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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