L3 Technologies Settles False Claims Act Allegations Relating to Double-Charging for Certain Material Costs

L3 Technologies, Inc., Communication Systems West, a Utah-based manufacturer of communications equipment for military systems, has agreed to pay $21.8 million to resolve allegations that it violated the False Claims Act by knowingly submitting and causing the submission of false claims to the Department of Defense by including in contract proposals the cost of certain parts twice, the Department of Justice announced today.

From approximately 2008 to 2011, L3 submitted, and the Department of Defense accepted, dozens of contract proposals for a handheld receiver called the Remote Operations Video Enhanced Receiver (ROVER), and a compact transceiver called the Video Oriented Transceiver for Exchange of Information (VORTEX), which operate together to provide real-time, full-motion video and other crucial data from the battlefield. The contract proposals included the cost of low-cost common-stock items, such as nuts and bolts, twice. As a result, the United States alleged that L3 knowingly double-charged the government for these parts.

“Government contractors must ensure that they provide the goods or services that they promised at the proper price,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement demonstrates our commitment to pursue those who knowingly overcharge the American taxpayers.” 

“The U.S. Attorney’s Office is committed to protecting the integrity of federal procurement contracting,” said U.S. Attorney Trina A. Higgins for the District of Utah. “We will vigorously pursue federal contractors who fail to comply with the highest standards of accuracy to ensure federal agencies are appropriately charged for goods and services.”

“The Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense’s Office of Inspector General, is steadfastly committed to rooting out fraud and ensuring taxpayer dollars are properly utilized,” said Acting Special Agent in Charge Gregory P. Shilling of DCIS’s Southwest Field Office. “DCIS, the Department of Justice, and our law enforcement partners will continue to work together to ensure individuals and contractors that defraud the government are held accountable for their actions.”

“This settlement further demonstrates the resolve of Army Criminal Investigation Division and our law enforcement partners to protect and defend the assets of the United States Army,” said Special Agent in Charge Scott L. Moreland of the Department of the Army Criminal Investigation Division’s Major Procurement Fraud Field Office.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Utah, with assistance from the Department of Defense, Defense Contract Audit Agency, and Defense Contract Management Agency.

This matter was handled by attorneys Paul R. Perkins, Russell B. Kinner, and Allison Cendali of the Civil Division and Assistant U.S. Attorney Sandra Steinvoort for the District of Utah.

In conjunction with this resolution, the Justice Department has agreed to settle for $7,982,554 a lawsuit filed by L3 alleging breach of contract claims against the United States. That case, L3 Technologies, Inc., Communications Systems-West Division v. United States, Civil Action No. 17-1304 (Fed. Cl.), alleged that in an effort to prevent L3 from continuing to double-charge for common-stock items, the Department of Defense improperly prohibited L3 from charging certain other costs.

The claims resolved by the settlement are allegations only. There has been no determination of liability.