ITT Cannon Pays $11M to Settle Whistleblower Claims of Government Contracting Fraud
On Tuesday, the Department of Justice announced that defense contractor ITT Cannon will pay $11 million to settle allegations it violated the False Claims Act by supplying electrical connectors to the military that had not been properly tested. The company sold the untested connectors to the government directly and through distributors and other government contractors. See DOJ Press Release.
According to the government, for almost ten years ITT sold the military six models of electrical connectors for which it did not conduct the periodic testing required under the government contracts. When the government learned of this failure in late 2010, ITT promised it would perform remedial testing and report the result. Shortly thereafter, however, ITT had several failures in its remedial testing but not disclose them, instead telling the government it was merely behind in the testing.
In 2017, the Defense Logistics Agency (DLA) issued an order stopping the shipment of the six connectors and several months later ITT disclosed its failure to conduct required testing, its test failures, and changes in the construction, sourcing and design of the connectors. DLA then removed the six ITT connectors from the Qualified Products List which identifies products that meet the engineering and technical specifications required by the Department of Defense.
In announcing the settlement, the government stressed the importance of government contractors complying with the manufacturing and testing requirements to which they agree: “Failure to comply with testing requirements undermines the integrity of essential government equipment and technology, and thereby reduces its durability and reliability.” The government trumpeted the settlement as “designed to ensure that ITT does not engage in this type of misconduct in the future, and . . . as a warning to any government contractor who is not completely upfront about its testing results.”
The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Ralph Tatgenhorst, the former regional quality manager at ITT’s Santa Ana facility. He will receive a whistleblower award of roughly $2.1 million from the proceeds of the government’s recovery.
Government procurement fraud, by defense contractors and other government suppliers, has always been one of the primary targets of the False Claims Act. Indeed, the 160-year old statute was enacted during the Civil War to specifically target those war profiteers selling rotten food, sickly mules, and defective weapons to the Union Army. Next to healthcare fraud, contracting fraud remains the most common area of misconduct the government goes after under the False Claims Act.
Please contact us if you have any information on any potential fraud in this or any other area and would like to have a confidential conversation with one of Constantine Cannon’s experienced whistleblower lawyers.