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Sikorsky agrees to $70 million settlement for fraud charges

Molly Ingram

Sikorsky Support Services Inc., a helicopter manufacturer headquartered in Stratford, Conn., agreed to pay the federal government $70 million in a settlement alongside Wisconsin-based Derco Aerospace Inc. because of claims that it knowingly overcharged the Navy for spare parts and other materials needed to repair and maintain the aircraft it already uses.

According to a release from the Department of Justice, Sikorsky and Derco, which are both owned by the same parent company, Lockheed Martin, entered into a type of contract that violates federal statute because it gives suppliers an incentive to drive up government costs — which is what the lawsuit argued the two companies were doing.

The release said Sikorsky was purchasing parts from Derco at the original cost plus an additional markup of 32%, and then submitting cost vouchers to the Navy for reimbursements. The lawsuit alleged that Sikorsky and Derco's failure to disclose those markup costs meant that both companies knowingly presented the Navy with false and fraudulent cost vouchers.

“Overinflation of parts and material costs for the repair and maintenance of aircraft affected naval air training and is a disservice to the American taxpayer,” said the Naval Criminal Investigative Service’s Greg Gross. “NCIS continues to safeguard the Department of the Navy’s warfighting efforts from economic crimes by upholding the integrity of the defense acquisition process.”

In response to WSHU's request for comment, a Lockheed Martin spokesperson said, "We are pleased that the settlement will bring this case to a conclusion and there is no finding of wrongdoing by Sikorsky or Derco Aerospace."

This story is developing ...

Eda Uzunlar (she/her) is a reporter for WSHU.