Warren, Sterling Heights and Detroit all part of the landscape as federal charges brought against defense contractor



The BAE Systems building in Sterling Heights.

The federal government is suing a subsidiary of BAE Systems Inc., which has operations in Sterling Heights, in federal court in Detroit, claiming the defense contractor overcharged more than $40 million on a truck production contract awarded in 2008 through the U.S. Army TACOM Life Cycle Management Command in Warren.

According to Crain's Detroit Business, the Department of Justice civil division alleges that BAE knowingly inflated the price of parts and materials through subsidiary BAE Systems Tactical Vehicle Systems LP in Texas.

BAE also houses its Heavy Brigade Combat Team business unit in Sterling Heights, which oversees engineering and program management on several ground vehicle contracts and took over some business functions after BAE closed a Texas plant last year.
 

Last year, BAE engaged in a nasty battle with its Sterling Heights neighbor, General Dynamics Land Systems, over a contract that will eventually be worth $6 billion to produce a new generation of nimble armored vehicles for the U.S. Army.
In that dispute, BAE questioned whether General Dynamics used its political muscle on Capitol Hill to alter the process and give GD a second chance at the lucrative contract, which BAE eventually secured.
At the same time, GD complained that Pentagon bid specifications presented an unfair advantage for BAE.

As for the newest claims, federal prosecutors say they believe BAE tried to boost revenues by blatantly overcharging the Army. 

"Private companies are entitled to earn an honest profit from procurement contracts with the U.S. government, but they may not knowingly overcharge the military for supplies and materials,” U.S. Attorney Barbara McQuade in Detroit said in a statement on the lawsuit. “The conduct alleged in this complaint is akin to charging $600 for a hammer.”
According to Crain's, at issue is the Family of Medium Tactical Vehicles, a contract for a series of payload carrier military trucks and trailers with 2.5- to 5-ton payloads that BAE eventually lost to competitor Oshkosh Defense in early 2010 after a rebid award.

A company spokesman said BAE is already pursuing an internal Pentagon appeals process over the matter and it is inappropriate for the Justice Department to claim that the pricing procedures are a civil violation of federal law.

This is one of the Army's Medium Tactical Vehicle trucks
 involved in the pricing dispute with BAE.