Sikorsky Aircraft Corp. has agreed to a $3.5 million settlement with federal authorities last week over allegations that the helicopter maker violated federal law in inflating the costs of spare helicopter parts it sold to the Army.
The Stratford-based manufacturer of Black Hawk helicopters and spare parts for the U.S. military and other nations allegedly violated the False Claims Act over the pricing of spare parts. The repair work involving the spare parts was mainly performed at the Corpus Christi Army Depot in Texas.
Specifically, the government alleges that from Feb. 7, 2008, through Sept. 8, 2011, Sikorsky failed to disclose accurate, complete and current cost and pricing data to the Army Aviation and Missile Life Cycle Management Command. AMCOM is one of the Army purchasing units charged with purchasing spare parts for the Black Hawk helicopter.
The Truth In Negotiations Act, often called TINA, requires that contractors disclose accurate, complete and current cost and pricing data to the government during the contract negotiation process. In the private sector, one party in a business deal would rarely, if ever, disclose to the other side during price negotiations all the labor and material costs. But failure to disclose such information in a government contract can result in civil or criminal penalties.
According to the U.S. Attorney’s Office, when determining the prices to be charged to the government, Sikorsky failed to disclose that it had lower prices for certain parts. As a result, the government paid artificially high prices.
“In this era of shrinking defense budgets, it is particularly important to guard the public coffers and safeguard against the unnecessary expenditures of funds from American taxpayers,” said acting Connecticut U.S. Attorney Deirdre Daly. “Failure to disclose accurate, complete and current cost and pricing data created an uneven playing field in the negotiation process which tilted unfairly in Sikorsky’s favor.”
According to court documents, there were 53 instances where Sikorsky overcharged the government for spare helicopter parts.
Sikorsky, a subsidiary of United Technologies Corp., was defended in this matter by James Cowdery, of Cowdery, Ecker & Murphy in Hartford. Cowdery declined to comment on the settlement.
A Sikorsky spokesman said the company was “pleased to have reached an agreement to resolve this matter with the Army and looks forward to continuing to work closely with the Army to maintain its fleet of Black Hawk helicopters.”
Craig Rupert, special agent in charge, Defense Criminal Investigative Service in the Northeast Field Office, said in a statement that the fraud “puts U.S. military readiness at a disadvantage.”
“With the current state of the economy, taxpayers can ill-afford to overpay for warfighter necessities required to carry out our Defense mission,” Rupert added.
The investigation was conducted by the Defense Criminal Investigative Service, Defense Contract Audit Agency, the Department of Defense’s Office of Inspector General-Audit Division, and the Defense Contract Management Agency. The investigation was led by Assistant U.S. Attorney Alan Soloway.•