U.S. sues Newport News
According to a Department of Justice statement, the shipbuilding company is alleged to have charged the Navy for more than $72 million of costs related to the design and development of the commercial tankers, which were passed through as overhead on major Navy shipbuilding contracts. The government's complaint states that Newport News Shipbuilding mischarged the costs even after being warned in 1995 by senior staff and by its outside consultant, Arthur Andersen & Company, that its charges to IR&D could make it subject to suit under the False Claims Act. Under the False Claims Act, the United States may recover three times the amount of its losses plus civil penalties.
"This suit illustrates the determination of the United States to recover funds inappropriately billed on defense contracts," said Robert D. McCallum Jr., Assistant Attorney General for the Department's Civil Division.
The investigation of Newport News Shipbuilding's cost mischarging was conducted by agents from the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and auditors from the Defense Contract Audit Agency.
The suit, which was filed in federal court in Alexandria, Virginia, is entitled U.S. v Newport News Shipbuilding, Inc., Civil No. 1:03-CV-142.