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GS Engineering founder talks about federal case settlement

HOUGHTON — Paying $1 million to the federal government to settle allegations of false claims by GS Engineering was the company’s least-bad option, its founder said Thursday.

“We strongly disagree with the allegations, but it would cost more to take it to court through lawyer costs than to pay or come up with a negotiated settlement to clear the charges,” said Glen Simula, founder and former president of GS Engineering. 

In the settlement announced last Friday by the U.S. District Attorney’s Office, GS Engineering paid $1 million to resolve allegations the company double-billed the government for lease costs under its defense contracts. 

Between August 2009 and December 2015, the government alleged, GS Engineering had fully depreciated data acquisition equipment, which they then charged to government defense contracts. They then purported to transfer and lease the same equipment back from Echo Leasing, an affiliated company, the U.S. Attorney’s office said. 

Between January 2009 and 2016, the government alleged, GSE subsidiaries Arcadian Holdings, Echo Leasing, GS Infrastructure and LJ Leasing leased property and equipment to GSE at rates above those allowed under the Federal Acquisition Regulation. 

The government did not make a determination of liability, the U.S. Attorney’s office said in a release. Simula did not discuss the particulars of the allegations on the record. 

As part of the settlement, Simula, GS Engineering’s former bookkeeper and the four subsidiaries allegedly involved in the leasing, agreed to be excluded from federal contracts and awards for three years. 

In a statement, Acting President Lynn Eliason said the company can still work on, bid for and accept government contracts.

“We continued to work on all contracts during this process – and we continue to bid on projects and secure new contracts from the U.S. Army, whom we are proud to count as one of our valued clients,” she said. 

GS Engineering also agreed to a three-year administrative agreement with the U.S. Army, which includes an ethics and compliance program and a corporate ethics monitor to ensure GS Engineering meets government contracting requirements. 

“Defense contractors cannot use their control over related companies to unnecessarily increase costs to the government,” U.S. Attorney Andrew Birge said in a statement. “My office will protect the integrity of the procurement process and ensure that contractors comply with all applicable laws.”

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