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… UTC’s proposed prices for the engine contract misrepresented how UTC calculated those prices, resulting in the government paying hundreds of millions more than it otherwise would have paid for the engines. Specifically, the government alleged that UTC failed to include in its price proposal historical discounts that it received from suppliers, and instead knowingly used outdated information that excluded such discounts.
United Technologies Corporation Liable For Over $473 Million For Inflating Prices On Aircraft Engines Sold To Air Force
Recovery Sets Record for Case Tried Under the False Claims Act
June 20, 2013
The U.S. District Court for the Southern District of Ohio found United Technologies Corporation liable for over $473 million in damages and penalties arising out of a contract to provide the Air Force with fighter aircraft engines for F-15 and F-16 aircraft between 1985 and 1990, the Justice Department announced today. United Technologies, which is based in Connecticut, provides a broad range of high-technology products and services to the global aerospace and building systems industries.
“The department will relentlessly pursue justice against those who knowingly submit false claims to the government and abuse the public contracting process,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “It is vital that companies who do business with the government provide full and accurate information, and if they do not, they will pay the consequences.”
The government alleged that UTC’s proposed prices for the engine contract misrepresented how UTC calculated those prices, resulting in the government paying hundreds of millions more than it otherwise would have paid for the engines. Specifically, the government alleged that UTC failed to include in its price proposal historical discounts that it received from suppliers, and instead knowingly used outdated information that excluded such discounts.
The government filed suit against UTC in 1999 under the False Claims Act and the common law, and those claims were tried, without a jury, in 2004. An initial decision by the district court in 2008 found UTC liable under the False Claims Act, but did not award any damages. The district court also dismissed the government’s common law claims. That decision was appealed by both the government and UTC. In 2010, the Court of Appeals for the Sixth Circuit affirmed the district court’s finding that UTC was liable under the False Claims Act, but reversed and remanded the case to the district court to recalculate the government’s damages and to reconsider the government’s common law claims.
In yesterday’s ruling, the district court awarded the government False Claims Act damages and penalties of $364 million, which is the highest recovery obtained by the government in a case tried under the Act. The court also awarded an additional $109 million in damages on the government’s common law claims. With the addition of prejudgment interest on the latter claims, which the court has yet to calculate, the government anticipates that the total judgment against United Technologies could be well in excess of half a billion dollars.
This case is being handled by the Civil Division of the Department of Justice. The lawsuit is captioned United States of America v. United Technologies Corp., No. 3:99-cv-093 (S.D. Ohio).
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