The Washington Metropolitan Area Transit Authority has agreed to pay $4.2 million to the feds for allegedly giving out uncompetitive software contracts that used federal funding, the U.S. Department of Justice announced Wednesday.

According to a complaint filed against WMATA in federal district court, the transit authority awarded a $14 million software upgrade to Virginia-based Metaformers Inc. without considering less expensive bids from competitors.

The project, intended to upgrade the agency’s financial and business-management software called PeopleSoft, used $9 million in grant funding from the Federal Transit Authority, DOJ said.

“The American people have a right to know that their government is following rules and regulations in spending the taxpayers’ money,” U.S. Attorney Ronald Machen Jr. said in a written statement. (DOJ intervened in the case for the limited purpose to settle with WMATA.)

In February 2012, a former WMATA employee sued the transit agency on behalf of the government for violating the False Claims Act and the American Reinvestment Recovery Act over the 2010 contract.

Shahiq Khwaja, a technical expert who had helped steer the upgrade from 2010 to 2011, alleged that Metaformers charged “far in excess of a ‘best value’ or fair market price” and billed the transit authority for unnecessary and at times unfulfilled services.

Qui tam lawsuit: WMATA fired Khwaja in September 2011 after he raised questions of impropriety to the transit authority’s inspector general prompting a whistleblower retaliation case.

Resolution of the whistleblower case: As part of the settlement, WMATA awarded $996,480 to Khwaja for his role as a whistleblower; he received an additional $390,000 for wrongful termination.

“Mr. Khwaja tried to correct False Claims Act violations at WMATA before they occurred to save the taxpayers money, but he was retaliated against and fired for blowing the whistle internally,” said one of Khwaja’s whistleblower attorneys, David Colapinto of Kohn, Kohn & Colapinto, in a statement. “The government would not have recovered these funds on behalf of the taxpayers without Mr. Khwaja stepping forward.”

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