Contractor denies cheating U.S. Army out of $54 million
Washington — The U.S. Justice Department filed suit against a British-based military contractor, accusing it of defrauding the Pentagon in the acquisition of 20,000 trucks and trailers for the U.S. Army at its Warren command.
In a civil complaint filed Friday in U.S. District Court, the Justice Department said that BAE Systems Plc — through its Texas-based BAE Systems Tactical Vehicle Systems LP unit — overcharged the Army Tactical Command Life Cycle Management Command in Warren by at least $54 million.
TACOM researches and develops designs for tank and automotive systems and then contracts out for their manufacture and delivery.
In 2008, the Army awarded BAE a $3.7 billion contract to build more than 20,000 trucks and trailers for the military. The government alleges that BAE knowingly inflated the price of the contract “by concealing cost and pricing data on numerous parts and materials during contract negotiations, despite having certified that the data it had disclosed was accurate, complete and current.”
BAE concealed 40 vendor price quotes that were lower than it told the Army — which would have reduced the contract by at least $20 million — and other part contracts that would have lowered the costs by at least another $24 million, according to the Justice Department.
“Private companies are entitled to earn an honest profit from procurement contracts with the U.S. government, but they may not knowingly overcharge the military for supplies and materials,” said U.S. Attorney Barbara McQuade in Detroit.
“The conduct alleged in this complaint is akin to charging $600 for a hammer,” McQuade said.
BAE Systems denied Friday the federal government’s allegations.
“We object to the characterization of the company’s actions and contract pricing data,” BAE Systems spokesman Neil Franz said in a statement.
“It is the company’s policy to maintain fair and compliant pricing for all customers,” he said.
“This matter relates to an existing contract pricing dispute before the Armed Services Board of Contract Appeals. We see no basis for the Department of Justice’s complaint, and we intend to vigorously defend our position.”
The Justice Department said BAE violated the federal Truth-in-Negotiations Act, which requires the truthful disclosure of cost or pricing data, and the False Claims Act, which prohibits knowingly submitting false claims for federal funds.