CAMDEN, N.J. -- The Air Force Office of Special Investigations (AFOSI), alongside federal law enforcement and oversight partners, investigated a case that resulted in a $2.6 million civil settlement with SEA BOX Inc. over alleged violations of U.S. cargo transportation laws tied to War Department contracts.
According to the U.S. Department of Justice (DOJ), SEA BOX agreed to resolve allegations that it violated the Cargo Preference Act and related military contract requirements.
The settlement resolves claims under the False Claims Act. The claims settled are allegations only, and there has been no determination of liability.
The law requires supplies bought for the War Department and moved by sea be carried on U.S.-flagged ships. That requirement is built into military contracts to protect U.S. shipping companies.
According to the DOJ, between late 2017 and late 2021, SEA BOX was awarded about 35 contracts to provide International Organization for Standardization (ISO)-compliant shipping containers to the Department of the Army and the Department of the Air Force, primarily through the Defense Logistics Agency (DLA).
However, despite contract requirements to use U.S.-flagged ships, SEA BOX shipped the containers on lower-cost, foreign-flagged vessels. According to officials, this lowered the company’s shipping costs, gave an unfair advantage over competitors.
“Protecting the integrity of the federal procurement system is a core mission for AFOSI Procurement Fraud,” said Jason Hein, director of AFOSI’s Office of Procurement Fraud. “We will continue to work with our partners to investigate fraud and ensure contractors meet their legal and contractual obligations.”
The investigation was conducted jointly by AFOSI, the Defense Criminal Investigative Service and the Department of the Army Criminal Investigation Division, with support from the Defense Contract Audit Agency, DLA and the Maritime Administration.
“Federal contracting laws exist to protect national security and the integrity of our industrial base,” Hein said. “AFOSI PF will continue working across agencies to ensure those requirements are enforced.”