Sikorsky Subsidiaries Agree To Pay $70 Million To Settle False Claims Case

Two Sikorsky Aircraft subsidiaries have agreed to pay $70 million to resolve claims they overcharged the U.S Navy for spare parts used to maintain aircraft used to train Navy pilots.

The settlement settles a whistleblower suit filed in Wisconsin against Sikorsky Support Services Inc. of Stratford and Milwaukee-based Derco Aerospace Inc.

The two companies are accused of entering into an illegal cost-plus-percentage contract on parts Sikorsky Support bought from Derco at cost. The contract inflated the price at which Sikorsky Support resold the spare parts to the Navy by 32 percent, according to a statement by the U.S. Department of Justice.

A federal court in Milwaukee ruled that the arrangement violated a law against cost-plus-percentage contracting, which Congress has said provides an incentive to drive up costs to the government.

“Government contractors must ensure their subcontracting arrangements comply with the law and with their contractual obligations,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said Friday. “Today’s settlement demonstrates that the Justice Department will ensure that government contractors do not skirt the law and engage in self-dealing that may artificially inflate their charges at the expense of the American taxpayers.”

A spokesman for Lockheed Martin, which owns Sikorsky, said that the settlement was based solely on allegations and there has been no determination of liability.

“We are pleased that the settlement will bring this case to a conclusion and there is no finding of wrongdoing by Sikorsky or Derco Aerospace,” the spokesman said.

The suit was the result of a complaint by a Derco employee who will share a portion of the settlement under the terms of the whistleblower law.

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