A Utah-based military equipment manufacturer agreed to pay $21.8 million to settle false claim charges levied by the Department of Justice (DOJ) regarding double-billing the Department of Defense (DOD) for certain parts.

L3 Technologies knowingly billed the DOD twice for nuts, bolts, and other common parts in dozens of contracts between 2008 and 2011, the DOJ said in a settlement agreement, filed Monday in U.S. District Court for the District of Utah.

In conjunction, the DOJ agreed to pay nearly $8 million to settle a lawsuit filed by L3 against the agency over breach of contract. The lawsuit alleged that in “an effort to prevent L3 from continuing to double-charge for common-stock items, the [DOD] improperly prohibited L3 from charging certain other costs,” the DOJ said.

The nuts and bolts were included with recording equipment and a compact video receiver the military used to provide real-time video and other data from battlefields.

Typically, such common parts are not billed as items in DOD contracts; instead, their cost is added through a “material additive factor,” which is folded into the total price, the settlement explained.

L3 billed the DOD through a material additive factor for the nuts and bolts, and then the company also billed the agency for them as individual parts, the DOJ alleged. By billing the DOD individually for stock parts, thus charging the agency twice, the company violated the False Claims Act, the DOJ alleged.

“Government contractors must ensure that they provide the goods or services that they promised at the proper price,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the DOJ’s Civil Division, in a press release. “Today’s settlement demonstrates our commitment to pursue those who knowingly overcharge the American taxpayers.”

Company response: L3 became L3Harris following a 2019 merger.

“L3Harris is pleased to have been able to amicably resolve the two matters referenced in the DOJ’s announcement,” a company spokesperson said in an emailed statement. “These matters … have been resolved without any admission of fault or liability by either party. We remain steadfast in our commitment to the integrity of the government procurement process and proper pricing.”

Adrianne Appel writes regulatory news, policy, and trends for Compliance Week. She previously reported about policy developments for Bloomberg Law and Bloomberg Government.

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