L3 Technologies Settles for $62 Million Over False Claims in Defense Contracts

Key Takeaways

• $62 Million Settlement: L3 Technologies Inc. has agreed to pay $62 million to resolve allegations of submitting false cost data for communications equipment sold to U.S. Department of Defense agencies between 2006 and 2014.
• Violation of the Truth in Negotiations Act: The settlement addresses allegations that L3 failed to disclose accurate and complete cost data, violating the Truth in Negotiations Act (TINA), which mandates transparency in government pricing agreements.
• Implications for Government Contracting: This case underscores the importance of honest, complete, and up-to-date information in government contracting to ensure fair pricing and prevent fraud.
• Law Enforcement Involvement: The settlement follows investigations by the Air Force Office of Special Investigations (OSI) and the Army Criminal Investigation Division (CID), highlighting the commitment to safeguarding public funds and national security.

Deep Dive

L3 Technologies, a big player in military communications systems, has agreed to pay $62 million to settle allegations involving false cost and pricing data submitted in defense contracts. The case highlights the importance of transparency in government contracts, especially when taxpayer dollars are on the line.

The accusations center around L3's division, Communications Systems West, which allegedly failed to disclose accurate and up-to-date cost information for their communications equipment, including their Remote Operations Video Enhanced Receivers (ROVER), Vortex Transceivers, and Soldier Intelligence, Surveillance, and Reconnaissance (SIR) receivers. These are critical pieces of technology that assist in military operations, allowing unmanned vehicles to collect and transmit data from the battlefield.

Between 2006 and 2014, L3 provided these systems to the U.S. Department of Defense under sole-source, fixed-price contracts. The company was also a subcontractor for other prime contractors in the unmanned vehicle space. However, it’s alleged that L3 knowingly failed to disclose complete and accurate cost data related to the production of these products, violating the Truth in Negotiations Act (TINA). The law requires that contractors submit the most accurate and current cost data at the time of price negotiations to ensure taxpayers aren’t overcharged.

Acting Assistant Attorney General Yaakov M. Roth from the Justice Department’s Civil Division commented on the settlement, saying, “We won’t stand by while federal contractors mislead the government during negotiations. It’s about ensuring that taxpayers are paying fair prices for defense systems that keep our nation secure.”

Federal prosecutors are clearly sending a message here: contractors who fail to play by the rules will be held accountable. Acting U.S. Attorney Felice John Viti added, “The government is not a blank check. Companies that take advantage of our defense resources will face the consequences.”

The settlement also underscores the hard work of law enforcement agencies like the Air Force Office of Special Investigations (OSI) and the Army Criminal Investigation Division (CID), who were integral in uncovering the false claims. Special Agent Jeffery T.E. Herrin from OSI stated, “This settlement is a reminder that defective pricing on critical defense systems erodes public trust. We’ll continue to ensure that defense contractors play by the book.”

Olga Morales, Special Agent in Charge at Army CID, further emphasized the importance of accountability: “We have a duty to protect public funds. Investigating fraud in defense contracts is essential to maintaining the trust of the American people.”

While L3 Technologies did not admit liability as part of the settlement, this resolution brings closure to the case and sends a message about the expectations for transparency in government contracting. As the government continues to crack down on fraudulent activities, it’s more important than ever to ensure that cost data is disclosed truthfully and fully. After all, when it comes to defense, our nation’s security and the trust of the public depend on it.

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