October 17, 2014

DOJ Catch of the Week — Sikorsky Aircraft

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to Sikorsky Aircraft Corporation.  Yesterday, the DOJ joined a whistleblower lawsuit filed under the False Claims Act against the aircraft maker and two of its subsidiaries, Sikorsky Support Services Inc. and Derco Aerospace Inc.  Sikorsky Aircraft is a wholly owned subsidiary of United Technologies Corporation, with its headquarters in Stratford, Connecticut.  See DOJ Press Release.

The government’s complaint alleges Sikorsky Aircraft approved an illegal cost-plus-a-percentage-of-cost subcontract between Sikorsky Support Services and Derco.  This is a contract where the cost of performance is unknown and compensation is based on the cost of performance plus an agreed-to percentage of such costs.  These contracts are barred by the government because they give government contractors no incentive to control their cost of performance.  The government claims the Sikorsky group employed this illegal subcontract to overcharge the Navy on parts and materials used to maintain Navy aircraft.

In announcing the filing of its lawsuit, the DOJ’s acting Civil Division Chief Joyce R. Branda highlighted the government’s focus on going after this kind of government contracting fraud — “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 original whistleblower complaint in this action was filed by Mary J. Patzer, a former Derco employee, under the qui tam provisions of the False Claims Act.

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