The Department of Justice on Tuesday said that Boeing’s [BA] Insitu business unit has agreed to pay $25 million to settle allegations related to overcharging on Defense Department contracts for the supply and operation of unmanned aerial vehicles (UAVs).
The settlement involves seven contracts with the Navy and Special Operations Command between 2009 and 2017 for ScanEagle UAVs in which Insitu allegedly got its customers to award the contracts based on pricing that factored in new parts and materials on the systems but in fact were “less expensive recycled, refurbished, reconditioned, and/or reconfigured parts to perform the contracts,” the DoJ said.
The government’s lawsuit against Insitu was based on allegations by a former company executive, D.R. O’Hara, who will receive $4.6 million under the deal.
“Taxpayers deserve to get what they paid for, especially in significant no-bid military contracts,” Brian Moran, U.S. Attorney for the Western District of Washington, said in a statement. “Cases such as this one should be seen as a warning to defense contractors that false claims have no place in military purchasing.”
Insitu typically provides its ScanEagle systems, including launchers and payloads, as contractor-owned and operated services to many of its government customers. The systems are used by military units for intelligence, surveillance and reconnaissance operations.
Insitu said in a statement that the settlement with the government “resolves a complex case” for the pricing of the UAVs and that it “cooperated fully” with the investigation. “At all times, Insitu provided superior ISR services to the Navy and Special Operations Command, a fact the government does not dispute,” the company said. “Insitu continues to provide mission-ready systems and supports the nation’s warfighters by providing world-class service.”