Boeing-owned drone maker Insitu Inc. agreed to pay $25 million to settle allegations that it used recycled parts instead of new parts in military drones.
The U.S. Attorney’s Office for the Western District of Washington said the parts were put into military drones that Insitu built for the U.S. Special Operations Command (SOCOM) and the Department of the Navy between 2009 and 2017.
Insitu violated the False Claims Act since the company knowingly submitted materially false cost and pricing data for multiple contracts with the U.S. SOCOM and U.S Navy to supply Unmanned Aerial Vehicles (UAVs) or drones.
The U.S. Department of Justice (DOJ) said Insitu vowed to provide new parts for military drones when it was awarded seven separate contracts. However, the firm later delivered only used, reconditioned, or recycled parts.
In a statement, DOJ Civil Division Acting Assistant Attorney General Jeffrey Bossert Clark said, “We expect companies that seek to do business with the government to provide complete and accurate information so contract prices can be negotiated on a level playing field.”
“Taxpayers deserve to get what they paid for — especially in significant no-bid military contracts. Cases such as this one should be seen as a warning to defense contractors that false claims have no place in military purchasing,” said U.S. Attorney Brian Moran.
Meanwhile, Bryan D. Denny, special agent in charge of the Defense Criminal Investigative Service, said defense contractors are required to obey strict standards when proposing cost and pricing data for work to be performed on government contracts.
Denny said, “The pursuit and favorable settlement of this civil litigation is yet another example of our agents and law enforcement partners working together to uncover fraudulent activity and protect taxpayers’ dollars entrusted to the DoD.”
The settlements resolve allegations that were included in a federal case filed by D.R. O’Hara, a former executive who dealt with pricing for Boeing and Insitu.
The lawsuit of O’Hara was filed under the whistleblower provisions of the False Claims Act, which allow private individuals to sue on behalf of the government for false claims and share in the recovery of funds.
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