Defense Contractor Berg Pays $3.3 Million to Settle Bid-Rigging Allegations Over Military Shelter Contracts

Key Takeaways

• $3.3 Million Settlement: Berg Companies Inc. agreed to pay $3.3 million to resolve allegations that it rigged bids under Department of Defense contracts by coordinating inflated quotes with other vendors.
• False Competition Schemes: From 2019 to 2021, Berg worked with Noble Supply & Logistics and two sub-vendors to create the illusion of competitive bidding while steering contracts for its own shelters at inflated prices.
• Whistleblower Role: Two whistleblowers, including a U.S. Army veteran, filed suit under the False Claims Act and will receive a combined $561,000 for their role in uncovering the fraud.
• Government Response: DOJ officials emphasized the harm to taxpayers and the military, stating the scheme undermined procurement integrity and violated rules meant to ensure fair pricing.

Deep Dive

A Washington-based defense contractor accused of inflating prices on shelters sold to the U.S. military has agreed to pay $3.3 million to settle allegations that it rigged bids and manipulated a federal procurement process.

Berg Companies Inc., headquartered in Spokane and now part of Hunter Defense Technologies, admitted to coordinating with other vendors to secure overpriced contracts under a Department of Defense (DoD) supply program, a scheme that, according to prosecutors, cheated taxpayers and undercut fair competition.

At the heart of the case is a familiar but troubling story: a vendor working behind the scenes to make it look like contracts were competitively awarded, when in reality the competition was staged. From 2019 to 2021, Berg worked with Boston-based prime contractor Noble Supply & Logistics and two other vendors to inflate bids for rigid wall shelters, the same shelters Berg itself manufactured.

In one scheme, inflated quotes were submitted for 10 shelters that ultimately went to a vendor in New Mexico. In another, 29 shelters were routed through a Florida-based vendor under similarly rigged solicitations. In both cases, the illusion of a competitive bidding process was enough to pass through procurement checks, but the consequences were real: higher prices for the government, wasted taxpayer dollars, and a procurement process left in tatters.

“Bid rigging of this type inhibits competition… creating the risk that the government is purchasing inferior products at exorbitant prices,” said Assistant Attorney General Brett Shumate. The scheme violated rules that require at least two or three independent quotes for purchases made under DoD’s Maintenance, Repair & Operations (MRO) contracts, rules specifically designed to ensure the military gets a fair deal.

Justice Department officials from multiple districts didn’t mince words.

“These contractors manipulated and undermined the fair and open bidding process designed to save our military and taxpayers money,” said U.S. Attorney Leah Foley of Massachusetts. Her counterpart in New Mexico, U.S. Attorney Ryan Ellison, called it a betrayal of public trust and a distortion of the playing field for honest businesses.

Berg, for its part, didn’t fight the accusations. The company cooperated with investigators and accepted responsibility as part of the settlement. While the $3.3 million payout resolves civil allegations under the False Claims Act, it also sends a broader message about what happens when procurement integrity is cast aside.

This particular case also highlights the role of whistleblowers and the rewards that can come with it. Two individuals who came forward under the False Claims Act’s qui tam provisions will share $561,000 from the settlement. One is a U.S. Army veteran and former salesperson for a sub-vendor involved in the scheme; the other, a UK-based director of a military equipment company. Their disclosures helped open the door to a deeper investigation, even as parts of the case remain under seal.

“Today’s settlement announcement demonstrates the commitment of the Defense Criminal Investigative Service and our law enforcement partners to aggressively pursue those who undermine the integrity of the DoD contracting process,” said Chad Gosch, Acting Special Agent in Charge at the Department of Defense Office of Inspector General.

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