Ingalls to repay millions amid allegations of overcharging US government

(Photo source: Huntington Ingalls Industries)
(Photo source: Huntington Ingalls Industries)
Published: Aug. 15, 2017 at 2:24 PM CDT|Updated: Aug. 15, 2017 at 10:14 PM CDT
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PASCAGOULA, MS (WLOX) - Huntington Ingalls Industries will pay $9.2 million to the Department of Defense to settle a lawsuit alleging the company overbilled the U.S. Navy and Coast Guard for ships built in Pascagoula.

According to a news release from the Department of Justice, the alleged labor overcharges on several Navy and Coast Guard contracts date back to 2003. The news release says Ingalls billed the government for labor on certain contracts that that did not occur during those projects. The lawsuit also alleged Ingalls billed the Navy and Coast Guard for dive operations to support hull construction that never happened.

"Contractors that knowingly bill the government in violation of contract terms will face serious consequences," said Acting Assistant Attorney General Chad A. Readler of the Justice Department's Civil Division.  "This settlement demonstrates, once again, that we will not tolerate defense contractors who falsely charge the armed forces or any agency of the United States."

Multiple federal agencies conducted an investigation after Bryon Faulkner, a former Huntington Ingalls employee, raised the allegations in a lawsuit filed under the whistleblower provision in the False Claims Act.

Faulkner's attorney, Brad Pigott, said his client was a supervisor in Pascagoula who refused to participate in what he saw happening.

"He refused to commit fraud and join them. He put his job and his income on the line," Pigott explained. "He went to the government, as well as to Ingalls auditors."

The False Claims Act allows private individuals to sue for false claims on behalf of the government and share in any recovery money. Faulkner will receive $1.59 million as a result of the lawsuit he filed.

Pigott said whistleblowers are critical components in ensuring integrity in government.

"The value of whistle blowers is essential to the ability of federal agencies like the Navy, Coast Guard, or even agencies like Medicare or Medicaid to discover fraud, to prosecute fraud, and get the results of fraud back into the Treasury," Pigott said.

HII released this statement Tuesday morning:

The company informed the government of alleged misconduct by certain employees and fully cooperated with the government in investigating and reaching a resolution of the matter. The company has strengthened its compliance program to help ensure that no similar issues arise in the future.

A spokesman from the office of U.S. Sen. Thad Cochran said the senator "is confident in the oversight of the Defense Department, just as he's confident that shipbuilders in Pascagoula will continue to produce the high-quality ships required for our national defense" and "the senator is hopeful this agreement will help ensure that taxpayer dollars are spent responsibly and honestly."

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