the customers had very different interests in its use.

Proposed Deals, an Industry Role and SAIC’s Own Technology

The government’s allegations also reached work SAIC hoped to obtain. SAIC pursued radioactive-metal recycling opportunities with Alaron. The government alleged that Alaron was licensed and regulated by the Nuclear Regulatory Commission and that the proposed work closely matched the technical areas in which SAIC advised the agency.

A SAIC vice president who worked on the later regulatory contract also served as an officer and board member of the Association of Radioactive Metal Recyclers. The association advocated national standards for reusing and recycling radioactive material. The government alleged that the executive’s industry role created a conflict with the agency assignment.

SAIC also developed the Plasma Hearth Process, an experimental technology for treating radioactive waste at high temperatures. The government alleged that the technology aimed to make a large portion of the waste suitable for release or recycling into general commerce and, if used, would fall under Nuclear Regulatory Commission regulation.

What the Partial Reversal Changed

The partial reversal left the contract judgment standing but set aside the False Claims Act judgment on liability and damages.

In July 2008, a jury found for the United States on both the contract claim and the False Claims Act claims. In December 2010, the federal appeals court in Washington upheld the contract judgment but sent the false-claim issues back because the jury had been given the wrong instructions about knowledge and damages.

The jury could not simply add up what different employees each knew to conclude that SAIC knowingly submitted false claims. The other error concerned the government’s loss: the jury had to account for the value of the work the agency actually received.

Questions about the alleged conflicts, what SAIC knew and the work’s value remained disputed. The later settlement resolved the remaining false-claim allegations.

Independent Advice Had a Value of Its Own

The government paid for technical work it could trust as the basis for a regulatory decision. The court considered evidence that SAIC’s work retained technical value while its alleged conflicts impaired that use.

SAIC pointed to evidence that its work was of high quality and that the agency continued using it after discovering the alleged conflicts. But the court opinion also describes an independent peer review commissioned by the regulator. An agency employee overseeing the work testified that the alleged conflicts and resulting public distrust prevented the agency from using it as the technical basis for rulemaking as originally planned.

That is a costly kind of failure even when the calculations are sound. The agency employee’s account was that the work could no longer serve that purpose as intended. Independence was part of the product.

The surviving contract award was just $78, beside the $1.5 million settlement of the False Claims Act allegations. SAIC argued that the small contract award also limited what the government could recover on the earlier contract’s false claims. The court disagreed. We see why that distinction mattered: a tiny contract award did not settle the price of the alleged false assurances.

For the later contract, the government sought its full payment back. To recover it all, the government had to show that the undisclosed conflicts made the advice worthless.

What Are the Indicators of Government Procurement Fraud?

In an advisory contract like SAIC’s, a central indicator is a conflict certification that cannot be reconciled with the contractor’s customer work, proposed deals or industry roles. The court opinion also shows why the system used to check those relationships matters.

Witnesses testified that SAIC’s conflict-checking system omitted some business relationships, contained incomplete descriptions of its work and failed to associate relevant keywords with certain descriptions. Another witness testified that he made conflict representations to the government without seeing documents relevant to assessing them. The court found enough evidence for a jury to consider whether the company ignored the truth or kept itself from learning it.

Transparency International’s 2024 paper, Transparency, Accountability, and Integrity of Public Procurement Systems, describes a Romanian procurement system that collects association memberships and past employment and automatically flags possible conflicts between bid evaluators and bidders.

For someone inside technical consulting, the useful comparison is between the work people actually perform and the description the conflict review sees. A narrow project description may leave out the very overlap that makes a relationship important. In this case, witnesses’ accounts of those missing inputs helped put the checking process itself at issue.

What Proof Do You Need as a Whistleblower?

For this kind of case, we connect the promised independence, the outside relationship, the people who knew about both and the government’s payment. The SAIC opinion shows how technical proposals, customer reports, conflict certifications and testimony about internal reviews can illuminate different parts of that connection.

The knowledge question became particularly concrete for a scientist who helped prepare the earlier technical proposal and worked on both agency contracts. The court found evidence from which a jury could conclude that he understood why conflict avoidance mattered to the Nuclear Regulatory Commission and knew about overlapping customer work. His familiarity with the technical assignments connected facts that a certification alone would not explain.

We examine that kind of account alongside the contract and billing evidence. If your work gives you a view of both the government assignment and the commercial relationship, our whistleblower experts can assess what that connection means for a case.

A whistleblower case under the False Claims Act can pay a whistleblower reward of 15% to 30% of what the government recovers.

You Know Who Else the Adviser Worked For

If you saw a no-conflict certification leave out a customer, a project or an industry role, talk with our whistleblower experts about the work behind that assurance. We build your strongest government procurement whistleblower case with you and bring in government procurement whistleblower lawyers who understand technical consulting, conflict disclosures and federal payment claims. You get partners who can follow the science and the business relationships, and who stay beside you through the case.