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
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
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.