Feds: Sikorsky to pay $3.5m to settle case on inflating spare parts prices

Sikorsky Aircraft Corp. of Stratford has agreed to pay $3.5 million to resolve allegations that it violated the federal False Claims Act by inflated the price of spare parts.

Sikorsky manufactures Black Hawk helicopters and spare parts for the helicopters for the U.S. military and for other nations considered friendly to the United States. It is the largest private employer in the region.

The company’s main factory is on Route 110 near the Shelton border, and many Shelton residents work for Sikorsky.

Sikorsky will pay the money as part of a civil agreement with the federal government.

Accurate, complete and current costs

According to a press release from the U.S. Attorney’s Office in Connecticut, the federal government alleges that from Feb. 7, 2008 to 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).

AMCOM is one of the purchasing commands of the Army that is charged with purchasing spare parts for the Black Hawk.

The Truth In Negotiations Act requires that contractors disclose accurate, complete and current cost and pricing data to the government during the negotiation process.

When determining the prices to be charged to the government, Sikorsky allegedly failed to disclose that it had lower prices for certain parts. As a result, the government paid artificially excessive prices for those parts, federal officials said.

The Black Hawk repair work was principally performed at the Corpus Christi Army Depot in Corpus Christi, Texas.

‘Created an uneven playing field’

“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 Deirdre M. Daly, U.S. attorney for Connecticut.

“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,” Daly said.

Overpaying for necessities

Craig W. Rupert, a special agent with the Defense Criminal Investigative Service (DCIS), said in today’s economy, “taxpayers can ill-afford to overpay for war-fighter necessities required to carry out our defense mission.

“This investigative effort and resulting settlement,” Rupert said, “reflects DCIS’ commitment to safeguarding our military members and protecting the taxpayer’s interests by ensuring transparency and accountability in the Department of Defense procurement system.”

Rupert added, “Unethical decisions and instances of fraud occurring within the defense contractor community continue to burden the U.S. Defense budget and puts U.S. military readiness at a disadvantage.”

Many agencies involved in investigation

The investigation was conducted by the DCIS, Defense Contract Audit Agency, the U.S. Defense Department’s Office of Inspector General — Audit Division, and the Defense Contract Management Agency.

The investigation was led by Assistant U.S. Attorney Alan M. Soloway.