Bradken Inc. Pays $10.8 Million to Resolve False Claims Act Allegations Involving Substandard Naval Parts
The Department of Justice announced today that Bradken Inc. (Bradken) has paid $10,896,924 to resolve allegations that Bradken produced and sold substandard steel components for installation on U.S. Navy vessels. The United States alleged that a Bradken employee knowingly falsified test results to conceal the fact that the components did not meet the Navy’s specifications.
“When government contractors supply our armed forces with equipment that fails to meet performance standards, they not only cheat taxpayers, they also potentially put our service members at risk,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Today’s settlement demonstrates our commitment to ensuring the military receives products that enable it to perform its critical mission.”
Bradken, which operates a foundry in Tacoma, Washington, is a Delaware corporation with its principal place of business in Kansas City, Missouri, operating as a wholly owned subsidiary of Bradken Ltd. of Newcastle, Australia. Since the 1980s, Bradken has produced steel parts used by other contractors to build vessels for the United States Navy. The Navy’s contracts expressly required parts made of specified grades of high yield steel.
The settlement announced today resolves allegations that some of the steel Bradken produced did not conform to the Navy’s specifications. The United States alleged that a former Bradken metallurgist altered the results of tests designed to ensure that the parts met the specifications for high yield steel, and Bradken’s internal controls were inadequate to identify the hundreds of falsified test results. The United States further contended that Bradken invoiced shipbuilders for the steel parts as if they were made to the demanding military specification when they were not, causing the shipbuilders to invoice the Navy for defective parts.
“This settlement demonstrates the commitment of the Naval Criminal Investigative Service (NCIS) and our law enforcement partners to hold companies accountable for supplying substandard products, especially products that could impact the Department of the Navy’s (DON) war fighting ability and battlefield superiority, and the safety of our Sailors and Marines,” said Charles P. King, Special Agent in Charge, NCIS Northwest Field Office. “NCIS will continue to work diligently with our law enforcement partners to safeguard DON major acquisition programs. The success of the DON’s war fighting ability is dependent upon a sound and reliable acquisition process.”
“The announced settlement is representative of the law enforcement community's relentless efforts to hold accountable those who engage in unethical business practices that endanger America's warfighters, corrupts the defense procurement process, and inexcusably wastes taxpayer dollars,” said Bryan Denny, Special Agent in Charge of the Defense Criminal Investigative Service (DCIS), Western Field Office. “This case clearly demonstrates that unscrupulous actions by government contractors and subcontractors will be investigated by DCIS and its law enforcement partners.”
This civil settlement was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Washington, DCIS, NCIS, and the Defense Contract Audit Agency.
In addition to the civil settlement, U.S. Attorney Brian T. Moran for the Western District of Washington announced that the United States has filed a criminal charge against Bradken for committing the crime of major fraud against the United States. The United States and Bradken have also entered into a Deferred Prosecution Agreement (DPA) in which Bradken admitted the government’s allegations and agreed to take certain remedial actions. If Bradken complies with all of the DPA’s requirements, the government will dismiss the criminal charge after three years.
Except to the extent admitted as part of the DPA, the claims resolved by the civil settlement are allegations only. There has been no determination of liability in the civil case.