DOJ Intervenes In False Claims Act Lawsuit Against Navy Contractor

November 17, 2014 —It is a violation of the False Claims Act for military contractors to bill the government for services rendered under a cost-plus-a-percentage-of-cost contract. Military contracts are highly prized and can be very profitable for many government contractors. But contractors must deal fairly and honestly with the government. When they don’t, the qui tam provisions of the False Claims Act allow insiders to file a whistleblower lawsuit on the government’s behalf. At the time the case is tried or settled, the tipster receives a share of any monies received.

Military Contractor Allegedly Used Cost-Plus-A-Percentage-Of-Cost Subcontract, Resulting In Overcharges To Navy For Aircraft Servicing

The U.S. Department of Justice has intervened in a False Claims Act lawsuit against three military contractors — Sikorsky Aircraft Corporation and two of its subsidiaries, Derco Aerospace Inc. and Sikorsky Support Services Inc. The whistleblower lawsuit, originally brought by Mary J. Patzer who was formerly employed by Derco, alleged that the corporations were intentionally involved in a scheme to overcharge the Navy for servicing of Navy aircraft.
In their contract with the government to maintain Navy aircraft, the defendant contractors agreed not to bill the Navy for materials or services provided on a cost-plus-a-percentage-of-cost contract. In this type of contract, the cost of materials and services is unspecified beforehand and the contractor’s compensation is calculated based on the cost of performance along with a predetermined percentage of the actual costs. The government refuses to pay contractors’ claims that include charges for materials or services provided under such agreements because the contracts create no incentive for contractors to keep their costs down. In fact, the higher the cost, the more the military contractors are able to bill the government.
In violation of its contract with the armed forces, Sikorsky Aircraft Corporation allegedly approved a forbidden cost-plus-a-percentage-of-cost subcontract between Derco Aerospace and Sikorsky Support Services Inc. Those costs would then be passed on to the government.

Whistleblowers Notify Government About False Claims Act Violations by Military Contractors

While Waters & Kraus is not handling this particular case involving military contractor fraud, we are representing whistleblowers in similar lawsuits. If you have comparable claims against a different government contractor, contact us or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can work together to notify the government about fraud and abuse. Our qui tam lawyers, such as Paul Lawrence in the firm’s Washington D.C. area office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.

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