FOR IMMEDIATE RELEASE CIV MONDAY, JULY 17, 1995 (202) 616-2765 TDD (202) 514-1888 ISRAELI FIRM SETTLES DISPUTE, WILL PAY U.S. $8.5 MILLION WASHINGTON, D.C. -- Israel Aircraft Industries Ltd. will pay the United States $8.5 million plus interest computed from the first of the year to settle allegations the firm knowingly submitted false cost data in negotiating several contracts to maintain and provide support for Israeli Kfir aircraft leased to the U.S. Navy, the Department of Justice announced today. Assistant Attorney General Frank Hunger of the Civil Division said the settlement agreement resolves IAI's potential liability under the False Claims Act, the Truth in Negotiations Act and the common law. Under the agreement, IAI will make installment payments of $1 million per month, plus interest computed from January 1, 1995. Hunger said the United States's claims were based on audits by the Defense Contract Audit Agency and information uncovered by the Defense Criminal Investigative Service concerning IAI's costs under 1984 and 1986 "Aggressor I" contracts and a 1986 "Aggressor II" contract with the U.S. Navy. The total value of the contracts was $155 million. DCAA and DCIS uncovered information that, the Department alleged, indicated that Israel Aircraft Industries knowingly failed to provide the Navy with current, accurate and complete data concerning its costs for equipment used to maintain the aircraft and for its costs for "consumable" aircraft parts such as bolts and rivets. For example, the United States alleged that IAI held back from the Navy updated bills of material that revealed its most current data such as vendor quotes and purchase orders concerning what it would need to pay for equipment to service the Kfirs. The United States also alleged that in negotiating the Aggressor II contract IAI held back actual records concerning the dollar value of "consumable" items it had used per flight hour to service the Kfirs during the first year of the Aggressor I contract, instead providing the Navy with an inflated consumable per flight hour figure that IAI falsely stated represented the company's actual cost. Under the Truth in Negotiations Act, 10 U.S.C. 2306, IAI was obligated to provide the Navy with the most current, accurate and complete cost and pricing data prior to final agreement on the price of the contracts. The United States's claims under the False Claims Act were based on IAI knowingly submitting the false cost data in violation of the Truth in Negotiations Act. ##### 95-396