Composite Engineering Settles False Claims for $2M

Composite Engineering Inc., a subsidiary of Kratos Defense & Security Solutions, has agreed to pay $2 million to settle allegations that the company knowingly submitted or caused the submission of false claims to the U.S. Air Force, the U.S. Attorney’s Office for the Eastern District of California announced on Monday.

The contract at issue was a firm fixed-price contract modification for the procurement of spare parts to meet the requirements of the Air Force’s Subscale Aerial Target (AFSAT) program. The United States alleges that, in submitting its contract proposal, CEI knowingly or recklessly included significantly overstated materials costs and labor hours, resulting in a windfall to CEI. The False Claims Act allows the government to recover damages and penalties for the presentation of false claims for payment to the United States. By basing its contract price with the government on overstated materials and labor costs, CEI caused the United States to pay artificially inflated prices.

The whistleblower provision of the False Claims Act allows private parties with knowledge of fraud against the government to sue on the government’s behalf and share in the recovery. Had there been a whistleblower in this case, they would have been entitled to up to 30 percent of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.