A Maryland IT, cloud, and security consultancy will have to pay the US government at least $14.75 million to settle multiple allegations that it issued false invoices between 2018-2023.
Among the allegations, which as part of the settlement were neither proved nor disproved, Hill Associates was accused of charging for services it was not allowed to, and putting staff on jobs on which they may not have been qualified to work.
The Rockville company was awarded a government contract during this period via the General Services Administration, which runs the Multiple Award Schedule (MAS) program. This sees the GSA negotiating terms for commonly procured goods and services, and then awarding the contracts to vendors, of which Hill was one recipient.
Hill’s GSA MAS contract encompassed two blanket purchase agreements (BPAs): one from the Treasury and another from the Department of Justice (DoJ).
Collectively referred to as the named contracts, Hill allegedly charged fees for which the GSA MAS contract didn’t allow.
Court documents [PDF] claimed invoices for task orders included fees related to: corporate administration, corporate profit, corporate overhead, management reserve, task order management, and task order management support.
Additionally, written into the GSA MAS contract was a provision for a government discount if it paid Hill’s invoices within 10 days, to the tune of 5 percent. However, Hill was accused of submitting invoices without this discount offer applied.
The US accused Hill of playing it fast and loose with the qualifications of its personnel too. The GSA MAS contract specified labor categories to inform contract billing, with categories based on staff members’ experience and education.
The contract stated that years of experience could not be substituted for years of education or vice versa, but the DoJ alleged that Hill went ahead and made these substitutions anyway.
The complaint went on to accuse the consultancy of charging the Treasury and DoJ for specialist IT labor carried out by people who either did not meet or could not verify they met experience/education requirements for the labor category under which the work was billed.
Further, the US claims Hill invoiced the Treasury for various services that were out of the scope of its contract.
These included cloud computing and cloud-related IT professional services, IT training, and highly adaptive cybersecurity services. The US said Hill had not even passed the oral technical evaluation for the latter, let alone had the approval to charge for these services.
Finally, while servicing the GSA MAS contract, the US claimed that Hill applied for another contract in 2022 but claimed it did so using overstated costs related to overheads, facilities, and general administration.
These allegedly overstated costs included incentive compensation paid to four business development execs as part of the overheads, despite not being able to prove that the compensation was reasonable or allowable.
Not just a straightforward fine
The settlement agreement Hill signed has it firmly under the US’s thumb until the next decade – a hefty punishment for what the government views as income and taxpayer fraud.
The minimum sum Hill will pay as part of the settlement is $14.75 million. $8 million of this must be paid within 14 days of the settlement being finalized, plus interest accruing at 4.625 percent per year.
The remaining $6.75 million will also accrue interest at the same rate and from the same date, and will be paid over a defined schedule – five payments made on December 31 of each year up to and including 2029.
Beyond the $14.75 million, Hill must also pay 2.5 percent of its annual gross revenue generated between from January 1, 2026, to December 31, 2029, each year, provided it generates over $18.8 million per year.
This must be paid at the calendar year-end, with interest accruing at 4.625 percent until payment is made, and it will have 120 days to do so, along with filing audited annual financial results.
Additionally, Hill must provide the US government with 30 days’ notice of any sale, transfer, merger, or liquidation of any assets worth at least $1 million.
Once the sale goes through, Hill will have to pay the US one of the lesser of two sums: All remaining owed money over time, or half of the sale proceeds after deducting taxes and secured debt on the sold asset.
“Information technology contractors are expected to charge the government appropriately for their services,” said Brett A Shumate, assistant attorney general at the DoJ’s Civil Division.
“We will continue to pursue cyber fraud and hold accountable those companies that knowingly fail to meet contractual obligations to the American taxpayers.”
“As the nation’s tax watchdog, the Treasury Inspector General for Tax Administration (TIGTA) is dedicated to safeguarding the integrity of the Internal Revenue Service (IRS)’s contracting and procurement processes,” said Jessica Cipolla, acting special agent in charge at TIGTA’s Gulf States Field Division.
“We remain steadfast in our mission to expose and hold accountable those who attempt to defraud the IRS. Anyone doing business with the IRS or the Department of the Treasury is expected to operate with the highest levels of honesty and integrity. We are grateful to the US Department of Justice and our law enforcement partners for their continued collaboration and critical support in this investigation.” ®