Word broke that the United States Department of Justice is supposedly launching a criminal investigation against United Technologies Corp’s (UTC) Sikorsky division for allegedly overbilling the Navy for a contract almost a decade ago. Back in 2006, Sikorsky Support Services (SSSI) won a navy contract in which they were to support T-34 and T-44 fixed wing turboprop training aircraft and as a part of this contract, SSSI subcontracted another Sikorsky unit Derco Aerospace to procure spare parts.
According to the US Government, Sikorsky overcharged the navy from 2006 to 2012. They said the reasoning for this was because Derco added profit and overhead costs to the price of the spare parts that Derco procured and then sold to SSSI. This is in violation of the False Claims Act. When UTC was asked to release their quarterly security findings as well as documents related to the contract, the filing revealed that the department is seeking up to $148m in damages and fines from the company.
According to a statement release by a UTC spokesperson, Sikorsky and its subsidiaries intend to cooperate fully in the investigation, which was discussed as part of the transaction with Lockheed Martin and is not expected to affect the close.
In recent news, UTC has reached an agreement with Lockheed Martin to sell them their Sikorsky Aircraft business for upwards of USD$9 billion. On July 13, Lockheed was made aware if the investigation and when they was asked to comment, they released a statement saying, "We were made aware of the issue during our due diligence and negotiation process and we will continue to monitor the issue in close collaboration with UTC."
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