IAP Worldwide Services, Incorporated, a company based in Delaware that provides logistics and technical services, has agreed to pay $810,821.65 to settle allegations of violating the False Claims Act. The settlement was announced by Kelly O. Hayes, U.S. Attorney for the District of Maryland, along with Special Agent in Charge Christopher Dillard from the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS) – Mid-Atlantic Field Office and Special Agent in Charge Greg Gross from the Naval Criminal Investigative Service (NCIS) – Economic Crimes Field Office.
According to the U.S. Attorney’s Office, IAP allegedly submitted false claims for payment involving non-conforming goods supplied to the United States Navy. The case involves a contract awarded on November 4, 2015 by the U.S. Navy’s Naval Air Systems Command at Patuxent River, Maryland. Under this contract, IAP was responsible for maintaining and supporting a military aircraft—the Boeing E-6B—including repair and replacement of parts that were required to meet Federal Aviation Administration or Original Equipment Manufacturer certification standards.
Investigators allege that between January 1, 2018 and October 26, 2019, IAP knowingly provided and billed for BACB30LU bolts used in the E-6B aircraft that did not meet these requirements. These bolts were reportedly made from noncompliant metal stock; their head and shank were machined instead of forged; their head fillet was not cold worked; and their threads were machined rather than rolled—factors that could reduce their lifespan.
The False Claims Act is described as “the government’s primary civil tool to combat fraud and abuse in federal programs and procurement,” having been enacted during the Civil War.
“Companies that do business with the United States are expected to meet exacting standards, especially when the safety and readiness of our service members are at stake,” Hayes said. “As this settlement makes clear, supplying materials that do not conform to required design specifications and quality standards – while seeking payment as if they did – is unacceptable. This office will continue to use the False Claims Act to hold contractors accountable and to protect the integrity of federal procurement and the interests of the United States.”
Dillard commented: “Contract fraud is not a victimless crime; it is a direct threat to our national security and the safety of our warfighters. DCIS along with the Department of Justice and our investigative partners will continue to utilize all available tools, including civil settlements, to safeguard the resources of the Department of Defense and ensure that our men and women in uniform receive the quality products and services they deserve.”
Gross added: “Ensuring the integrity of the defense supply chain is essential to protecting our most sensitive national security assets and the safety of the personnel who rely on them. This investigation underscores the serious risk posed when contractors compromise the quality of equipment used on Navy platforms. NCIS, in close coordination with our partners, remains committed to holding those individuals accountable and safeguarding both operational readiness and the lives of those who serve.”
U.S. Attorney Hayes commended DCIS Special Agent Samuel Peyton as well as NCIS agents for their investigative work on this matter. Assistant U.S. Attorney Tarra DeShields handled this case.
Officials noted that these claims are allegations only; there has been no determination of liability.
More information about reporting fraud or learning about priorities from Maryland’s U.S. Attorney’s Office can be found at https://www.justice.gov/usao-md/ or https://www.justice.gov/usao-md/community-outreach.
