#493: 10-08-96 - FMC Corp. Agress to Pay $13 Million to Settle False Claims Act Allegations

FOR IMMEDIATE RELEASE                                         CIV
TUESDAY, OCTOBER 8, 1996                           (202) 616-2765
                                               TDD (202) 514-1888

FMC CORP. AGREES TO PAY $13 MILLION TO SETTLE FALSE CLAIMS ACT ALLEGATIONS

WASHINGTON, D.C. -- The Chicago-based FMC Corporation will pay the United States $13 million to settle claims it falsely inflated the cost of military contracts to produce the Bradley Fighting Vehicle and the M113 tank, the Department of Justice announced today.

Assistant Attorney General Frank W. Hunger of the Civil Division and U.S. Attorney Michael J. Yamaguchi of San Francisco said the settlement resolves the allegations in a complaint filed under the qui tam provisions of the False Claims Act by Robert F. Neargarder, a former manager at FMC's Ground Systems Division in San Jose, California.

In his complaint, Neargarder alleged, among other things, that GSD, in various documents submitted to the Department of the Army, falsely inflated the amount it intended to spend on independent research and development (IR&D) and bid and proposal (B&P) projects during 1991 and 1992. The complaint further alleged that the Army, in relying on those false statements, agreed to reimburse GSD for a higher amount of IR&D and B&P expenditures than it would have if the Army had known GSD's true spending plans.

IR&D involves the cost of research and development of new technologies and products, while B&P are the costs companies incur in preparing bids and proposals for government contracts. During the years in question, the U.S. reimbursed companies for a negotiated percentage of their IR&D expenditures if the projects had some military relevance and also reimbursed companies for a negotiated percentage of B&P costs.

A portion of FMC's inflated IR&D and B&P costs were included in the prices of its contracts for the Bradley Fighting Vehicle and the tanks.

Under the False Claims Act's qui tam provisions, private citizens can file suit on behalf of the United States against companies and individuals who submit false claims for payment to the government and are entitled to share in the proceeds of any subsequent settlement or judgment.

Under the terms of the settlement with FMC, Neargarder will receive $2.86 million. #####

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