Whistleblower accuses Navistar of fraudulent pricing for MRAPs in newly unsealed complaint...overpricing in the Military Industrial Complex is legal...

via Defense News.

In the complaint it is alleged that Navistar specifically made misrepresentations of the price of its 7400 chassis used in the MRAP vehicles.

Navistar is accused of bumping the price to $250,000 a piece compared to a $125,000 price tag for other customers.

Because the chassis is a commercial item, Navistar was exempt from having to show certified cost and pricing data to the Marine Corps.

Burgess noticed, during the course of his job, that Navistar was charging $125,000 for the chassis to other customers, including another branch of the U.S. military and foreign countries. He brought the discrepancy to Navistar’s manager of financing for the MRAP contract, where it was confirmed the prices were different, but he received no explanation as to why.

The government ordered 9,000 MRAPs with the 7400 chassis and suffered approximately $1.25 billion in damages from the chassis price difference alone, the complaint alleges.
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When the Marine Corps decided in 2009 that it needed modifications to MRAPs sent to Afghanistan due to the more difficult terrain encountered there, it required the companies providing the vehicles to redesign the platforms with improved suspension systems to better handle tough, uneven terrain. Older vehicles would be retrofitted, while all new deliveries would have the new capability.

Navistar outfitted 3,898 vehicles with improved suspension system, or ISS, upgrades, the complaint notes.

According to the complaint, Navistar was concerned it would now have to produce cost data on the chassis and engine when negotiating pricing for the ISS upgrade.

Navistar employees including Burgess were directed to ensure the government would not get access to the data, the complaint states, because there was a fear the government would retroactively seek a rebate on MRAPs already sold to the Marine Corps.

Contract negotiations for the upgrades took place in 2010. And again, Navistar’s executive leadership team was at the table and proposed a $143,294 per unit price for the kits, which was then negotiated down to $142,602 per unit.

Navistar allegedly decided to convince the government the ISS kit was a commercial item to avoid providing cost data again. Burgess argued at the time that the kit didn’t meet the criteria, the complaint recounts.

Navistar showed purported sales histories, catalog listing and vendor quotes to try to convince the government the price was fair, according to the complaint, but the documents were either “forged or utterly misleading.”

For example, one sale history for a transfer case shaft to Deutsch’s Truck and Diesel Repair turned out to be a forgery — the company hadn’t sold the part to Deutsch’s.

And in another case, Navistar presented the government with other vendor quotes, including one price of $103,904 for front and rear axles. The complaint alleges that in reality the quote to that company was actually $58,480 per set.

Overall, due to the inflation of the ISS kits, Navistar overcharged the government $30,455 per kit, according to the complaint. The complaint calculates that total damages here amount to roughly $118.7 million.

Here 

Going off memory here but if I recall correctly there is some kind of protest with Navistar and the JLTV.  Wait a sec while I google it...

Yep.  The story of the Navistar protest is here.

Having remembered that drama while posting this story I can't make heads or tails of this thing.

Is this corporate hardball?

Are we seeing the govt finally coming around and telling Navistar to knock it off thru the backdoor?

Not sure.

What I am pretty sure of is that we're getting a peek behind the Military Industrial Complex in the US.  A look at the arcane and downright silly laws.  Oh and an education on how defense corporations are bilking the hell outta the taxpayer.

I can hear you say it now.

But what about the military.  Don't they have a role to play in holding the contractors feet to the fire!

Yes and no.

Think about it.  The mothers of America would be screaming bloody murder if their boys (and now girls...God this is gonna get so much worse when women start showing up mangled) didn't have gear to protect them from harm.

MRAPs were necessary and we needed them in a hurry.

Navistar APPARENTLY took advantage of the laws and the desire to protect to inflate their profit margins and OVERBILL the US govt.

Corporatism gone wild.  How do you fix it when its become part of corporate culture.



Our corporate culture today is Gordon Gekko on steroids....even the military industrial complex has adopted it.  Forget the protect our soldiers line. They worship money...patriotism be damned.