Austal USA settles False Claims Act allegations about Navy ships: USDOJ

UPDATE (8:03 p.m.): Austal USA sent WKRG News 5 a statement in response to the False Claims Act allegations the company settled Tuesday.

“Austal USA agreed to settle a civil investigation by the DOJ into allegations that the Company installed non-compliant parts on LCS ships, the last of which was delivered to the Navy over six years ago,” an Austal USA spokesperson said. “While we did not admit liability in the case, we felt it was in the best interests of the company to settle the investigation and focus our full efforts on executing our programs for our customers.”

ORIGINAL STORY:

MOBILE, Ala. ( WKRG ) — Austal USA LLC agreed to pay $811,259 to resolve allegations that it violated the False Claims Act, according to the United States Department of Justice.

The allegations made against the Mobile-based company said Austal knowingly supplied valves that didn’t meet military specifications.

“The United States’ settlement alleges that, under a 2011 Navy contract, Austal invoiced for military-grade high-performance butterfly valves and triple offset butterfly valves it installed on five LCS hulls when it knew the valves had not met the testing requirements to be deemed military grade,” the USDOJ release said.

Austal has manufactured several ships for the United States military such as the Independence Class Littoral Combat Ship.

The USDOJ release said the claims resolved by the settlement are only allegations, and there has not been any determination of liability.

“It is essential to the safety and operational readiness of our Navy fleet that contractors comply with applicable military specifications,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said. “We will continue to hold accountable those who knowingly supply equipment to the U.S. military that fails to meet contract specifications.”

The investigation included the Defense Criminal Investigative Service, the Navy Criminal Investigative Service and the Defense Contract Audit Agency’s Office of Investigative Support.

“Supplying nonconforming parts to the Department of Defense (DoD) compromises military systems and potentially endangers the lives of U.S servicemembers,” Special Agent in Charge Darrin K. Jones of Department of Defense Office of Inspector General, DCIS, Southeast Field Office said. “DCIS and our law enforcement partners are fully committed to ensure the safety of our military personnel and protecting the integrity of the DoD supply chain.”

The Civil Division’s Commercial Litigation Branch Senior Trial Counsel Art J. Coulter and Assistant U.S. Attorney Diedre Lamppin Colson for the Southern District of Mississippi handled the case.

“Product substitution risks degrading warfighter capability and wastes U.S. taxpayer dollars,” Special Agent in Charge Greg Gross of the NCIS Economic Crimes Field Office said. “I want to thank our investigative partners for their collaboration in working with NCIS to protect the integrity of the Department of the Navy procurement process.”

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