August 16, 2007
Valve manufacturer to pay $7.5 million in false claims case
The Crane Company, a manufacturer of products, such as valves and marine components, has agreed to pay the United States $7.5 million to resolve False Claims Act allegations, the Justice Department announced today. The government alleges the company did not comply with Defense Department Qualified Products List (QPL) regulations, which require that product suppliers submit to government inspection prior to becoming qualified and being eligible to bid on government contracts.
Additionally, it is alleged the Stamford, Conn.-based manufacturer violated the Berry Amendment, which requires the Pentagon to give preference in procurement to domestically produced, manufactured or homegrown products. The government has alleged that some of Crane's valve products did not comply with the amendment's provisions, as well as the Buy America Act, in that some of the components were not domestically produced.
Crane is alleged to have delivered valves to government prime contractors for use on Navy vessels and the U.S. Coast Guard's new National Security Cutters procured under that agency's Integrated Deepwater Improvement program.
The valves were supplied for installation on vessels used in critical search and rescue and combat operations, including in those used in support of ongoing operations in Iraq and Afghanistan.
"Today's action will help ensure that the exacting quality standards called for by the government endorsements will be met by contractors in the future," said Peter D. Keisler, Assistant Attorney General for the Department's Civil Division.
The suit against Crane was originally filed by a former company employee, Walter Klepacz, in U.S. District Court in Houston under the whistleblower provisions of the False Claims Act. Under these provisions, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. The complaint alleged that Crane violated the False Claims Act from as early as May 2003 by deliberately disregarding the military's specification requirements.
"The settlement demonstrates our commitment to ferret out fraud and abuse that threaten the integrity of our defense procurement programs," added Donald J. DeGabrielle, Jr., U.S. Attorney for the Southern District of Texas.
The settlement resolves Crane's potential liability under the False Claims Act arising from the relator's complaint and the government's additional allegations.
The litigation and settlement of the case were conducted by the U.S. Attorney's office in Houston, the Department's Civil Division, the Defense Criminal Investigative Service, the Navy Acquisition Integrity Office, and the Naval Criminal Investigative Service.