The Obama administration is suing Sprint on the grounds that the company overcharged the government for wiretaps.
According to the suit filed in a district court on Monday, the government paid $21 million more to Sprint than it should have between 2007 and 2010.
Under a 2006 Federal Communications Commission (FCC) ruling, companies are not allowed to pass on the costs of modifying their equipment to comply with the law to the government.
As a result, Sprint included "unallowable costs in their charges for carrying out court orders authorizing wiretaps, pen registers, and trap devices,” the government alleged. Pen registers and trap devices register the numbers dialed over a phone line or the source of a call, but not the call’s contents.
Sprint denied the allegations.
“Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance,” said John Taylor, a spokesman.
“The invoices Sprint has submitted to the government fully comply with the law. We have fully cooperated with this investigation and intend to defend this matter vigorously.”
The taps and other surveillance were conducted on behalf of the FBI; Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Agency; the U.S. Marshals and Immigration and Customs Enforcement, among other agencies.
The government claims that Sprint continued to pass on “the costs of financing that investment” to modify systems to tap phones, even after the FCC prohibited companies from charging those costs in 2006. The company revised its cost model in June 2010, to remove the costs associated with upgrading systems for wiretaps.
So far, however, it has “failed or refused to refund the overpayments,” the government claimed.