4 Firms to Settle Charges of Overbilling the Government

Times Staff Writer

Four major consulting and accounting firms agreed to pay more than $25 million to settle charges that they had overbilled the government for travel expenses, the Justice Department said Tuesday.

The settlements with BearingPoint Inc., Booz Allen Hamilton Inc., Ernst & Young and KPMG follow a deal struck last summer with accounting firm PricewaterhouseCoopers, which agreed to pay $42 million to resolve a similar complaint.

In all cases, the government alleged that the companies failed to disclose that they were receiving volume discounts and rebates from airlines, hotels, car rental companies and credit card companies on travel billed to government contracts.

Instead, they billed the government the full retail rate, never passing on the discounts of up to 40%, the government charged. That violated the firms’ contracts and government regulations, according to the Justice Department, which filed suit against the companies in U.S. District Court in Los Angeles.


The firms neither admitted nor denied guilt, but each agreed to pay two-to-three times the amount prosecutors estimated that they had overbilled the government, Assistant U.S. Atty. Howard F. Daniels said.

BearingPoint, formerly KPMG’s consulting arm, agreed to pay $15 million. KPMG settled for $2.8 million, Booz Allen agreed to pay $3.4 million and Ernst & Young settled for $4.5 million.

BearingPoint said it had inherited the contracts in question and believed the firm would have been vindicated in court, but settled to avoid lengthy litigation. None of the other companies could be reached for comment.