Whistleblower alleges Navistar Defense 'wildly inflated' MRAP component prices

By Marjorie Censer / December 4, 2019 at 1:57 PM

(Editor's Note: This story has been updated with a Justice Department statement.)

A newly unsealed court filing by a former Navistar Defense employee alleges the company undertook a "pervasive and long-running scheme to charge the U.S. Government wildly inflated prices for components of Mine-Resistant, Ambush-Protected vehicles."

The court filing alleges the company presented forged invoices and fabricated catalogue prices as supporting documentation for the commercial prices of components from the engines to the suspension systems.

"The forged and fraudulent documents presented to the Government served to mask that these components either had no commercial sales history at all, or when they did, that the true commercial price was as little as half the price that Defendants charged the Government," the complaint reads.

The whistleblower is Duquoin Burgess, identified in the court filing as contracts manager at Navistar Defense from 2009 to 2012 and director of contracts in 2012.

Additionally, the complaint alleges that Navistar Defense leadership, including its president and vice president, were aware of the fraud.

In a statement released today, the Justice Department said it has intervened in the suit. It said in 2009, the Marine Corps sought to upgrade MRAP vehicles purchased from Navistar Defense with a modified independent suspension system.

"During the course of negotiations for the ISS, the Marine Corps asked Navistar Defense to provide evidence of prior commercial sales of the various parts that made up the ISS to ensure that the prices paid were fair and reasonable," the Justice Department says. "The lawsuit alleges that Navistar Defense knowingly submitted fraudulent invoices that falsely purported to show prior, comparable commercial sales to conceal the inflated prices it was charging the Marine Corps. In reality, the lawsuit alleges, those sales never occurred."

The government, in a court document filed in September, said it would intervene in the part of the case that "alleges Navistar Defense inflated the government price for the Independent Suspension System, in part, through the submission of fraudulent sales history."

However, the government said it would not intervene in the part that alleges the government did not receive preferred customer volume discounts for Navistar Defense vehicles.

In the same filing, the government noted the "United States and Navistar are currently exploring settlement, which provides the possibility of avoiding litigation and conserving judicial resources."

In a statement, a Navistar spokeswoman said the company does "not believe the relator's unsealed complaint is well founded in fact or law. The company intends to defend itself as necessary and appropriate."