Federal Subcontractor Agrees to Pay $5 Million to Settle False Claims Act Allegations

DETROIT - Merrill Technologies Group, Inc., and its subsidiaries, Merrill Tool and Machine, Inc. (MTM), Merrill Fabricators, Inc., Merrill Engineering & Integration, Inc., Merrill Aviation and Defense, Inc. (collectively, Merrill Technologies Group) have agreed to pay $5,000,000 to resolve allegations that MTM violated the False Claims Act by falsely overstating cost or pricing data included in a subcontract proposal for work under a contract with the U.S. Department of the Army. 

In 2006, a government prime contractor and the U.S. Army’s Tank Automotive Command (TACOM) entered into a sole-source agreement under which the prime contractor agreed to manufacture and assemble components of upgrades to various armored vehicles.  Thereafter, in 2010, the prime contractor entered into a subcontract with MTM to perform some of the work under its contract with TACOM.  During that process, MTM submitted a subcontract proposal to the prime contractor, which the prime contractor ultimately relied on to negotiate a firm-fixed price contract with TACOM.  The settlement announced today resolves the government’s allegations that MTM’s subcontract proposal overstated MTM’s cost or pricing data, thereby causing the prime contractor to negotiate and certify the prime contract with TACOM based on inflated costs, which in turn caused TACOM to pay overcharges at the prime and subcontractor levels.

“Government contractors must be completely above board when seeking payment under government contracts,” said U.S. Attorney Dawn N. Ison for the Eastern District of Michigan.  “This settlement demonstrates our commitment to hold accountable contractors who cause the Government to overpay, and who enrich themselves at taxpayer expense.”  U.S. Attorney Ison added, “I would like to commend the leadership at Merrill Technologies Group for making things right once the government’s concerns were brought to its attention by federal investigators.”

“This settlement is the result of Army CID’s commitment to protect the government, the Army, and most importantly, the taxpayer, from those whose actions can erode the trust and confidence in our military and warfighting capability. Army CID and our law enforcement partners remain committed to hold accountable those who attempt to defraud the government,” said Keith K. Kelly, Special Agent-in-Charge Army Criminal Investigation Division, Fraud Field Office.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Chad Sibley (Relator).  Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.  In this case, Relator will receive $900,000.00 as part of the settlement.  The qui tam case is captioned United States ex rel. Sibley v. Merrill Tool and Machine, et al., Case No 15-13066 (E.D. Mich.).

The resolution was the result of a coordinated effort by the United States Attorney’s Office for the Eastern District of Michigan, the U.S. Army Criminal Investigation Division, and the Defense Contract Audit Agency.  The matter was handled by Assistant United States Attorney Carolyn Bell Harbin from the U.S. Attorney’s Office for the Eastern District of Michigan.  The claims resolved by the settlement are allegations only; there has been no determination of liability.