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U.S. sues Boeing for inflating contract price

By Phillips & Cohen LLP

The federal government filed a civil suit against Boeing, alleging that the company unlawfully inflated the price it charged the Air Force to manufacture the Towed Decoy System for the B-1 bomber.

The suit, filed in District Court in Los Angeles, contends that during contract negotiations Boeing failed to disclose that it would outsource the fabrication of most of the components of the parts that were to be used in the program.

Boeing?s own employees complained internally and warned their managers about the concealment, according to the complaint, but Boeing managers ignored the warnings and refused to tell the Air Force the truth. As a result, the suit alleges, Boeing inflated its contract price and consequently submitted 140 unlawfully inflated invoices to the Air Force, in violation of the False Claims Act. The lawsuit alleges that the Air Force paid $7.5 million more than it should have. Under the False Claims Act, the government may recover up to three times the amount of the loss, plus statutory penalties for each inflated invoice.

Full post as published by False Claims Act - Qui Tam on September 16, 2008 (boomark / email).