The Washington Metropolitan Area Transit Authority has paid $4.2 million in a settlement to resolve a whistleblower lawsuit involving a no-bid contract allegedly offered in violation of federal rules.

According to the U.S. Attorney for the District of Columbia, WMATA awarded a $14 million contract in July 2010 to the McLean based Metaformers, Inc. “to integrate the Authority’s financial and business systems” Of the $14 million, $9 million came from the Federal Transit Administration with the requirement to have “full and open competition” and no conflict of interest. “WMATA allegedly violated both the competition requirement and avoidance of ‘conflict of interest’ rule in awarding the financial management information technology contract,” according to the U.S. Attorney.

A 2012 audit by WMATA’s Inspector General Helen Lew found that the agency “may not have selected the contractor offering the ‘best value,'” as the Washington Examiner reported.

Her office found that Metro did not solicit at least three bids as federal rules require when it awarded what became an approximately $14 million contract to Metaformers and instead offered it only to that company. And Metro created a conflict of interest by allowing the company to prepare the underlying ground work for the contract, the audit said.

But Metro disagreed with some of the findings. Agency spokesman Dan Stessel noted that the audit found that Metro complied with its own policies and procedures at the time. The agency has already made a change to its practices for similar contracts to meet federal rules. “In light of the report, Metro’s senior management will go through additional training, beginning today, to ensure compliance with proper procurement procedures,” he added.

“The American people have a right to know that their government is following rules and regulations in spending the taxpayers’ money,” U.S. Attorney Ron Machen said in a release.“Our office has targeted government contractors who fail to meet their obligations, and this settlement shows that we expect agencies that receive federal funding to honor the integrity of the contracting process as well.”

The former employee who brought the whistleblower suit, Shahiq Khwaja, received $390,00 from WMATA over a wrongful termination claim.

In a statement, WMATA says it settled the suit “in order to avoid protracted litigation and expense for Metro’s customers and the region’s taxpayers.”

“Just as we have reformed the safety culture, WMATA has been working to overhaul financial controls, and has made substantial progress in procurement, accounting and grants management,” the statement says. “WMATA’s financial management has been strengthened with an improved procurement manual, training hundreds of personnel on revised procurement policies, new procedures to tighten grants management compliance, and the hiring of a new Chief Financial Officer with deep transit industry experience to spearhead continued change.”