Debra Wong Yang
United States Attorney
Central District of California
United States Courthouse
312 North Spring Street
Los Angeles, California 90012
May 25, 2005
Thom Mrozek (213) 894-6947
Los Angeles, CA - Honeywell Technology Solutions, Inc. (HTSI), an aerospace and technical services company that is a subsidiary of Honeywell International, Inc., has agreed to pay the United States $2.75 million to settle allegations that it falsely stated in a contract proposal to the United States Air Force that it had a fully compliant cost management system, when in truth it did not have one. HTSI subsequently was awarded the contract on December 21, 2001, and then it improperly charged the Air Force for putting a compliant system in place.
The Space and Missile Systems Center, a unit of the Air Force Space Command, awarded HTSI a cost-plus-award-fee contract to replace outdated communication systems in the Satellite Control Network (SCN) and to provide hardware and software repair and maintenance. The SCN is a worldwide network that is owned, operated and maintained by the Air Force Space Command to support Space Operations.
In July 2003, the Department of Defense - Office of Inspector General (DOD-OIG) received a hotline complaint regarding questionable contracting practices by HTSI during the award and administration of the SCN contract. DOD-OIG performed an audit of the hotline complaint and issued a report in March 2004 that it had substantiated an allegation that Honeywell stated in its SCN contract proposal that it had a fully compliant Earned Value Management System (EVMS) when in fact it did not have one. EVMS is a cost management system required on large Department of Defense contracts.
The Defense Contract Audit Agency (DCAA) conducted an audit of the EVMS-related costs incurred by HTSI on the SCN contract. In June 2004, DCAA reported that Honeywell had improperly charged the Air Force $1,434,000 for developing the EVMS after award of the contract.
Based on the DOD-OIG and DCAA audit findings, the United States Attorney's Office in Los Angeles coordinated an investigation of HTSI for alleged violations of the False Claims Act. HTSI submitted a Voluntary Disclosure Statement to the Department of Defense regarding its own internal investigation findings and cooperated with the Government's investigation.
HTSI will pay $2.75 million to resolve the allegations. HTSI agreed to settle the matter without an acknowledgment of wrongdoing.
The Government investigative team included agents and auditors from the Defense Criminal Investigative Service, the Department of Defense - Office of Inspector General, the Defense Contract Audit Agency, the Air Force Office of Special Investigations, and the Space and Missile Systems Center Office of the Staff Judge Advocate (Los Angeles Air Force Base).
Release No. 05-078
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