United States Files Suit against Texas Subsidiary of BAE Systems Alleging False Claims under Army Contract for Trucks

Washington, DC—(ENEWSPF)—June 19, 2015. The United States has filed a complaint against BAE Systems Tactical Vehicle Systems LP (BAE) for knowingly overcharging the Army for materials under a military truck contract, the Justice Department announced today. BAE is a subsidiary of BAE Systems Inc., headquartered in Arlington, Virginia, which is owned by BAE Systems plc, a global defense, security and aerospace company headquartered in London. BAE is located in Sealy, Texas.

“Those who do business with the United States must act in good faith,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division. “We will ensure that contractors do not abuse the military’s procurement process at the expense of our troops abroad and the taxpayers at home.”

In 2008, the Army Tactical Command Life Cycle Management Command, in Warren, Michigan, awarded BAE a contract to build more than 20,000 trucks for the military, known as Family of Medium Tactical Vehicles (FMTVs). Government procurement law requires contractors negotiating government contracts above a threshold price, to disclose cost or pricing data relevant to the negotiations. The purpose of requiring a contractor to disclose this information is to put the government on equal footing with the contractor and ensure a fair and reasonable price. The government alleges that BAE knowingly inflated the price of the FMTV contract by concealing cost and pricing data on numerous parts and materials during contract negotiations, despite having certified that the data it had disclosed was accurate, complete and current.

“We expect government contractors to act with integrity when they fulfill their contractual obligations to the government,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas. “Breach of that trust results in being held accountable in court.”

“Private companies are entitled to earn an honest profit from procurement contracts with the U.S. government, but they may not knowingly overcharge the military for supplies and materials,” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan. “The conduct alleged in this complaint is akin to charging $600 for a hammer.”

The government’s complaint alleges claims under the Truth-in-Negotiations Act, which requires the truthful disclosure of cost or pricing data, and the False Claims Act, which prohibits knowingly submitting false claims for federal funds.

The lawsuit is being handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Southern District of Texas and the U.S. Attorney’s Office of the Eastern District of Michigan. Investigative support is being provided by the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Army Criminal Investigation Command.

The case is captioned United States v. BAE Systems Tactical Vehicle Systems, LP (E.D. Mich.). The claims asserted in this case are allegations only; there has been no determination of liability.