Navy contractor pays nearly $10.9 million to settle defective steel allegations

by Ben Vernia | June 17th, 2020

On June 16, the Department of Justice announced that Missouri-based Bradken, Inc., a Navy contractor, had agreed to pay nearly $10.9 million and enter into a Deferred Prosecution Agreement to settle allegations that the company provided defective steel for use in Navy ships. According to DOJ’s press release:

The Department of Justice announced today that Bradken Inc. (Bradken) has paid $10,896,924 to resolve allegations that Bradken produced and sold substandard steel components for installation on U.S. Navy vessels.  The United States alleged that a Bradken employee knowingly falsified test results to conceal the fact that the components did not meet the Navy’s specifications.  

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Bradken, which operates a foundry in Tacoma, Washington, is a Delaware corporation with its principal place of business in Kansas City, Missouri, operating as a wholly owned subsidiary of Bradken Ltd. of Newcastle, Australia.  Since the 1980s, Bradken has produced steel parts used by other contractors to build vessels for the United States Navy.  The Navy’s contracts expressly required parts made of specified grades of high yield steel.

The settlement announced today resolves allegations that some of the steel Bradken produced did not conform to the Navy’s specifications.  The United States alleged that a former Bradken metallurgist altered the results of tests designed to ensure that the parts met the specifications for high yield steel, and Bradken’s internal controls were inadequate to identify the hundreds of falsified test results.  The United States further contended that Bradken invoiced shipbuilders for the steel parts as if they were made to the demanding military specification when they were not, causing the shipbuilders to invoice the Navy for defective parts.

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The case apparently arose from a government investigation, and not from a whistleblower’s qui tam complaint.

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