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Army Contractor Can’t Defuse Suit Over Bombs

(CN) - An Orlando federal judge refused to dismiss a lawsuit in which the government accuses a bomb-fuse maker with a $20 million Army contract of knowingly supplying the wrong kind of bomb fuses.

Kaman Precision Products, a Connecticut-based company, designs and develops electromechanical components for the aerospace and ammunition industries. In 1996, Kaman signed a contract now worth $20 million to supply the U.S. Army with fuses for bunker buster bombs.

A year later, Kaman developed a new bellows motor to arm the fuse after discovering that the current motor was too powerful for the FMU-143 fuses supplied to the Army and caused unpredictable firing.

After the government approved the design in 1998, it modified Kaman's contract to require the new bellows motor in future fuse supplies. Kaman later developed a third motor with a higher rotational speed for use in a different fuse.

When U.S. forces invaded Iraq in March 2003, the Army's demand for ammunition and explosives increased dramatically. Kaman stood poised to violate its contract that year when its supplier was unable to meet an order. The government says Kaman tried to avert the problem by knowingly sending a $2 million supply of the motor variant with the higher rotational speed and passing it off as the specified motor.

Although the two motors looked identical, they were assigned different part numbers and were stored in different areas of Kaman's facility, according to the government's complaint.

Kaman submitted certificates of conformance for the nonconforming shipments, claiming they met the government's requirements, and received more than $2 million for the supply, according to the complaint. The company acknowledged the substitution in September 2004, a month after the Army discovered the error and quarantined the entire shipment.

After the government sued Kaman for false claims, breach of contract and unjust enrichment, several Kaman employees gave widely diverging testimony about what led up to the switch.

Kaman's materials manager, Larry Streit, claimed he had checked with other company managers as to whether the two fuses were identical and could be substituted. But the consulted supervisors disagreed on the date and scope of the discussion. The engineering manager testified that he did not remember being asked whether the substitute motor could work in the FMU-143 fuse.

Streit admitted to transferring more than 1,000 bellows motors from a different fuse program to be used in FMU-143 fuzes, some of which were shipped to the government in the summer of 2003.

The government claimed that Kaman never asked for authorization to substitute the parts, nor did it report the substitution.

Kaman had argued that the government failed to prove the company had knowingly submitted false information, since the part transfer made by its employees was not an intentional substitution.

But U.S. District Judge Gregory Presnell upheld the government's false information claim, finding that it wasn't clear whether Streit checked with management before substituting the parts and whether management was aware of the shortage of bellows for the FMU-143 program.

"Moreover, Streit's testimony is internally inconsistent in that he began his search for parts by drawing number and also recognized that if the drawing numbers for the parts were the same, they are interchangeable, but, at the same time, he did not ask anyone if the JPF and FMU-143 programs used the same drawing number," Presnell wrote.

Proof of specific intent is also not required to assert False Claims Act violations, the court added.

Presnell rejected Kaman's argument that the certificates of compliance were not required under the contract, and thus could not be material to the payment received for the fuses. Had it known about the substitution of bellows motors in the FMU-143 fuses, the government would not have paid Kaman for the nonconforming shipments, the 14-page ruling states.

The court also rebuffed Kaman's attempt to characterize the bellows delivered to the government as "just as good" as those requested, noting that the fuses delivered failed to meet the specifications of the contract.

Presnell denied Kaman's motion for summary judgment, finding that the government had proved Kaman's attempt to deceive a government agency.

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