ArmorSource LLC, False Claims Act, Delaware 2006

Delaware-based Defense Contractor Agrees to Pay $3 Million to Settle False Claims Act Allegations.

ArmorSource LLC, a Delaware Limited Liability Company headquartered in Hebron, Ohio, has agreed to pay $3 million to resolve False Claims Act allegations in connection with a contract to provide combat helmets to the U.S. Army, the government announced today.

According to the allegations, from 2006 to 2009, ArmorSource delivered Advanced Combat Helmets (ACH) to the Army that were manufactured and tested using methods that did not conform to contract requirements and failed to meet contract performance standards. The ACH helmets are made of Kevlar, an armored material, and are worn to provide ballistic protection for soldiers.

“The U.S. government relies on contractors to manufacture equipment that is critical to the safety of our men and women in uniform, and equipment that fails to meet performance standards not only cheats taxpayers, but can put lives at risk,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

The settlement was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Texas. The investigation was conducted by the Department of Justice Office of the Inspector General, the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service, and the U.S. Army Criminal Investigation Command, Major Procurement Fraud Unit.

Whistleblowers Melessa Ponzio and Sharon Clubb, FPI employees, filed the lawsuit under the qui tam or whistleblower provisions of the False Claims Act. They will receive $450,000.

ArmorSource subcontracted the manufacturing to Federal Prison Industries, Inc., which operates under the trade name UNICOR. The company delivered ACH helmets that failed ballistic safety tests, leading to a recall in May 2010.

“Today’s settlement in this important case is a reminder to all government contractors that they must deliver on their promises, especially when the safety and security of our troops is on the line,” said Special Agent in Charge Monte A. Cason of the Department of Justice Office of the Inspector General’s Dallas Field Office.

Acknowledging the seriousness of the allegations, Director Frank Robey of the U.S. Army Criminal Investigation Commands Major Procurement stated, “Not conforming to contract requirements, failing to meet performance standards, and failing to pass ballistic safety tests for the helmets that protect the very heads and lives of our young men and women who serve this nation is incredibly unconscionable.”

Affected: U.S. Army, U.S. taxpayers, and the safety of military personnel worldwide.

Defendant: ArmorSource LLC (real full name or legal entity name)

Criminal Charges: False Claims Act Allegations

City and State: Hebron, Ohio; Delaware

Exact Date: 2006-2009 (alleged misconduct period)

Sentence or Outcome: $3 million settlement, $450,000 to whistleblowers

Dollar Amounts: $3 million, $450,000

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