US Intervenes in False Claims Case Against Military Contractors

The United States government has intervened in a whistleblower’s qui tam lawsuit alleging that military contractors Sikorsky Aircraft Corporation (“Sikorsky”), Sikorsky Support Services, Inc. (“Sikorsky Support”), and Derco Aerospace, Inc. (“Derco”) violated the False Claims Act. The whistleblower also alleged violations by the parent company of Sikorsky, United Technologies Corporation, but the federal government declined to intervene with regard to those claims.

According to its website, Sikorsky is engaged in the design, manufacture and service of military helicopters and fixed-wing aircraft for all branches of the U.S. military. Sikorsky’s website reflects that it supplies the U.S. armed forces with Blackhawk helicopters, Seahawk helicopters, CH-53E helicopters, MH-53E helicopters, and MH-60S aircraft, the U.S. military’s first all-new rotary wing aircraft in a decade.

Sikorsky Support, a wholly owned subsidiary of Sikorsky, is headquartered in Stratford, Connecticut. It provides maintenance, logistical, and technical services to customers of Sikorsky, including the U.S. military.

Derco, headquartered in Milwaukee, Wisconsin, is a subsidiary of Sikorsky that primarily provides aircraft spares to Sikorsky’s customers. The whistleblower, Mary Patzer, was employed by Derco as the Assistant Controller of US Government Accounting and Sarbanes Compliance.

According to the qui tam complaint filed in the United States Court for the Eastern District of Wisconsin, the whistleblower alleged that, between July 2006 and September 2010, Sikorsky, Sikorsky Support, and Derco knowingly submitted inflated bills to the federal government for parts and repair services. The whistleblower alleged that the submissions were made in violation of the False Claims Act.

According to the whistleblower, Sikorsky’s contract with the U.S. Navy specifically stated that the cost for parts and services provided by a vendor must be the actual cost, no fee or profit is allowed. The whistleblower alleged that the invoices submitted to the government by Sikorsky and its subsidiaries contained a hidden 20% profit mark-up in violation of the contract. According to the complaint, the whistleblower was terminated shortly after she raised this issue with Sikorsky’s accounting manager on or around September 10, 2010. The whistleblower further claims that her duties were reassigned to another employee with little or no knowledge of the government’s required “at cost” billing under the contract.

In its Notice of Partial Intervention filed on August 8, 2014, the United States stated that it will file its own complaint within 60 days.