On February 2, 2026, in United States v. McComber, the U.S. Court of Appeals for the Fourth Circuit affirmed a criminal conviction arising from overbilling on a federal government contract—characterizing the conduct as "textbook fraud." The decision sends a warning to federal contractors: timekeeping practices can escalate to criminal exposure when billing does not align with contract requirements. Although a criminal case, the court's analysis provides important guidance for contractors navigating compliance risks under the civil False Claims Act (FCA) and Federal Acquisition Regulation's (FAR) mandatory disclosure rule.
What are the basic facts of the case?
In July 2011, InfoTek secured a contract with the United States National Security Agency (NSA) to provide software and IT services at NSA's National Security Operations Center (NSOC) and its Counter Terrorism Mission Management Center. This contract included a Firm-Fixed-Price Level-of-Effort billing method, meaning the contract was for a fixed number of working hours paid at a set hourly rate. Importantly, the contract allowed billing only for "effort in direct support of the contract" and expressly prohibited billing for "travel, lunch, or work performed at … non-work locations or other effort which does not have a specific and direct contribution to tasks described."
From March 2016 to September 2017, Appellant (InfoTek's CEO) performed on the contract as an interim senior program manager (SPM) tasked with "managing all aspects of the contract" and serving as the "official point of contact" between InfoTek and NSA. Appellant also continued serving as the CEO of InfoTek. During this period, Appellant consistently billed 8.0 hours per day at a rate of $150 per hour, charging nearly $400,000 to the NSA contract.
In February 2021, Appellant was charged with 19 counts of submitting false claims to the federal government under the criminal false claims statute (18 U.S.C. § 287) and one count of making false statements to an investigator from the NSA's Office of Inspector General (OIG) in violation of 18 U.S.C. § 1001. Following a 16-day trial, the jury found Appellant guilty on all 20 counts. The district court sentenced Appellant to 13 months' imprisonment, followed by two years of supervised release, and ordered Appellant to pay $176,913 in restitution.
Although this was a criminal prosecution—not a civil FCA case—the charged conduct mirrors traditional FCA liability: knowingly presenting claims for payment that overstate labor hours actually worked.
What did the Fourth Circuit hold on appeal?
Appellant challenged her convictions and sentence to the Fourth Circuit. In affirming the district court's judgment, the court rejected challenges to the sufficiency of the evidence, the admission of summary billing exhibits, and the district court's loss calculation at sentencing. Ultimately, the Fourth Circuit upheld the jury's finding that Appellant billed more time to the NSA contract than she actually spent working on it. The Fourth Circuit concluded: "That is textbook fraud."
What "red flags" for potential overbilling appeared in the decision?
As recounted in the court's decision, NSA's investigation revealed several factors that led to Appellant's conviction:
- The contract required that nearly all work be performed onsite due to its classification, whereas almost all of Appellant's time was remote
- NSA and InfoTek personnel rarely had contact with Appellant during contract performance
- Although Appellant's position was seen as a part-time SPM role, she routinely billed for over 30 hours per week
- Appellant's hours billed represented a fourfold increase in charged time as compared with Appellant's prior stints serving in this SPM role
- Appellant billed for exactly 8.0 hours per day nearly every time she charged NSA on the contract
- An InfoTek employee thought he was performing the duties of SPM instead of Appellant, and another InfoTek employee stated Appellant held the SPM position "in name only" and delegated most of her work and
- Specific instances in which Appellant billed for an 8-hour day despite also engaging in unrelated activities, such as participating in a day-long meeting with another client or a golfing event, or traveling from Maryland to Alabama to drop her daughter off at college
These are the types of "red flags" that contractors should look for when assessing compliance with their own billing requirements.
What is the key takeaway for federal contractors?
Contractors should be aware of the mandatory disclosure rules related to these "red flags." In fact, under FAR 52.203-13, non-small contractors are required to have a compliance program designed to ferret out these very issues and to notify the relevant agency's OIG and the Contracting Officer whenever the contractor uncovers or learns of credible evidence of a significant overpayment or a violation of the civil FCA.[1] The failure to make timely disclosures could subject a contractor to suspension or debarment actions.[2] Moreover, a civil or criminal fraud or false statement finding, plea, or conviction can serve as an independent basis for a suspension or debarment action.[3]
The Fourth Circuit's decision also serves as a reminder that inaccurate labor charges can escalate quickly—from an internal compliance issue to civil liability and even criminal exposure, restitution, and potential suspension or debarment. Robust internal controls, monitoring, and reporting mechanisms (including creating and maintaining anonymous hotlines) are essential to protect contractors. It is equally important for contractors to be candid with the OIG and fully cooperate in the government's investigation if any "red flag" arises. Contractors should review and confirm that:
- Human resources and other labor departments ensure labor is properly mapped and qualified for the positions they bill
- Timekeeping systems are constructed to allow for charge codes that properly segregate and apply time and effort to the appropriate cost objective
- Employees (including executive leadership) are trained and re-trained on recording time accurately and to the appropriate charge codes and
- Supervisory personnel meaningfully review labor charges
With FCA recovery numbers hitting an all-time high last year (fiscal year 2025), this criminal prosecution is a stark reminder of the responsibility and accountability that come with government contracting. Should your organization need assistance, please feel free to contact any of the authors of this article.