SRCTec to pay $6.3 million to resolve federal allegations over radar parts

CICERO, N.Y. — SRCTec, LLC has agreed to pay the federal government more than $6.3 million to settle claims regarding problems with replacement parts that it sold to the U.S. Army for radar equipment.

SRCTec manufactures a lightweight counter mortar radar system and associated replacement parts under contracts with the Department of the Army, U.S. Attorney Richard Hartunian said in a news release issued Thursday.

Cicero–based SRCTec is the for-profit subsidiary of SRC Inc., the former Syracuse Research Corporation.

The allegations concern SRCTec’s invoicing for the radar system and spare parts, Hartunian’s office said.

The probe of the allegations fell under the U.S. False Claims Act, a law that imposes criminal and civil penalties on people or companies (often federal contractors) for falsely billing the government, making false representations about a delivered product, or under-stating an obligation to the government.

Under the settlement, SRCTec will pay more than $2.1 million in cash and provide more than $4.25 million in in-kind equipment at no charge to the Army.

The firm has separately agreed to replace or repair the affected parts “at its own expense,” Hartunian’s office said.

“Our office is committed to ensuring that federal programs receive products that perform as paid for, and we pursue False Claims Act claims vigorously. The stakes are particularly high when the procurement involves protection for our nation’s warfighters. This settlement reflects the importance of the case, the fine work of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit and the Defense Criminal Investigative Service, and SRCTec’s disclosure of the problem and cooperation in addressing it,” Hartunian said in the news release.

Lisa Mondello, director of corporate communications & public relations, provided a company reaction in a statement emailed to BJNN on Friday.

“While we disagree with the Department of Justice’s claim and we believe there was no wrongdoing, we decided to settle out of court in order to avoid what would be a significant disruption to the company, our employees and our customer, and to allow us to fully focus on our critical mission of providing the best products and services to our customers. This was a minor calibration issue and did not impact the ability of the radar to identify incoming mortar or artillery rounds. As stated in the Department of Justice release: “the systems’ ability to perform their sense and warn function was never impacted.”

The problem

The case SRCTec settled with the U.S. Department of Justice related to an issue with one of its radar programs that the company reported to the Army and resolved, Mondello said in the statement.

The settlement consists “primarily” of SRCTec providing spare parts to the Army, which continues “to buy additional radars from us,” Mondello added.

“After several communications with our customer [the U.S. Army], the matter drew the attention of the U.S. Department of Justice, which contacted us and opened an inquiry. Per the Department of Justice release: ‘This settlement reflects… SRCTec’s disclosure of the problem and cooperation in addressing it,’” the company statement noted.

SRCTec became aware of the problem in March 2013 and worked on solving it in the ensuing months, Hartunian’s office said.

“SRCTec did provide information related to this issue to the Army as soon as it was discovered,” Mondello said in the company statement.

SRCTec in March 2015 requested a meeting with the Army, which was held the following month. In the meeting, SRCTec disclosed how it learned of and ultimately solved the problem, according to Hartunian’s office.

During the time period covered by the settlement agreement, SRCTec invoiced the Army for radar systems and other equipment, which the Army “verified as operable,” at a cost of tens of millions of dollars, the office added.

Contact Reinhardt at ereinhardt@cnybj.com