Defense Contractors Settle Alleged Violation Of The False Claims Act For $5.5 Million

United States Attorney Andrew M. Luger today announced a settlement agreement between the United States, Relator David McIntosh, M.K. Battery, Inc. (MK Battery), East Penn Manufacturing Co., Inc. (East Penn), NPC Robotics, Inc. (NPC), BAE Systems, Inc., and BAE Systems Tactical Vehicle Systems LP (BAE). The $5.5 million agreement resolves an alleged violation of the False Claims Act related to the sale of batteries for use in gun turrets on military vehicles.

According to documents filed in court, East Penn manufactured batteries that were sold to NPC, for use by the United States Department of Defense (DOD). DOD wanted dual-purpose batteries, with both a strong starting capacity and good deep cycling ability, to power the turrets atop Humvee vehicles. Based on representations made by Defendants, DOD believed that the East Penn batteries were deep cycle batteries, and contracted with BAE to install the batteries in the Humvees.

DOD received samples of the battery in 2005 and approved its use. However, East Penn later made changes to the design and manufacturing of the battery that negatively affected its deep cycle performance. Defendants did not inform DOD of the change.

“The Department of Defense relies on companies it deals with to be honest about the products they provide, especially when those products will be used on the battlefield,” said Assistant United States Attorney Chad A. Blumenfield. “Inaccuracies about such products cannot be tolerated.”

Despite knowledge by MK Battery, East Penn, NPC, and BAE of the diminished battery performance, BAE continued to install the batteries in Humvees supplied to DOD through 2012, and did not inform DOD about the decreased deep cycle performance of the batteries. The United States only became aware of the change to the battery’s design and performance by the filing of a qui tam complaint. The $5.5 million settlement resolves allegations contained in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act that are pending in Minnesota. As part of the resolution, the whistleblower will receive a payment of $990,000.

Assistant U.S. Attorney Chad Blumenfield handled this matter for the United States.

U.S. Attorney Luger thanked the Defense Criminal Investigative Service for investigating this case.

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