Boo, Booz Allen! Yay, Sarah Feinberg!

Booz Allen is one of those big-name, smarty-pants, fancy-arse consulting firms. Right up there with McKinsey, Bain, and the Boston Consulting Group. Although I interviewed with them when I was in B-school (and did not get an offer, which was a good thing on both sides of the equation), I don't know a ton about them, other than that they're a big-name, smarty-pants, fancy-arse consultancy that charges clients a ton of money. In return, the clients may or may not get something of value. Caveat emptor.

Sarah Feinberg, a whip-smart (Wharton MBA) combat-hardened Marine Corps veteran - who, on top of all this and completely irrelevant to the matter at hand, is a very attractive mom of three little boys - was working in finance at Booz when she noticed a little problem.

Booz, it seemed, was "losing tens of millions of dollars and, in her view, billing more than it should on U.S. government contracts to cover the losses." She reported her concerns, and THIS:

Only a few months into a new finance job, Sarah Feinberg felt stunned when a senior manager with a Northern Virginia-based defense contractor called federal auditors “too stupid” to notice overcharging, according to a federal complaint she filed. (Source: Washington Post)

Steinberg also alleged that an exec told her that the amounts were so small dollar potatoes in the grand scheme of things that they would not bother to go after Booz to get the overpayments back. (Booz asserts that they were in billing compliance, and that Federal rules and regs are ambiguous.)

Anyway, Steinberg kept raising her concerns to senior Booz execs, including the CFO, to know avail. She left Booz and, in 2016, she blew the whistle and filed a complaint against her employee. 

And, eventually, justice was served up:

In July, the Justice Department, which investigated her complaint, announced that Booz Allen had agreed to pay $377 million — $209 million in restitution to the federal government and the rest in penalties — to settle the matter, one of the largest awards in a government procurement case in history.

Feinberg was awarded $42M (after the lawyer's got their share) for her efforts. 

Not surprisingly, big-name, smarty-pants, fancy-arse Booz Allen denies any wrong-doing. 

Company officials told investors on an earnings call in late July that they settled the case to avoid protracted litigation. Horacio Rozanski, the president and chief executive, said the company “acted lawfully and responsibly.”

No surprise here. A couple of years ago, McKinsey, a fellow big-name, smarty-pants, fancy-arse consultancy, paid nearly $600M to settle claims regarding their liability for the work they did with Purdue Pharma that helped them sell OxyContin and create the opioid crisis. McKinsey, too, claimed that they settled to avoid protracted legal woes, and that they had done nothing wrong (even as they helped Purdue figure out to increase sales, even in the face of learning that Oxy was so dangerously and addictive).

Legal analysts have questioned whether the system has been effective in delivering a strong enough message of deterrence to companies that operate within the federal government’s vast contracting network. In civil cases, they say, companies are rarely required to admit liability, senior executives often do not face personal accountability, and investors typically react with a shrug, sometimes pushing stock prices higher because the legal cloud is lifted.

“Assuming the company is not debarred and can continue to do business with the government, there’s a real question, in terms of the system as a whole, of whether the consequences are significant enough,” said Seton Hall University law professor Jacob T. Elberg, a former federal prosecutor.

Feinberg doesn't believe that the Booz settlement went far enough.

“The settlement has to be more than the damages or you’re giving them an interest-free loan, not a penalty,” Feinberg said.

The DOJ counters that it was fair, and sends a "strong message of deterrence."

We'll see about that.  

In the meantime, Sarah Feinberg is a bit richer, and will use nearly one third of her award for charitable work. She's active in her local Catholic Charities organization and in her church, and wants to invest in "underserved communities. She and her husband sound like genuinely good and committed folks, who have "helped resettle an Afghan refugee family with three children in a condominium they own in Shirlington, Va." (Feinberg served with the Marines in Afghanistan.)

Shame on big-name, smarty-pants, fancy-arsed Booz Allen. 

Yay, Sarah Feinberg! Semper fi!