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Sikorsky to pay $3.5M over claims of inflated costs charged to Army

A U.S. Army Black Hawk helicopter

Sikorsky will pay $3.5 million to settle claims that it overcharged the U.S. military for replacement Black Hawk components, the U.S. attorney for Connecticut said Monday.

The government alleges that the Stratford, Conn.-based helicopter manufacturer, a division of United Technologies Corp., failed to let the military know that it had lower prices for the helicopter parts from February 2008 to September 2011, in violation of the False Claims Act.

As a result, the military overpaid for more than 50 different components, ranging from nuts and washers to the helicopter's access doors, the government said. The size of the overpayments was not disclosed in the settlement.

The settlement, signed March 26, involves no admission of wrongdoing by the company and no concession from the government that its allegations are "not well founded." But it does give the government the ability to "recoup from Sikorsky any overpayment plus applicable interest and penalties as a result of the [overpayments]."

"In this era of shrinking defense budgets, it is particularly important to guard the public coffers and safeguard against the unnecessary expenditures of funds from American taxpayers," U.S. Attorney Deirdre M. Daly said in a written statement. "Failure to disclose accurate, complete and current cost and pricing data created an uneven playing field in the negotiation process which tilted unfairly in Sikorsky's favor."

Sikorsky spokesman Paul Jackson said the company is pleased to have reached the agreement with federal authorities and "looks forward to continuing to work closely with the Army to maintain its fleet" of Black Hawk helicopters.

Last year, Sikorsky reported $6.3 billion in sales and $594 million in operating profits. In 2012, the helicopter maker had $6.8 billion in sales and $712 million in operating profits.

Repair work on the Black Hawk fleet is primarily performed at the Corpus Christi Army Depot in Corpus Christi, Texas, the government said. The parts were purchased under four contracts between Sikorsky and the Army Aviation And Missile Life Cycle Management Command.

Craig W. Rupert, special agent with the Defense Criminal Investigative Service's northeast field office, said these examples of "unethical decisions and instances of fraud occurring within the Defense contractor community continue to burden the U.S. Defense budget and puts U.S. military readiness at a disadvantage."

"With the current state of the economy, taxpayers can ill-afford to overpay for warfighter necessities required to carry out our Defense mission," Rupert said.

Other contract disputes are still pending between the U.S. Department of Defense and United Technologies companies, which did about $10 billion in business with the Pentagon last year.

One, in the U.S Court of Appeals for the Sixth Circuit, centers on allegations that the government overpaid hundreds of millions of dollars for Pratt & Whitney's F100 military engine. In another case, the government claims Sikorsky overcharged for overhead for materials.

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