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Gallup Nears Settlement Deal With DOJ In Overbilling Case

The Gallup Organization has reached "an agreement in principle" with the Justice Department to settle civil allegations that the polling company overbilled the U.S. government by providing inflated estimates for federal contracts, according to a new court filing.

A deal could be announced by mid-June, the court filing says, bringing an end to a costly and embarrassing episode that first came to light when a Gallup insider blew the whistle.

The lawsuit by former employee Michael Lindley accuses Gallup of overcharging the U.S. Mint and the State Department for research about public demand for new coins and American passports. Last winter, the Justice Department formally joined the case, ratcheting up pressure on the historic polling organization. Now comes word that months of settlement talks are nearing an end.

"The parties have reached an agreement in principle to fully settle this matter and have completed negotiations of a written settlement document," reads the court filing from late Friday.

Gallup became a brand name back in 1936 when the company correctly predicted that Franklin Roosevelt would defeat Alf Landon to win the U.S. presidency. But its acumen got called into question in the latest presidential race when its polls suggested President Obama was trailing Republican challenger Mitt Romney just weeks before the election.

Gallup has enlisted outside experts to review its polling methods and has said it plans to roll out in early June the findings and possible changes to how many interviews it conducts via cell phone, and how it measures likely voters and early voters.

Although Gallup is best known for opinion polls, its business model relies on management consulting and contracting with entities such as the U.S. government. The Justice Department investigation threw some of that into turmoil.

In a related case, a former official at the Federal Emergency Management Agency who had agreed to go work for Gallup pleaded guilty in January to violating conflict of interest law for failing to disclose the job offer even as he was trying to steer business to Gallup on his way out the door.

After the case came to light, FEMA temporarily suspended Gallup from winning any new federal contracts, limiting its business options. Friday's joint court filing says the Justice Department and Gallup are still working out a separate deal "regarding the resolution of a related, collateral matter" — believed to stem from the plea by former FEMA human resources Director Timothy Cannon, who was sentenced to probation last month.

The court filing states that Gallup's lawyers are reviewing a draft agreement "to resolve the related, collateral matter" and plan to meet with a separate Justice Department team handling that case "to discuss a final resolution."

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