Central NY Military Contractor Pays $150,460 to Resolve False Claims Act Exposure

SYRACUSE, NEW YORK – JGB Enterprises, Inc. (JGB) paid $150,460 today to resolve claims that it improperly billed the United States Army for repair kits for the Army’s tank recovery vehicle because the kits included parts from unapproved sources, announced Acting United States Attorney Grant C. Jaquith.

JGB had a firm-fixed price agreement with the government to provide engine overhaul kits for the Army’s Recovery Vehicle, M51/M74/M88 (the “Contract”).  The Contract contains a source-controlled provision.  That provision requires that certain parts be obtained from specified manufacturers who have approved quality-control plans concerning the manufacture of their parts.  

JGB obtained some source-controlled parts from third-party vendors.  In several instances, these parts were not adequately traceable back to an approved source and at least two of the parts delivered by JGB were inconsistent with required specifications.  For example, source-controlled bolts included within the kit delivered by JGB did not fit on the Army’s Recovery Vehicle, rendering a component of the kit unusable until replacements could be obtained. 

Acting United States Attorney Grant C. Jaquith said:  “Contractors for the government need to ensure that they turn square corners, an obligation that is especially important when they are providing goods or services used by our nation’s warfighters.  We will continue to utilize the False Claims Act where appropriate to hold contractors to account when they submit false claims to the government.  We do appreciate that JGB worked cooperatively to resolve this matter outside litigation and understand that it has implemented changes to help ensure that something like this does not occur going forward.”

“The settlement agreement announced today is the successful resolution of this joint investigation conducted by the Defense Criminal Investigative Service (DCIS), the U.S. Army Criminal Investigation Command and the U.S. Attorney’s Office, Northern District of New York,” stated Leigh-Alistair Barzey, Special Agent-in-Charge, DCIS Northeast Field Office.  “The integrity of the DoD supply chain is of vital importance to America’s national security and DCIS is committed to working with its law enforcement partners to ensure that individuals and companies do not profit by providing non-conforming products to the U.S. military.”

“This settlement further demonstrates the resolve of USACIDC’s Major Procurement Fraud Unit and our law enforcement partners to protect and defend the assets of the United States Army,” stated Special Agent in Charge L. Scott Moreland, of the U.S. Army Criminal Investigation Command’s Mid-Atlantic Fraud Field Office.

The investigation and settlement were the result of a coordinated effort among the United States Attorney’s Office for the Northern District of New York, the Defense Criminal Investigative Service, and the United States Army Criminal Investigation Command.  The United States was represented by Assistant U.S. Attorney Michael D. Gadarian.