Navistar accused of bilking $1.3 billion from Pentagon

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Bloomberg  /  December 3, 2019

Navistar International Inc. and its defense unit are accused of bilking almost $1.3 billion from the U.S. government in connection with a contract for military vehicles used by American forces in Iraq and Afghanistan.

Filed in 2013, the whistle-blower suit was made public Tuesday by the U.S. District Court in Washington. The federal government elected to join part of the suit in September, according to an earlier court filing that also was just made available.

The false-claims case “arises out of defendants’ pervasive and long-running scheme to charge the U.S. government wildly inflated prices for components of Mine-Resistant, Ambush-Protected (“MRAP”) vehicles, which were critical to the government’s military efforts in Iraq and Afghanistan,” according to the U.S.-filed complaint.

The companies are accused of submitting to the government misleading documents — including forged invoices and fabricated, inflated catalog prices for components — to induce the U.S. to award the company a multi-billion-dollar contract. Top Navistar Defense officials are alleged to have been aware of the scheme.

Lyndi McMillan, a Navistar spokeswoman, said the complaint wasn’t well-founded in fact or law.

“We believe our pricing was fair, reasonable and competitive, and we are disappointed the government has chosen to intervene in this matter,” McMillan said in an email. “The company intends to defend itself as necessary and appropriate.”

According to the complaint, the whistle-blower was Washington resident Duquoin Burgess, who worked in the Navistar Defense contract management department first in Warrenville and later in Lisle, Illinois.

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U.S. Joins Suit against Navistar Defense LLC Alleging False Claims under Marine Corps Contract

Homeland Security Today  /  December 4, 2019

The United States has intervened in a whistleblower suit filed in the United States District Court for the District of Columbia against Navistar Defense LLC.  Navistar Defense manufactured armored vehicles for the United States military and is a subsidiary of Navistar International LLC, headquartered in Melrose Park, Illinois.  The suit alleges that Navistar Defense violated the False Claims Act by submitting fraudulent invoices to support inflated prices for commercial parts under its contract to supply Mine Resistant Ambush Protected (MRAP) vehicles.

“The Department of Justice will hold accountable those contractors who falsify information and thereby cause the military to pay inflated prices,” said Assistant Attorney General Jody Hunt for the Civil Division.  “We will take steps necessary to protect the military’s procurement process from abuse.”

“Through rigorous enforcement of the False Claims Act, we protect taxpayer dollars from waste, fraud, and abuse,” said U.S. Attorney Jessie K. Liu for the District of Columbia.  “We expect the utmost integrity and reliability from the contractors that design and build equipment that is meant to ensure that our men and women in uniform are adequately protected as they serve our country.”

In 2007, the United States Marine Corps awarded Navistar Defense a contract to build several hundred MRAP vehicles to replace the Humvee, which proved to be vulnerable to roadside explosive devices.  Navistar Defense ultimately provided nearly 4,000 MRAPs under the contract.  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, the Marine Corps sought to upgrade its MRAP vehicles with a modified Independent Suspension System (ISS).  During the course of negotiations for the ISS, the Marine Corps asked Navistar Defense to provide evidence of prior commercial sales of the various parts that made up the ISS to ensure that the prices paid were fair and reasonable.  The lawsuit alleges that Navistar Defense knowingly submitted fraudulent invoices that falsely purported to show prior, comparable commercial sales to conceal the inflated prices it was charging the Marine Corps.  In reality, the lawsuit alleges, those sales never occurred.

The lawsuit was originally filed under the qui tam or whistleblower provisions of the False Claims Act by Duquoin Burgess, a former government contracts manager for Navistar Defense.  Under the acts, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery.  The act permits the United States to intervene in and take over the action, as it has done here.  If a defendant is found liable for violating the act, the United States may recover three times the amount of its losses plus applicable penalties.

The lawsuit is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Columbia.  Investigative support is being provided by the Defense Contract Audit Agency, the Naval Criminal Investigative Service, the Defense Criminal Investigative Service, the Army Criminal Investigation Command, and the Federal Bureau of Investigation.

The case is captioned United States ex rel. Burgess v. Navistar Defense, LLC (D.D.C).  The claims alleged in the lawsuit are allegations only, and there has been no determination of liability.

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https://www.justice.gov/opa/pr/united-states-joins-suit-against-navistar-defense-llc-alleging-false-claims-under-marine