ATK agrees to pay $36.9M for faulty flares

Apr 23 2012 - 9:24pm

PROMONTORY -- ATK Launch Systems Inc. has agreed to a $36.9 million settlement with the federal government to resolve a whistleblower's complaint that it sold dangerous and defective illumination flares made at its Promontory facility to the Army and Air Force, the U.S. Department of Justice announced Monday.

The government contended that from 2000 to 2006, ATK delivered LUU-2 and LUU-19 illuminating paraflares to the U.S. Department of Defense.

The flares, which burn in excess of 3,000 degrees Fahrenheit for more than five minutes, are used for nighttime combat, covert and search and rescue operations and have been used extensively by U.S. forces in Iraq and Afghanistan, the Department of Justice said in a prepared statement.

The government alleged that the flares delivered by ATK were incapable of withstanding a 10-foot drop test without exploding or igniting, as required by specifications, and that ATK was aware of this when it submitted claims for payment.

ATK has agreed to pay the United States $21 million in cash and provide necessary in-kind services worth $15,967,160 to fix the 76,000 unsafe paraflares remaining in the government's inventory.

The settlement resolves a False Claims Act suit filed in the U.S. District Court for the District of Utah.

George Torres, a spokesman for ATK, said the whistleblower complaint was filed in 2001 and that the flares were manufactured at the Promontory facility then operated by ATK's predecessor firm, Thiokol.

"We have decided its in the best interest of all to settle (the complaint) and put it behind us," he said in a phone interview Monday.

ATK purchased Thiokol in 2003, Torres said.

The lawsuit was initially filed by an ATK employee under federal whistleblower provisions of the False Claims Act.

The act entitles the whistleblower to bring lawsuits on behalf of the government to receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

The Department of Justice did not identify the whistleblower or detail how much of the settlement the individual will receive.

Stuart F. Delery, acting assistant attorney general for the Department of Justice's Civil Division, said in a statement that the settlement with ATK is significant.

"Our men and women in combat deserve equipment that meets critical safety and performance requirements," he said. "This case demonstrates that the Department of Justice will pursue cases where contractors knowingly provide defective equipment that puts the safety of American military service members at risk."

Those comments were echoed in a separate statement by U.S. Attorney for the District of Utah David B. Barlow.

"This settlement demonstrates our commitment to aggressively go after contractors who recklessly disregard and deliberately ignore critical safety defects in munitions used by America's uniformed fighting men and women on the front lines of the war on terror," he said. "This office fully supported the federal investigators in their efforts to uncover these fraudulent claims and recover the ill-gotten gains for the American taxpayers."

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