Sikorsky Support Services / Derco Aerospace — Navy Procurement Overcharges
Defense Contractors Pay $70 Million for Overcharging Navy on Spare Parts
Source: U.S. Department of Justice
TL;DR: Defense Contractors Pay $70 Million for Overcharging Navy on Spare Parts This case resulted in a $70 Million resolution and demonstrates the impact of whistleblower protections in recovering funds from fraud.
Summary
Sikorsky Support Services Inc. and Derco Aerospace Inc. agreed to pay $70 million to resolve DOJ allegations that they overcharged the Navy for spare parts and materials used to maintain Navy trainer aircraft. DOJ alleged the companies entered into an improper cost-plus-percentage-of-cost subcontract under which Derco sold parts to Sikorsky at cost plus a 32% markup, and that Sikorsky then submitted cost vouchers to the Navy without disclosing the illegal CPPC arrangement—rendering the vouchers false under the government's theory. DOJ also noted the matter arose from a qui tam lawsuit in which the United States intervened.
Our Take
Overcharge cases often start with people who handle pricing, vouchers, and subcontract structures—especially when affiliates are contracting with affiliates. The most valuable internal evidence is contractual and financial: the subcontract terms, pricing formulas, disclosure discussions, and cost-voucher support showing how markups were calculated and presented to the government. If you've seen "self-dealing" arrangements justified as business-as-usual, document how the structure worked and whether anyone raised the CPPC risk.
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Notice
The summaries above are based on publicly available information released by the U.S. Department of Justice and are provided for informational purposes only. They do not constitute legal advice, investigative findings, or allegations by Disclosure Strategy. Our commentary reflects general, experience-based observations about how False Claims Act matters commonly arise and is not a statement about any party's liability.