July 5, 2013 Military Contractor Fraud
GE Settles False Claims Act Case for $6.6 Million
Last month, an Ohio-based defense contractor agreed to settle a False Claims Act lawsuit. General Electric Aviation Systems (GEAS) allegedly submitted or caused the submission of false claims related to contracts with the Department of Defense. As a result of the whistleblower lawsuit, GEAS will pay the United States government $6.6 million.
GEAS is headquartered in Cincinnati, with manufacturing plants in multiple locations around the country. Formerly known as Smiths Aerospace, the company transformed into GEAS in 2007. It operates as a subsidiary of General Electric Company and currently manufactures and sells integrated systems and parts for commercial, corporate, military and marine aircraft. GEAS provides the United States military with commercial and military jet engines and components as well as avionics, electric power, and mechanical systems for aircraft with an extensive global service network to support these products.
According to the DOJ, GEAS entered into a contract with the United States Navy in 2005. The company agreed to manufacture and deliver multiple external fuel tanks for the F/A-18 Hornet strike fighter jet. After consenting to the terms of the defense contract, GEAS allegedly failed to comply with the specifications originally agreed upon. It also failed to follow the necessary quality control procedures for 641 fuel tanks that were manufactured in its Santa Ana plant and delivered to the Navy between June 2005 and February 2008.
Additional Allegations of Defense Fraud
The recent False Claims Act settlement agreement with GEAS also resolves earlier allegations of False Claims Act violations related to a separate defense contract with the United States Army. These allegations involve the manufacture and delivery of drag beams that were meant to be used on the UH-60 Blackhawk helicopters. The drag beams are essentially cylinders that attach to the airframe at one end and to the shock strut at the other. When landing the helicopter, drag beams transmit the load of that impact to the airframe, shock strut and the wheel.
According to official documentation, GEAS was accused of making false statements to the government between June 2010 and June 2011 in relation to defense contract specifications. GEAS misrepresented to another government contractor that it had completed detailed and thorough inspections of 228 drag beams that the company manufactured for the Army. As a result, GEAS violated the False Claims Act by maintaining it complied with the details of its defense contract.
Doing Business With the Government
When GEAS or any other defense contractor enters into an agreement with the federal government, it is under an obligation to deliver goods or services that meet technical requirements. In addition, the company must also submit certifications stating that quality control procedures have been implemented and followed during the manufacturing of those goods or in the training of those employees who perform services.
It would be impossible for the government to inspect every piece of inventory that it purchases from defense contractors around the world. As a result, it requires contractors to certify they are in compliance with the contract requirements. This step was implemented as a way to stop taxpayer dollars being wasted or used fraudulently and to ensure military personnel are not placed at risk by faulty goods and services. Once GEAS submitted a claim for reimbursement under a false certification that it delivered goods that met or exceeded the contract requirements, it can be held accountable for those False Claims Act violations.
Defense Fraud Whistleblower
Details of GEAS’s defense fraud were originally brought to light by a whistleblower. When Jeffery Adler, a former GEAS Santa Ana facility employee, learned his company was cutting corners with a defense contract, he decided to come forward with the information. After first consulting with an experienced False Claims Act attorney, Adler then moved forward with his qui tam action. He filed suit on behalf of the government under the whistleblower provisions of the False Claims Act. While Adler’s share of the settlement has not been determined as of yet, he stands to receive a substantial portion of the government’s $6.6 million recovery.
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