The Justice Department said today that it has intervened in a case against defendants Sikorsky Aircraft Corporation and two of its subsidiaries, Sikorsky Support Services Inc. and Derco Aerospace Inc., for violating the False Claims Act.
Sikorsky Aircraft Corporation is a wholly owned subsidiary of United Technologies Corporation, headquartered in Stratford, Connecticut.
The DOJ’s complaint was filed in a case brought under the qui tam provisions of the False Claims Act by Mary J. Patzer, a former employee of Derco.
Under the False Claims Act, a private citizen, called a “relator,” can sue on behalf of the United States and share in any recovery.
The DOJ has the option to intervene, as it did in this case. The FCA allows the government to recover treble damages and penalties for violations.
The government’s complaint alleges that Sikorsky Aircraft Corporation approved an illegal cost-plus-a-percentage-of-cost subcontract between Sikorsky Support Services Inc., and Derco Aerospace.
A cost-plus contract is one where the cost of performance is unknown in advance and compensation is determined based on the cost of performance plus an agreed percentage of the costs.
“Such contracts are prohibited because they give contractors no incentive to control the cost of performance,” the DOJ said.
The complaint also alleges that the defendants used the illegal subcontract to overcharge the Navy on parts and materials.
Acting Assistant Attorney General Joyce Branda said, “Today’s complaint demonstrates, once again, that the Department of Justice will not tolerate contractors who engage in schemes to defraud the armed forces or any other agency of the United States.”
The case was filed in the Eastern District of Wisconsin. It is United States ex rel. Patzer v. United Technologies Corporation, et al., No. 11-C-560 (E.D. Wis.).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.