US Government Sues Boeing For Overpricing
US Government Sues Boeing Over B-1 Bomber System Decoy Overpricing
LawFuel - The Law Jobs and Legal NewsWire
The United States today filed a civil lawsuit
against The Boeing Company,
alleging that the company
unlawfully inflated the price it charged the Air Force to
manufacture the Towed Decoy System for the B-1 bomber.
At the core of the lawsuit, which was filed in United States District Court in Los Angeles, is the allegation that during contract negotiations Boeing failed to disclose that it would outsource the fabrication of most of the components of the parts that were to be used in the program. During negotiations with the Air Force in 1998, according to the complaint, Boeing said that it would manufacture 50 parts at its Palmdale Site 9 fabrication facility, but the company was already planning to use suppliers and subcontractors to make the parts.
The suit alleges that Boeing realized
substantial cost savings on earlier
contracts by
purchasing similar parts, and components of the parts, from
suppliers.
The aerospace company also allegedly planned to close its Palmdale Site 9 facility at the end of 1998.
Boeing allegedly did not tell the Air Force of the significant cost savings the company had achieved on earlier contracts by purchasing parts and offloading manufacturing steps. The suit alleges that had the Air Force known the truth, it would have negotiated a substantially lower price for the Towed Decoy System, which is used to decoy missiles that are fired at the B-1.
Boeing's own employees
complained internally and warned their managers
about the
concealment, according to the complaint, but Boeing managers
ignored the warnings and refused to tell the Air Force the
truth. As a result, the suit alleges, Boeing inflated its
contract price and consequently submitted 140 unlawfully
inflated invoices to the Air Force, in violation of the
False Claims Act. The lawsuit alleges that the Air Force
paid $7.5 million more than it should have. Under the False
Claims Act, the government may recover up to three times the
amount of the loss, plus statutory penalties for each
inflated invoice.
The government investigation team
included agents from the Air Force's
Office of Special
Investigations, the Defense Criminal Investigative Service,
and auditors from the Defense Contract Audit Agency.
In
October 2006, the Justice Department announced the formation
of a
National Procurement Fraud Task Force designed to
promote the early detection, identification, prevention and
prosecution of procurement fraud associated with the
increase in government contracting activity for national
security and other government programs. The Procurement
Fraud Task Force - chaired by Assistant Attorney General
Alice S. Fisher for the Criminal Division - includes United
States Attorney's Offices, the FBI, the U.S. Inspectors
General community and a number of other federal law
enforcement agencies. This case, as well as other cases
brought by members of the Task Force, demonstrates the
Department of Justice's commitment to helping to ensure the
integrity of the government procurement
process.
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