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Contractor to pay $15 million to settle lawsuit

An Air Force contractor has agreed to pay $15 million plus interest to settle a false claims lawsuit involving computer equipment sold to Hanscom Air Force Base, Mass., the Air Force announced Thursday.

The U.S. Attorney General’s Office had accused Dynamics Research Corporation, known as DRC, of selling computer chips and other equipment that failed to meet Air Force specifications to the Electronic Systems Center at Hanscom.

Two former officers of the company, Paul Arguin and Victor Garber, were prosecuted in a separate criminal action, resulting in guilty pleas in 2002 for conspiring to defraud the government.

The lawsuit against DRC alleged that from 1997 to 2000, Arguin and Garber steered Air Force contracts for computer equipment and services to companies owned by the men, Arguin’s wife and others in exchange for kickbacks. The men also were accused of inflating contract prices that produced windfall profits.

In one of the schemes, the two men substituted generic computer chips for name-brand chips that were called for under the contract. The generic chips did not meet military specifications.

The case was uncovered through an anonymous tip and investigated by special agents from the Air Force Office of Special Investigations Detachment 102, the Defense Criminal Investigative Service, the General Services Administration’s Office of the Inspector General, and the Defense Contract Audit Agency.