Airbus Subsidiary Pays Over $1 Million to Settle Cost Accounting Fraud Allegations

by Ben Vernia | October 25th, 2021

On October 4, the Department of Justice announced that Airbus U.S. Space & Defense, Inc., had agreed to pay over $1 million to settle a whistleblower’s allegations that the company mischarged federal agencies in government contracts. According to DOJ’s press release:

The settlement resolves allegations that from January 2016 through January 2017, ADSI submitted proposals for contracts that included an unapproved cost rate to which ADSI was not entitled. ADSI referred to this as the “Orlando Factor.” The government further alleged that on certain contracts, during 2013 through 2020, ADSI charged federal government agencies an additional fee from its affiliates on top of ADSI’s own fee for parts ADSI acquired from its affiliates, but did not accurately disclose this affiliate fee to the government. Finally, the government alleged that ADSI charged a third-party contractor an excessive monthly storage fee to store a radar system purchased to support a contract with the U.S. Navy. The contractor passed along the full storage fees charged by ADSI to the U.S. Navy. However, ADSI did not disclose that they paid only a portion of those storage fees to store the radar system.

The Vernia Law Firm represented the whistleblower in the case, Maros Kmec, a former employee of the Airbus subsidiary. Mr. Kmec received $157,220 of the False Claims Act settlement (a 19% relator’s share of the portion of the settlement which addressed Mr. Kmec’s qui tam allegations).

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