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July 24, 2015

DOJ opens criminal probe of Sikorsky overbilling allegations

Following a lawsuit filed by the federal government last year alleging that Sikorsky overbilled the U.S. Navy for aircraft spare parts, the U.S. Department of Justice has initiated a criminal probe, Sikorsky parent United Technologies disclosed in a regulatory filing Friday.

United Technologies wrote in a U.S. Securities Exchange Commission filing that the DOJ notified Sikorsky of the investigation on July 13 and asked it and two of its wholly-owned subsidiaries to voluntarily provide documents.

“Sikorsky and its subsidiaries intend to cooperate fully in the investigation. We cannot predict the outcome or consequences of this investigation at this time,” the filing said.

The DOJ’s notice came seven days before UTC announced that it had reached an agreement to sell Sikorsky to Lockheed Martin for $9 billion.

The government’s Oct. 2014 lawsuit alleged that Sikorsky Support Services (SSSI) overbilled the Navy because its fellow Sikorsky subsidiary and subcontract Derco Aerospace added profit and overheads costs to the price of spare parts that it sold to SSSI. The suit seeks as much as $148 million in damages, UTC said.

UTC said it doesn’t believe Derco violated any law when it added profit and overhead to its parts costs.

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