Lockheed's Sikorsky Support Services, Derco Aerospace to Pay $70 Million to Resolve False Claims Act Allegations

By Josh Beckerman

Lockheed Martin units Sikorsky Support Services and Derco Aerospace have agreed to pay $70 million to resolve False Claims Act allegations that they overcharged the U.S. Navy for aircraft spare parts and materials, the Justice Department said Friday.

The Justice Department alleged that Sikorsky and Derco entered an improper cost-plus-percentage-of-cost, or CPPC, subcontract.

Lockheed didn't immediately respond to a request for comment.

Under the contract, Sikorsky agreed to buy parts from Derco at the cost that Derco paid other suppliers, plus a fixed 32% markup, the department said. The government alleged that the two companies knowingly presented false and fraudulently cost vouchers to the Navy, due to a failure to disclose that the costs claimed by Sikorsky were the product of an illegal CPPC subcontract between the Sikorsky and Derco.

The U.S. District Court for the Eastern District of Wisconsin ruled that Derco's markup violated a federal statute barring CPPC contracting, the department said.

Write to Josh Beckerman at [e-mail]

(END) Dow Jones Newswires

06-21-24 1600ET