U.S. v. United Technologies Corp., 5:92-CV-375 (EBB).

• Decision Date: 07 June 1999
• Docket Number: No. 5:92-CV-375 (EBB).,5:92-CV-375 (EBB).
• Citation: 51 F.Supp.2d 167
• Court: U.S. District Court — District of Connecticut
• Parties: UNITED STATES of America, Plaintiff, v. UNITED TECHNOLOGIES, CORP., SIKORSKY AIRCRAFT DIVISION, Defendant.

51 F.Supp.2d 167

UNITED STATES of America, Plaintiff, v. UNITED TECHNOLOGIES, CORP., SIKORSKY AIRCRAFT DIVISION, Defendant.

No. 5:92-CV-375 (EBB).

United States District Court, D. Connecticut.

June 7, 1999.

COPYRIGHT MATERIAL OMITTED

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Alan M. Soloway, Asst. U.S. Attorney, U.S. Attorney's Office, New Haven, CT, Russell B. Kinner, U.S. Department of Justice, Washington, D.C., for plaintiff.

James T. Cowdery, Steven David Ecker, Cowdery & Ecker, Hartford, CT, Richard L. Beizer, Clinton L. Gardiner, Jeffrey E. Greene, Elizabeth L. Pearl, Crowell & Moring, Washington, D.C., for defendant.

OPINION

ELLEN B. BURNS, Senior District Judge.

Plaintiff, United States of America, has brought this action against Defendant, United Technologies Corporation, Sikorsky Aircraft Division ("Sikorsky"), alleging violations of the False Claims Act, 31 U.S.C. § 3729 ("FCA"), and the Truth-in-Negotiations Act, 10 U.S.C. § 2306a ("TINA"). The government also seeks damages under the common law causes of action of payment by mistake and unjust enrichment.

In its amended complaint, the government alleges that Sikorsky submitted false cost or pricing data to the Navy during negotiations and provided a false statement in the company's July 25, 1985 Certificate of Current Cost or Pricing Data that accurate, current and complete cost or pricing data had been provided to the Navy through the agreement date of July 9, 1985.

In accordance with Federal Rule of Civil Procedure 52(a), the Court now enters the following findings of fact and conclusions of law.

I. FINDINGS OF FACT

A. Background

1. On or about January 13, 1984, the Navy awarded contract N00019-83-C-0364 ("Contract") to Sikorsky. (EX. 501.) The purpose of the Contract was to extend the service life of the Navy's SH-3 Sea King helicopter. This effort became known as the Main Gear Box Improvement Program ("MGBIP").

2. The Contract references, and is governed by, clauses in the Defense Acquisition Regulation ("DAR"), including DAR § 7-104.29(a) (January, 1970), Price Reduction For Defective Cost or Pricing Data. (EX. 501 at 8-12.)

3. Modification P00001 to the Contract was executed by the Navy on March 13, 1984. Among other things, Modification P00001 required Sikorsky to furnish main gear box improvement kits for aircraft, for training and for spares. Because there were several versions of the Sea King helicopter in service, the modification kits had to be customized in order to upgrade the various model's main gear boxes. The price for P00001 was undefinitized, meaning that it was to be negotiated at a future date.

4. On or about September 2, 1984, the Navy executed a second undefinitized modification to the Contract, Modification P00004. Inter alia, Modification P00004 changed Contract Line Item Number ("CLIN") 0028 to increase the quantity of main gear box improvement kits for the H-3 version of the Sea King helicopter from 62 to 80, and directed delivery of quantities of kits for spares.

5. On or about May 22, 1985, the Navy executed another undefinitized modification, P00008, which, inter alia, altered the quantities of kits needed under the Main Gear Box Improvement Program ("MGBIP").

6. The total price for the main gear box improvement kits and interim spares purchased through Modifications P00001, P00004 and P00008 was definitized in Modification P00013. Modification P00013 was signed by Sikorsky on October 9, 1985, and by the Navy on January 17, 1986. (EX. 26.) Modification P00013 was entered into on January 17, 1986. The issuance of Modification P00013 was preceded by Sikorsky's submittal of price proposals and cost information in support of those proposals, and by lengthy negotiations between Sikorsky and the Navy. With respect to the kits and interim spares, those negotiations concluded on July 9, 1985.

B. Sikorsky's proposals and submissions

7. On or about May 14, 1984, Sikorsky submitted to the Navy proposal number SPB 84-N3247 to definitize P00001. That proposal included amounts for FY 1984 main gear box improvement kits and for interim spares. Sikorsky submitted with the proposal a DD Form 633, a Contract Pricing Proposal cover sheet. (EX. 73.)

8. On or about May 17, 1984, at the Navy's request, Sikorsky submitted another proposal, SPB 84-N3248. This proposal included amounts for main gear box improvement kits and interim spares for FY 1985 and FY 1986 and also included a DD 633. (EX. 74.)

