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In an attempt to recover damages and penalties under the False Claims Act, the U.S. Justice Department sued AstroPower Inc. on Oct. 20, accusing the Newark, Del., solar-energy company of defrauding taxpayers of $2.3 million. The civil suit filed in U.S. District Court in Wilmington on behalf of the Departments of Defense and Energy alleges AstroPower falsely attributed costs to government contracts, when in fact those costs were part of a commercial venture, court records show. The government is seeking at the least treble damages of $6.9 million, plus civil penalties, according to the complaint. The government contracts were awarded for the sole purpose of developing new cutting edge solar technology, according to U.S. Assistant Attorney General Virginia Gibson-Mason. “Instead, they produced a more traditional technology for commercial use, and the government paid for the production,” she said. AstroPower Chief Executive Officer Allen Barnett said the allegations were untrue. “If the product wasn’t so successful in generating commercial revenue, the DOD auditor wouldn’t have had a problem,” Barnett said. “It is only because we were successful and the product brought in revenue that we were singled out.” Under the DOD’s cost-plus fixed-fee contracts, AstroPower was entitled to be reimbursed for its allowable and allocable costs plus an agreed-upon profit or fee. AstroPower’s reimbursable costs were limited by a predetermined contract ceiling that AstroPower could exceed only with DOD approval, court records indicate. The DOE subcontracts were cost-share, which entitled AstroPower to receive an agreed-upon percentage of its allowable and allocable costs. Unlike the DOD contracts, however, AstroPower was not entitled to receive a fee under the DOE subcontracts, according to the complaint. For 1991 through 1993, AstroPower charged material and labor directly attributable to developing and manufacturing a commercial product as indirect costs on government contracts, in violation of government regulations, the U.S. claimed in its complaint. “Accordingly, the United States paid for AstroPower to manufacture a product that it sold to commercial customers for profit,” the complaint stated. The defendant, however, certified that the costs included in the incurred cost submission were solely allocable to the government contracts, the U.S. said in its complaint. The alleged misrepresentations cost the government $1.2 million, according to court papers. For 1994 and 1995 AstroPower allegedly submitted false claims of $1.1 million, the U.S. claimed, although the company altered the manner in which it supposedly overbilled. Barnett said it’s ironic that the 17-year-old company has become the poster child for the Justice Department, yet it’s still under contract with the government. “We have an incredible relationship with the DOE, in fact we still have a contract with the DOE and just got another one….I believe the case will never go to court, because it costs too much to prosecute,” Barnett said. AstroPower, which makes solar cells and panels for use in commercial and residential buildings, has about 440 employees. The case is United States of America v. AstroPower Inc., CA No. 00912.

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