Federal authorities announced Tuesday that NORESCO, LLC, a government contractor headquartered in Westborough, Massachusetts, has agreed to pay $9,585,141 to resolve allegations of violating the False Claims Act (FCA).
The settlement addresses accusations that NORESCO overcharged numerous federal agencies for energy improvements under 29 federally funded Energy Savings Performance Contracts (ESPCs).
ESPCs are designed to allow federal agencies to implement energy savings and facility upgrades without upfront costs. NORESCO secured loans to finance these projects in federal buildings globally. The agencies then repaid NORESCO through installments, covering project costs and financing charges, using the savings generated by the energy improvements.
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The government alleged that NORESCO engaged in two primary forms of overcharging. Firstly, the company is accused of inflating the price of a project for the United States Navy by improperly including contingency costs.
According to the allegations, after the Navy partially rejected NORESCO’s request for certain contingency costs, NORESCO instructed two subcontractors to add a total of $3.46 million to their bids to cover potential unforeseen contingencies.
NORESCO allegedly failed to disclose that these additional costs were included in the Navy’s budget. Following the government’s investigation, NORESCO reportedly refunded these contingency costs to the Navy project.
The settlement also resolves allegations that NORESCO overcharged several federal agencies, including the Navy, for financing costs across 29 ESPCs. During the government’s investigation into the Navy project, NORESCO self-disclosed that it had incorrectly calculated financing costs over the duration of multiple contracts.
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This error allegedly resulted in NORESCO improperly receiving, or being positioned to receive, an aggregate of $1,466,180 in excess payments. The company further calculated that, if left uncorrected, these incorrect financing calculations would have led to a total overpayment of $5,645,655 across the 29 projects. NORESCO subsequently collaborated with the affected agencies to repay or credit the entire $5,645,655.
Authorities acknowledged NORESCO’s cooperation in the investigation and its voluntary self-disclosure of the financing cost issue.
The Department of Justice’s guidelines for considering disclosure, cooperation, and remediation in FCA cases were reportedly considered. As part of the settlement agreement, NORESCO acknowledged and accepted responsibility for the facts underlying the settlement.
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