9. Sikorsky did not submit with its proposals a consolidated, priced bill of materials listing, by part number, all of the components required for the contract. At the time of these negotiations, Sikorsky's computer system did not accommodate the creation of such consolidated bills of materials. Sometime in late 1984, Robert Yates, the Navy's primary negotiator on the MGBIP, learned of this limitation in Sikorsky's computer system. (TR. 1852.) Sikorsky provided to Yates handwritten bills of materials for each of the subkits. (TR. 1822; EX. 510.)

10. On July 18, 1984, Sikorsky submitted to the Navy a seven-page, handwritten "Unique Parts List" which gave for each of the parts listed a part number, description, quantity, unit price and total price. (TR. 927; EX. 512.)

11. On August 16, 1984, representatives of the Navy and Sikorsky met to discuss the Navy's concern regarding the proposed prices Sikorsky had furnished with its May, 1984, proposals for subcontracted items on the MGBIP. As a result of that meeting, Sikorsky was to provide, on hard copy and diskette, the price history for all items with unit costs over $100. (EX. 101.)

12. On October 11, 1984, the Defense Contract Audit Agency ("DCAA") issued Audit Report No. 2661-4B210204, discussing the findings from a pre-award assist audit of Sikorsky's proposals. (EX. 511.) In performing the review, DCAA examined Sikorsky's handwritten bills of materials for the subkits. In the report, DCAA recommended "that the contractor be required to resubmit its proposed material costs for our review prior to contract negotiations." (EX. 511 at 11.)

13. Sikorsky employee Robert Madden was the primary negotiator on behalf of Sikorsky for the definitization of the kits and interim spares portion of the MGBIP. Stephen Kiesel, another Sikorsky employee, assisted Madden in the negotiation process.

14. In keeping with its then current practice, Sikorsky assigned a person in the Pricing, Targeting and Termination Liability unit of the Purchasing Department to act as a liaison between that department and Sikorsky's government contract negotiators. Dennis Buccilli was assigned to support the Sikorsky negotiators. His job was to gather and organize information from the Purchasing Department for Sikorsky to use and to pass on to the government. (TR. 381-82, 388-90, 404, 481-82.)

15. As part of his duties, Buccilli would solicit buyers, who were not typically informed when negotiations were taking place with the government (TR. 185), to obtain the most current pricing information for incorporation into Purchasing Updates. Buccilli would gather this information in various ways: (1) by delivering lists of parts specific to buyers and purchasing agents of each buying group for updating, (2) by checking the Sikorsky computer system which displayed information regarding purchase orders ("PRISM"), and (3) sometimes by speaking with buyers in person. (TR. 481-82, 490-91, 546, 583.)

16. Upon receipt of this information, Buccilli incorporated it into a Purchasing Update, which he then forwarded to Sikorsky's negotiators. (TR. 476-77, 481, 486-87.) During the final stages of the negotiations, Buccilli highlighted changes from the previous version. (TR. 592, 1418, 1482-83, 1974.)

17. On or about January 3, 1985, Sikorsky delivered a Purchasing Update, dated January 2, 1985, to the Navy. (EXs. 95; 522.)

18. On or about January 22, 1985, Sikorsky provided the Navy with a "Program Update," which set forth proposed pricing for the entire MGBIP as then contemplated, except for the warranty and the interim spares. (EX. 543.)

19. On or about April 23, 1985, Sikorsky submitted to the Navy a second comprehensive Program Update dated April 20, 1985, ("April 20 Program Update") covering all aspects of the MGBIP, except for warranty. (TR.1945-46.) This update also covered the interim spares. Regarding program material costs, this Program Update included Shop Fabricated Spares Cost Worksheets of various subkit configurations and listings maintained on a personal computer spreadsheet of the parts for certain other subkits to be purchased by the Navy. This Program Update also contained listings of interim spares maintained on a personal computer. These worksheets and listings were essentially priced bills of materials for each of the subkits and for the interim spares the Navy was considering. The April 20 Program Update also included material cost summary pages for each of the fiscal years subject to the negotiations. These summary pages contained information regarding the quantity of each of the subkits that the Navy was considering buying for each of the three fiscal years, 1984, 1985 and 1986. (EX. 6.)

20. Yates understood that, in order to determine Contract quantities of a particular part by using the April 20 Program Update, one would first look to the bills of materials for an individual subkit to get a per-subkit quantity and then look to the material summary pages to determine how many of that type of subkit were being purchased. Then the two numbers would be multiplied together to determine the total for the part. (TR. 1853-55.)

21. On or about May 6, 1985, Sikorsky delivered to the Navy a Purchasing Update. (EX. 98.)

22. On or about May 15, 1985, Sikorsky delivered to the Navy another Purchasing Update. (EX. 99A.)

23. On or about June 26, 1985, Sikorsky delivered to the Navy a Commitment Report for special project codes 3F and DG dated June 19, 1985. (EXs.110, 540.)

24. On or about June 28, 1985, Sikorsky...