The US Department of Justice (DoJ) has reportedly launched a criminal investigation against United Technologies Corp’s (UTC) Sikorsky for allegedly overbilling the US Navy for a contract.
In 2006, Sikorsky Support Services (SSSI) secured a navy contract to support T-34 and T-44 fixed-wing turboprop training aircraft.
As part of this contract, SSSI subcontracted another Sikorsky unit Derco Aerospace to procure spare parts.
The US Government alleges that the company overcharged the navy under this contract from 2006 to 2012.
According to the government, SSSI overbilled the navy on the contract because Derco added profit and overhead costs to the price of the spare parts that Derco procured and then sold to SSSI.
The DoJ stated the companies have violated the False Claims Act.
According to the quarterly securities filing of UTC, Sikorsky and its two subsidiaries were asked to produce documents related to the contract.
The filing revealed that the department is seeking up to $148m in damages and fines from the company.
UTC spokesman said: "Sikorsky and its subsidiaries intend to cooperate fully in the investigation, which was discussed as part of the transaction with Lockheed Martin and is not expected to affect the close."
Recently, UTC reached an agreement to sell Sikorsky Aircraft business to Lockheed Martin for $9bn.
Responding to the DoJ’s investigation, a statement from Lockheed read as: "We were made aware of the issue during our due diligence and negotiation process and we will continue to monitor the issue in close collaboration with UTC."