U.S. sues BAE Systems unit for overcharging for military trucks

Reuters News
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Posted: Jun 19, 2015 11:19 AM

WASHINGTON (Reuters) - The United States has sued a Texas-based subsidiary of global defense company BAE Systems Plc <BAES.L> for overcharging the U.S. Army in a contract to build 20,000 military trucks, the Department of Justice said on Friday.

The department accuses BAE Systems Tactical Vehicle Systems LP of inflating the cost of parts and materials during contract talks with army negotiators based in Warren, Michigan.

BAE Systems Inc, the U.S. unit of London-based BAE Systems Plc, said in a statement that it saw no basis for the lawsuit.

"We intend to vigorously defend our position," spokesman Neil Franz said.

He said the dispute is also before the Armed Services Board of Contract Appeals.

According to prosecutors, BAE violated the False Claims Act in 2008 by knowingly submitting inaccurate costs, including hiding lower price estimates for 40 parts.

If BAE had disclosed the lower quotes, the overall bill for the contract would have been more than $20 million lower, according to the lawsuit.

"The conduct alleged in this complaint is akin to charging $600 for a hammer," said U.S. Attorney Barbara McQuade of the Eastern District of Michigan, one of the prosecutors in the case.

The case is United States v. BAE Systems Tactical Vehicle Systems, LP, U.S. District Court, Eastern District of Michigan, No. 15-12225.

(Reporting by Lindsay Dunsmuir; Editing by Lisa Von Ahn and Leslie Adler)