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Press Release

Government Contractor to Pay $142,500 to Settle Civil Fraud Allegations Resulting from its Disclosure of Conduct

For Immediate Release
U.S. Attorney's Office, Eastern District of Virginia

NORFOLK, Va. – Fairbanks Morse Engine (FME), located in Norfolk, has agreed to pay $142,500 to settle civil fraud allegations that their employees engaged in labor mischarging.

The allegations involved FME overcharging the Navy on a subcontract for engine repairs on the USS Ashland.  FME had two subcontracts to perform work on the Ashland, a firm-fixed price subcontract and a time-and-materials subcontract.  Supervisory hours were charged to the time-and-materials subcontract that should have already been included under the separate, firm-fixed-price subcontract.  Along with taking corrective action once the conduct was revealed and repaying the overcharges, FME submitted a disclosure to the Department of Defense Office of Inspector General under the Contractor Business Ethics Compliance Program and Disclosure Rule, also known as the Federal Acquisition Regulations Mandatory Disclosure Rule.  FME has now agreed to pay an additional $142,500 to settle alleged False Claims Act violations resulting from the disclosed conduct.

The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia, Naval Criminal Investigative Service, and the Defense Criminal Investigative Service with assistance from the Defense Contract Audit Agency.

The matter was investigated by Assistant U.S. Attorney Clare P. Wuerker.  The civil claims settled by this False Claims Act agreement are allegations only; there has been no determination of civil liability.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.

Updated August 25, 2016