Fort Drum Contractor Pays $683,987 to Resolve False Claims Act Exposure

SYRACUSE, NEW YORK – Alutiiq Diversified Services, LLC (“Alutiiq”) paid $683,987 to resolve claims that it improperly billed the United States Army for the construction of a shoot house located at Fort Drum and has agreed to remediate the shoot house at no cost to the government, announced United States Attorney Grant C. Jaquith.

Alutiiq had an agreement with the Army to construct a shoot house on Fort Drum for use as a live-fire, close-quarters combat training facility.  Shoot houses like this one are made principally with a substance called Shock Absorbing Concrete (“SACON”).  SACON is specially designed to absorb bullets fired during training exercises, reducing the risk to soldiers of being hit by friendly gun fire during live-fire training.  The specification for the SACON sets forth requirements for the density of the SACON at various stages of manufacture and the SACON’s compressive strength, both of which can impact the SACON’s ability to absorb bullets.  Alutiiq subcontracted with another company to do the actual work of building the shoot house, but Alutiiq remained contractually obligated to the government to perform quality control.

The investigation revealed that the subcontractor responsible for making the SACON did not follow the SACON specifications, delivering hundreds of SACON blocks that were outside the density parameters.  Moreover, there were no records showing that the subcontractor performed compressive strength testing at the required time, and the limited strength testing records that were available showed that some SACON blocks were outside the maximum strength limit even when tested too early.  The investigation also uncovered a SACON block with makeshift rebar in the form of nail and wire embedded inside the block, a condition that increases bullet ricochet risk.  Alutiiq submitted quality control reports for the SACON work certifying that it was performed in accordance with the contract requirements but did not actually confirm before submitting its claims for payment that the SACON subcontractor had manufactured the SACON properly.

United States Attorney Grant C. Jaquith said: “Accurate claims are essential in all government contracts to protect the public purse and the safety of those who use the purchased product.  This case underscores the importance of that principle, involving false claims about the reliability of materials to reduce the risk to our soldiers during live-fire combat training.  The settlement agreement reflects Alutiiq’s failure to carry out its quality control obligations, its submission of false claims, and its cooperative work to resolve this case by paying a substantial sum of money and fixing the shoot house so the Army has the safe setting needed to train soldiers to defend our nation.  We will continue to use the False Claims Act to safeguard the integrity of defense procurement.”

“The settlement agreement announced today is the successful resolution of this joint investigation conducted by the Defense Criminal Investigative Service (DCIS), the U.S. Army Criminal Investigation Command and the U.S. Attorney’s Office, Northern District of New York,” stated Leigh-Alistair Barzey, Special Agent-in-Charge, DCIS Northeast Field Office.  “The integrity of the DoD supply chain is of vital importance to America’s Armed Forces and its national security and the DCIS will continue to work with its law enforcement partners to hold Defense Contractors accountable to contract requirements ensuring quality products and services are provided to the U.S. military.”

This settlement further demonstrates the resolve of the U.S. Army Criminal Investigation Command's (USACIDC) Major Procurement Fraud Unit and our law enforcement partners to protect and defend the assets of the United States Army,” stated Special Agent in Charge L. Scott Moreland, of the USACIDC’s Mid-Atlantic Fraud Field Office.

The investigation and settlement were the result of a coordinated effort among the United States Attorney’s Office for the Northern District of New York, the Defense Criminal Investigative Service, and the United States Army Criminal Investigation Command.  The United States was represented by Assistant U.S. Attorney Michael D. Gadarian.