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Contractor to pay nearly $3.5M after overcharging US Navy and ‘wasting valuable taxpayer money’

Court room and gavel. (Dreamstime/TNS)

Charles Stark Draper Laboratory, Inc. (Draper), a Cambridge-based non-profit research company and defense contractor, has agreed to pay nearly $3.5 million after officials said it overcharged the U.S. Navy and “wasted valuable taxpayer money.”

In fiscal 2016, Draper billed the government for costs associated with internal projects that Draper called “Opportunity Investments.” An audit of these costs found that many “Opportunity Investment projects were not of interest to the government, or Draper lacked sufficient documentation to justify the costs,” a press release stated.

The settlement also stated that the audit found that Draper lacked sufficient internal accounting controls concerning Opportunity Investments.

“When the Department of Defense requested additional information about the costs flagged by the audit, Draper, for months, did not reveal that it lacked documentation to support charging some of the Opportunity Investments to the government,” the press release stated.

“Draper Lab’s overcharging on Navy contracts wasted valuable taxpayer money and undermined the integrity of the Department of the Navy’s procurement process,” said Michael Wiest, special agent in charge of the Naval Criminal Investigative Service (NCIS), northeast field office.

The nearly $3.5 million settlement resolves the allegations, the press release said. This kind of process is to make sure taxpayers can trust where their money is going, said Acting United States Attorney Nathaniel R. Mendell.

“Contractors responsible for supplying and supporting our armed forces are required to follow many rules designed to protect both our military and the taxpayers,” said Mendell. “Our office monitors government contractors and – where appropriate – we will hold accountable those who fail to operate within the rules. This is our way of making sure taxpayers can trust that their money is going toward legitimate government-supported purposes and not overcharges.”

Draper has continued to work on a number of other projects for the U.S. Navy since 2016, including a $133.5M U.S. Navy contract to continue guidance technology research efforts and was one of 40 companies to participate in a five-year, $982 million contract to support the research, development and delivery of unmanned surface vehicles.


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