The federal government has decided to intervene in a False Claims Act lawsuit against Navistar Defense. The whistleblower complaint alleges the company overbilled the Department of Defense for commercial parts used in the manufacturing of Mine Resistant Ambush Protected (“MRAP”) vehicles.
Starting in 2007, Illinois-headquartered Navistar was under contract to supply armored vehicles to the U.S. military. Navistar´s MRAPs then began substituting Humvees, which had shown vulnerability to mines. The company ended up supplying about 4,000 MRAPs to the DoD.
According to the Department of Justice, "in 2009, as the focus of the war effort transitioned from the paved roads and flat terrain of the Iraqi deserts to Afghanistan’s rocky terrain," an upgrade of the MRAPs provided by Navistar was necessary. The Marine Corps then requested information from the company to ensure that the pricing of an Independent Suspension System (“ISS”) it manufactured was appropriately priced.
Under federal law, private companies must offer their most competitive pricing to the government. Prosecutors claim that Navistar falsified records of previous sales in order to inflate the price of the ISS.
Navistar´s MaxxPro MRAPs have a V-shaped frame that helps deflect explosions caused by mines and common roadside bombs, which have proved fatal for many U.S. troops in Iraq. One of the plants where the vehicles were manufactured employed over 1,000 workers during peak production.
Over the course of five years, the federal government paid Navistar nearly $9 billion to acquire MRAPs. The Defense News estimates that at least $1.28 billion of that was tainted by fraud. Since damages are tripled in FCA cases, the government could potentially recover nearly $4 billion in the event of a favorable verdict.
The original lawsuit was filed by Duquoin Burgess in 2013, under the False Claims Act (“FCA”). The whistleblower was a government contracts manager at Navistar between 2009 and 2013.
He claimed his employer forged invoices and catalog prices in its negotiations with the DoD and that Navistar´s top executives were aware of the misconduct. He is currently an employee of BAE, an international defense, security, and aerospace company.
Insiders with information about procurement fraud can file a lawsuit under the False Claims Act to expose fraudsters and obtain an award. Whistleblower awards range between 15 and 30 percent of the government´s total recoveries. If the government intervenes, the chances of a successful outcome increase, and the maximum award is 25 percent. If the government declines, the relator can still pursue the case on their own, and the maximum award rises to 30 percent. If the case against Navistar leads to a favorable settlement or verdict for the plaintiffs, Duqoin Burgess will likely receive a multimillion-dollar award.
The Civil Division´s Assistant Attorney General Jody Hunt said in a press release that the DOJ "will hold accountable those contractors who falsify information and thereby cause the military to pay inflated prices," and "take steps necessary to protect the military’s procurement process from abuse.” The U.S. Attorney for the District of Columbia emphasized the importance of protecting taxpayer dollars from "waste, fraud, and abuse.”