NORESCO, LLC, a government contractor based in Westborough, Massachusetts, has agreed to pay $9,585,141 to settle allegations of overcharging federal agencies. The allegations claim that NORESCO violated the False Claims Act by inflating costs associated with energy savings performance contracts (ESPCs) across 29 projects.
ESPCs are designed to allow federal agencies to achieve energy savings and facility improvements without upfront payments. NORESCO obtained loans to finance these upgrades and was reimbursed by the agencies using the savings generated.
The settlement addresses two main issues. First, NORESCO allegedly inflated project costs for the United States Navy by including improper contingency fees. After some of these fees were rejected by Navy personnel, NORESCO reportedly instructed subcontractors to add $3.46 million in undisclosed contingency costs. Upon learning of an investigation into this conduct, NORESCO refunded these costs.
Second, NORESCO disclosed that it had miscalculated financing costs on 29 projects involving various federal agencies. This resulted in an overpayment totaling $1,466,180 and could have led to further excess payments amounting to $5,645,655 if uncorrected. The company worked with affected agencies to address these overpayments.
NORESCO cooperated with the investigation and self-disclosed one issue related to financing cost calculations. They received credit for their cooperation under Department of Justice guidelines concerning disclosure and remediation in False Claims Act cases. As part of the agreement, NORESCO acknowledged responsibility for the actions leading to this settlement.
The announcement was made by U.S. Attorney Leah B. Foley alongside officials from several investigative bodies including Greg Gross from the Naval Criminal Investigative Service and Christopher Algieri from the U.S. Department of Veterans Affairs Office of Inspector General.
The case was managed by Brian LaMacchia from the Affirmative Civil Enforcement Unit and Senior Trial Counsel Kelley Hauser from the Justice Department.
