On Tuesday, August 15, 2017, the Department of Justice announced that the publicly traded company, Huntington Ingalls Industries, had agreed to pay $9.2 million to settle allegations that it violated the False Claims Act. The Newport, Virginia company was accused of overbilling the government for labor on Coast Guard and U.S. Navy ships at shipyards in Pascagoula, Mississippi.
In accordance with the settlement, HII will be required to make a payment of $7.9 million. When combined with prior repayments, the government will recover roughly $9.2 million. Acting Assistant Attorney General Chad A. Readler made a statement about the settlement.
“Contractors that knowingly bill the government in violation of contract terms will face serious consequences. This settlement demonstrates, once again, that we will not tolerate defense contractors who falsely charge the armed forces or any agency of the United States.”
U.S. Attorney Harold Brittain made mentioned of three guilty pleas in a related criminal matter. Two individuals previously pleaded guilty in the case of the “United States v. N. R. Holden & R.G. Gardner”. The pair were sentenced in 2015. In a separate case, “United States v. R.M. Wilson”, another individual pleaded guilty and was sentenced in 2016.
The civil settlement resolves alleged labor mischarging for contracts dating back to 2003. The government accused Huntington Ingalls Industries of mischarging labor incurred on specific contractors to other contracts, while the costs were not actually incurred by those contracts. The settlement will also resolve claims that HII had billed the Navy and Coast Guard for dive operations to accommodate ship hull construction, which was not carried out as claimed.
The labor mischarging allegations were initiated after a former employee, Bryon Faulkner, blew the whistle on HII. As a whistleblower, Faulkner is entitled to a portion of the recovery. As a result of the civil action he filed, Mr. Faulkner will receive a total of $1,590,144.