The Department of Justice announced today that it has intervened in a False Claims Act case against Sikorsky Aircraft Corporation and two of its subsidiaries, Sikorsky Support Services Inc. and Derco Aerospace Inc. Sikorsky Aircraft Corporation is a wholly owned subsidiary of United Technologies Corporation.
The government’s complaint alleges that Sikorsky Aircraft Corporation approved an illegal cost-plus-a-percentage-of-cost subcontract between the two subsidiaries. A cost-plus-a-percentage-of-cost contract is one where the cost of performance is unknown in advance and compensation is determined based on the cost of performance plus an agreed-to percentage of such costs. These types of contracts are prohibited because they give contractors no incentive to control the cost of performance.
The complaint further alleges the defendants used this illegal subcontract to overcharge the Navy on parts and materials that were used to maintain Navy aircraft.
The complaint was filed in a case brought under the qui tam provisions of the FCA by a former employee of Derco.
For more information, see the DOJ release.