The department said the company signed a deal with the U.S. Army in 2003 for hand-held mine detection devices, and the company and the Army extended the contract several times.
In three of the subsequent negotiations, however, the company failed to update its pricing, using out-of-date prices that were to its advantage, the Justice Department said.
"Under the Truth in Negotiations Act, CyTerra was required to provide cost or pricing data that was 'accurate, complete and current,'" the department said.
"The Department of Justice will hold accountable those who undermine the integrity of the public contract process in pursuit of financial gain," said Stuart Delery, acting assistant attorney general for the Civil Division.
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