Navistar Accused of Bilking $1.3 Billion in Defense Contract

(Bloomberg) -- Navistar International Inc. and its defense unit are accused of bilking almost $1.3 billion from the U.S. government in connection with a contract for military vehicles used by American forces in Iraq and Afghanistan.

Filed in 2013, the whistle-blower suit was made public Tuesday by the U.S. District Court in Washington. The federal government elected to join part of the suit in September, according to an earlier court filing that also was just made available.

The false-claims case “arises out of defendants' pervasive and long-running scheme to charge the U.S. government wildly inflated prices for components of Mine-Resistant, Ambush-Protected (“MRAP”) vehicles, which were critical to the government's military efforts in Iraq and Afghanistan,” according to the U.S.-filed complaint.

The companies are accused of submitting to the government misleading documents -- including forged invoices and fabricated, inflated catalog prices for components -- to induce the U.S. to award the company a multi-billion-dollar contract. Top Navistar Defense officials are alleged to have been aware of the scheme.

Lyndi McMillan, a Navistar spokeswoman, said the complaint wasn't well-founded in fact or law.

“We believe our pricing was fair, reasonable and competitive, and we are disappointed the government has chosen to intervene in this matter,” McMillan said in an email. “The company intends to defend itself as necessary and appropriate.”

According to the complaint, the whistle-blower was Washington resident Duquoin Burgess, who worked in the Navistar Defense contract management department first in Warrenville and later in Lisle, Illinois.

--With assistance from Craig Trudell.

To contact the reporter on this story: Andrew Harris in federal court in Washington at aharris16@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth

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