Defense Contractor Agrees to Over $800,000 Settlement for False Claims Act Violations

A defense contractor has agreed to pay more than $800,000 to the United States to resolve allegations of violating the False Claims Act. The settlement with IAP Worldwide Services, Incorporated, a company providing logistics, facilities management, and technical services, stems from claims that it submitted false payment requests to the U.S. Navy for non-conforming goods. This resolution underscores the government’s commitment to ensuring contractors meet stringent standards, particularly when the safety of military personnel is involved.

The case centers on a contract awarded to IAP by the U.S. Navy’s Naval Air Systems Command at Patuxent River, Maryland. This contract required IAP to maintain and support specific military aircraft, including the Boeing E-6B, by repairing, replacing, and replenishing necessary materials. A key stipulation of the contract was that all parts used in these repairs and maintenance activities must be certified by either the Federal Aviation Administration or the Original Equipment Manufacturer (OEM). These certifications are crucial for verifying that parts meet the manufacturer’s original design specifications and quality standards.

The U.S. government alleges that between January 1, 2018, and October 26, 2019, IAP submitted claims for payment to the Navy for materials that did not meet these contract requirements. Specifically, the company is accused of providing and billing the Navy for BACB30LU bolts that were not in conformity with OEM standards. These bolts, essential for the structural integrity and safety of the E-6B aircraft, reportedly had several non-compliant manufacturing characteristics. These included being made from noncompliant metal stock, having machined heads and shanks instead of forged ones, lacking a cold-worked head fillet, and having machined threads rather than rolled threads. Such deviations in manufacturing could significantly reduce the lifespan and reliability of the bolts.

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The False Claims Act, a federal law enacted during the Civil War, serves as the government’s primary legal tool for combating fraud and abuse in federal programs and procurement processes. By agreeing to this settlement, IAP is addressing allegations of knowingly submitting false claims for payment.

The investigation and subsequent settlement highlight the serious risks associated with compromised defense supply chains. Ensuring the integrity of materials used in military platforms is paramount for national security, operational readiness, and the safety of service members. Agencies involved in the investigation, including the Department of Defense Office of Inspector General and the Naval Criminal Investigative Service, emphasize their continued dedication to safeguarding government resources and holding contractors accountable for supplying quality products and services. The U.S. Attorney’s Office for the District of Maryland has indicated its ongoing commitment to utilizing the False Claims Act to protect federal procurement interests and ensure contractor accountability.

It is important to note that the claims resolved by this settlement are allegations, and no determination of liability has been made. The U.S. Attorney’s Office for the District of Maryland encourages the public to report any suspected instances of fraud against the government.

Article by Mel Anara, based upon information from the U.S. Attorney’s Office, District of Maryland.

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