STRATFORD, Conn. – Two Lockheed Martin subsidiaries have agreed to pay the federal government $70 million for overcharging the Navy for aircraft parts, the U.S. Department of Justice announced Friday.
The federal agency says Sikorsky Support Services, based in Stratford, Connecticut, and Derco Aerospace, based in Milwaukee, Wisconsin, knowingly entered into an improper subcontract for spare parts and materials for aircraft used to train Navy pilots.
Under the terms of the contract, Sikorsky purchased the parts from Derco at the cost that Derco paid other suppliers, plus a 32% markup.
Sikorsky then charged the Navy the price he paid Derco, in violation of federal regulations prohibiting such agreements, which prosecutors say increases the government’s costs.
“Today’s settlement demonstrates that the Department of Justice will ensure that government contractors do not skirt the law and engage in self-dealing that could artificially inflate their charges at the expense of American taxpayers,” said Brian Boynton, head of the civil division of the DOJ. in a statement.
Maryland-based Lockheed Martin said in a statement Friday that it is “pleased that the settlement will bring this case to a conclusion,” noting that there has also been no discovery of wrongdoing on the part of Sikorsky or Derco Aerospace.
Prosecutors said the settlement resolves a lawsuit filed by a former Derco employee under the whistleblower provision of the federal False Claims Act. The case dates back to 2011, or several years earlier Lockheed Martin acquired Sikorskymanufacturer of Black Hawk military helicopters, in 2015.
Darrin Jones of the U.S. Department of Defense’s Office of Inspector General said the deal should serve as a deterrent to those seeking to exploit the agency’s acquisition process.
“The overinflation of parts and materials costs for aircraft repair and maintenance has impacted naval air training and is a disservice to the American taxpayer,” added Greg Gross of the Naval Criminal Investigative Service’s Economic Crimes Field Office.
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