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The U.S. Department of Justice (DOJ) has announced a nearly $2 million settlement with Virginia-based contractor Intelligent Waves LLC, resolving claims that the company knowingly sold unauthorized equipment to the Air Force and billed for undelivered products. The agreement, totaling $1.95 million, settles allegations brought under the False Claims Act (FCA) in connection with two separate Air Force contracts.

Whistleblower Lawsuit Sparks Federal Investigation

The case originated from a lawsuit filed in December 2022 by two former Intelligent Waves employees under the FCA’s whistleblower provision. Their claims prompted a federal investigation that unearthed alleged contractual violations spanning two major Air Force contracts.

In September 2019, Intelligent Waves secured an $89.2 million contract to provide crowdsourced flight data collection support and data analytics to the 59th Test and Evaluation Squadron at Nellis Air Force Base in Nevada. However, according to the DOJ, the company knowingly sold unapproved equipment under the contract, misrepresenting it as authorized in submitted invoices.

Additionally, Intelligent Waves was accused of invoicing the Air Force for products and labor that were never delivered as promised, failing to issue credit for the undelivered goods and services.

Allegations of Misconduct in a Second Air Force Contract

The second disputed contract, awarded in November 2020, involved the construction of special access program facilities at Edwards Air Force Base in California. Federal investigators claimed that Intelligent Waves manipulated the selection process by making false statements and providing meals and entertainment to Air Force personnel both before the contract award and during its execution.

Intelligent Waves Denies Wrongdoing but Settles

Despite agreeing to the settlement, Intelligent Waves has maintained its innocence. In a press release issued Friday, the company asserted that it acted "lawfully, transparently, and in good faith."

"While we believe our actions were always responsible and aligned with applicable guidance, we opted to resolve this civil matter to move forward without the uncertainty and distraction of extended legal proceedings," said Tony Crescenzo, CEO of Intelligent Waves.

Legal Representation and Unanswered Questions

The whistleblowers in the case are represented by Robert Scott Oswald and Lydia Anna Pappas of The Employment Law Group PC, while the federal government’s case was handled by Tanya Kapoor of the U.S. Attorney's Office for the Eastern District of Virginia. Intelligent Waves enlisted Holland & Knight LLP for its defense.

As of Friday, representatives from all involved parties had yet to issue further comments on the settlement, leaving lingering questions about the long-term impact of the case on future government contracting standards.