Austal USA LLC, False Claims Act Violations, Alabama 2023

Austal USA LLC, a Mobile, Alabama-based company, has agreed to pay 811,259 to resolve allegations that it violated the False Claims Act by knowingly supplying valves that did not meet military specifications. The company manufactures numerous ships for the United States, including the Independence Class Littoral Combat Ship (LCS).

The United States’ settlement alleges that, under a 2011 Navy contract, Austal invoiced for military grade high performance butterfly valves and triple offset butterfly valves it installed on five LCS hulls when it knew the valves had not met the testing requirements to be deemed military grade. ‘It is essential to the safety and operational readiness of our Navy fleet that contractors comply with applicable military specifications,’ said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.

‘We cannot and will not tolerate companies who cut corners and misrepresent the products they provide to our military,’ said U.S. Attorney Todd W. Gee for the Southern District of Mississippi. ‘This office is committed to protecting taxpayer dollars and will pursue fraud wherever we find it.’

Supplying nonconforming parts to the military compromises military systems and potentially endangers the lives of U.S servicemembers, said Special Agent in Charge Darrin K. Jones of DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office. ‘DCIS and our law enforcement partners are fully committed to ensure the safety of our military personnel and protecting the integrity of the DoD supply chain.’

Product substitution risks degrading warfighter capability and wastes U.S. taxpayer dollars, said Special Agent in Charge Greg Gross of the Navy Criminal Investigative Service (NCIS) Economic Crimes Field Office. ‘I want to thank our investigative partners for their collaboration in working with NCIS to protect the integrity of the Department of the Navy procurement process.’

DCIS, NCIS and the Defense Contract Audit Agency’s Office of Investigative Support investigated the case. Senior Trial Counsel Art J. Coulter of the Civil Division’s Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorney Deidre Lamppin Colson for the Southern District of Mississippi handled the case.

The claims resolved by the settlements are allegations only. There has been no determination of liability. Austal USA LLC’s settlement of 811,259 is a stark reminder that companies who engage in false claims will be held accountable for their actions.

Related Federal Cases