A Salt Lake whistle-blower will get $900,000 of a $4.5 million settlement agreed to by Alliant Techsystems Inc. and Hercules Inc. to end a government fraud case.
P. Robert Pratt, who was fired from his team-leader job in the shipping department at Hercules' Bacchus Works in October 1995, alleged that his employer overcharged the Navy for labor costs on contracts implementing the Intermediate-Range Nuclear Forces Treaty."This is a nice victory for us," said Pratt's attorney.
Hercules, based in Wilmington, Del., sold its missile production unit to Alliant Techsystems, based in Hopkins, Minn., in 1995 and Alliant now operates the Magna plant. Both companies will share equally in the $4.5 million payment.
After he was fired, Pratt, 42, sued under provisions of the False Claims Act in U.S. District Court in Los Angeles.
"Today's settlement is an example of the Justice Department's determination to prosecute and collect damages under the False Claims Act when it detects government contractors knowingly or recklessly overcharging the government," said Frank Hunger, an assistant attorney general in the department's Civil Division.
"We will not tolerate conduct that is anything less than truthful by government contractors."
But Alliant spokesman Rod Bitz said Monday that Alliant and Hercules "deny all wrongdoing contained in the lawsuit" and that they ageed to the settlement "to avoid the delay, expense and disruption of protracted litigation."
He noted that the INF contract involves only 1.5 percent of annual sales at Bacchus and that the company's time card compliance system has been "closely scrutinized" by government auditors over the past five years and has received an excellent compliance rating.
Pratt charged that managers at Alliant and Hercules regularly directed their employees to mis-charge labor time to a number of military contracts even though management knew the employees didn't devote as much time to the contract as was charged to the government.
The government intervened in the charges involving the INF treaty but declined to get involved in Pratt's allegations that the contractors also mischarged labor time to other federal contracts.
But that doesn't mean it's a dead issue, said Pratt's attorney, Lon Packard, whose Salt Lake firm, Packard, Packard and Johnson, represents Pratt.
Packard said Pratt has a civil action still pending in California against Hercules and Alliant on those other charges which he said involve much larger contracts than the INF. Moreover, said Packard, the government may yet choose to intervene in that case even though it has so far declined.
Packard said the other claims involve missile contracts on the Trident 2, MX and others, as well as Pratt's claim for wrongful termination.
While he was still employed with Hercules, Pratt made secret audio tapes of statements by 14 Hercules employees in 1995, after he had been demoted but before he was fired. Packard said those tapes may be used in the civil action still pending.
Pratt's allegations were filed under what is called the "qui tam" provisions of the false claims act, which says a private party can file an action on behalf of the United States and receive a portion of any recovery if the government intervenes.
Another false claims act case was filed in 1989 by Katharine A. Colunga, also a former Hercules employee, and is scheduled for trial in U.S. District Court for Utah later this year.
The allegations settled Monday involved the 1987 INF treaty that permitted officials from the Soviet Union to inspect facilities at the Bacchus plant that Hercules operated originally and Alliant later took over. Under the treaty, Soviet officials were permitted to inspect vehicles leaving the plant to ensure they didn't contain certain prohibited rocket motors.
Under contracts with the Navy, Hercules and Alliant were permitted to charge the government with the costs associated with monitoring the activities of the Soviet, now Russian, inspectors.