August 18, 2008 / 8:30 PM / 12 years ago

General Dynamics settles Navy fraud case at $4 mln

NEW YORK (Reuters) - General Dynamics Corp has agreed to settle charges that it overbilled the U.S. government for Navy plane and submarine parts by paying $4 million to the government, the U.S. Department of Justice said on Monday.

General Dynamics unit Armament and Technical Products Inc committed civil fraud by billing the government for faulty or untested parts between September 2001 and August 2003, U.S. attorneys alleged.

Both firms denied the government’s allegations but opted to settle the case rather than litigate.

“The activity that resulted in this lawsuit is alleged to have begun in 2001, pre-dating General Dynamics’s acquisition of the operations in June 2002,” General Dynamics said in a statement.

“Shortly after we completed the acquisition, we began implementing steps to ensure that the company was complying with customer testing procedures and fulfilling customer requirements. We ultimately closed the facility in 2005,” the statement said.

According to federal prosecutors, the General Dynamics unit defectively manufactured or failed to test parts used in various Navy aircraft, including the C-141 transport plane, and failed to properly manufacture or test components made for Los Angeles and Trident classes of submarines.

General Dynamics is the Pentagon’s fourth-largest supplier by contract value and makes a range of tanks, warships and military gear.

Reporting by Bill Rigby; Editing by Daniel Trotta

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