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News | June 9, 2021

$50 million settlement reached with Navistar Defense LLC

By DCAA Staff Writer

DCAA auditors Kari Duguid, Colin Feeney, Marc Ramminger, Thomas Hagen, and Supervisory Auditor Joseph Fleming assisted in a seven-year investigation that resulted in a $50 million settlement.

On May 27, 2021, Navistar Defense LLC (Navistar), an Illinois based manufacturer of military vehicles and subsidiary of Navistar International LLC, agreed to pay $50 million to resolve allegations that it fraudulently induced the U.S. Marine Corps to enter into a contract modification at inflated prices for a suspension system for armored vehicles known as Mine-Resistant Ambush Protected vehicles.

During negotiations for the modification, Navistar was asked to provide sales information on the contract parts to assess the reasonableness of Navistar’s proposed prices. The United States alleged that Navistar knowingly created fraudulent commercial sales invoices and submitted those invoices to the government to justify the company’s prices. The sales reflected in the commercial sales invoices never occurred. The government relied on the fraudulent sales invoices in agreeing to Navistar’s inflated prices.

“It is always disappointing to see a contractor not fulfill their obligations in an open and fair manner,” said Director Anita Bales of the Defense Contract Audit Agency. “We are proud to have partnered with the investigative team in providing forensic audit expertise to bring this contractor to justice. We consider it an honor to be part of a team that helps protect our warfighters.”

DCAA’s auditors reviewed contracts, identified relevant FAR criteria, assisted in subpoena preparation, and identified specific contracts, parts, and number of units impacted. Based on their review of sales data and purchase order history, the auditors assisted in the identification of inflated pricing and false claims, calculating several damage models for the US Attorneys General.

Read the Department of Justice Press release here.