Jet Engine Maker Told to Pay US $473M

A federal judge ordered United Technologies Corp. Monday to pay the government $473 million plus interest for overbilling on jet engines for F-15 and F-16 fighter jets.

U.S. District Judge Thomas M. Rose wrote that "the government should not have paid the amounts that the government proved it paid as a direct result of United Technologies' fraud," in his 16-page order.

The case originated in 1999, when the government sued United Technologies, claiming that its Pratt & Whitney division overcharged the Air Force by more than $75 million though fraud from 1985 to 1990. The lawsuit was filed in Dayton because the F-15 and F-16 development programs were managed at Wright-Patterson Air Force Base.

Ian Race, a spokesman for Hartford, Conn.-based United Technologies, said the company would appeal.

"We strongly disagree with the court's opinion concerning the Fighter Engine Campaign from the 1980s," Race said in a statement.

From the early 1970s, Pratt & Whitney was the sole manufacturer and supplier of high-performance jet engines used in the two fighters. As Air Force officials became dissatisfied with costs, they sought to have the General Electric Company become an alternative supplier, according to court documents.

In 1982, the Air Force provided both companies with proposals for 2,000 engines and both companies received portions of the contract. But the government later claimed that Pratt & Whitney knowingly inflated its cost estimates in the contract, but government officials did not discover this until 1997.

At a bench trial in 2008, Rose found that Pratt & Whitney violated the federal False Claims Act, but also found that the government "suffered no actual damages in the years under review, and that the government was precluded from pursuing common law claims," according to Rose's order.

Both parties appealed to the U.S. Court of Appeals for the Sixth Circuit, which upheld Rose's ruling that the company had violated the False Claims Act, but found that he should have found actual damages. The appeals court returned the case to Rose, ordering him to "find and account for the fair market value of the engines the Air Force received when determining damages," according to Rose's order.

In his ruling on Monday, Rose awarded $109 million in common law damages plus annual interest. He also awarded more than $364 million, largely under False Claims Act authority that allows him to award triple damages.

A $335 million contract was granted to Pratt & Whitney in October 2012 by the Air Force Research Laboratory Aerospace Systems Directorate at Wright-Patterson to develop the next generation of advanced fighter aircraft engines.

Pratt & Whitney has powered the record-setting SR-71 Blackbird spy plane and the F-22 Raptor stealth fighter.

Its parent company, United Technologies, acquired Goodrich Corp. in July 2012. The Troy facility, which has just over 700 workers at its aircraft wheels and brakes division, is now part of UTC Aerospace Systems.

The company's shares gained 87 cents to $95.87 in morning New York Stock Exchange trading.

Show Full Article