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Bollinger Shipyards to pay $8.5 mil to settle False Claims Act suit

After almost a decade, a Louisiana-based shipyard, Bollinger Shipyards, has agreed to pay the federal government $8.5 million to settle a False Claims Act suit.

The suit claims that Bollinger misrepresented the longitudinal strength of ships that the company was contracted to retrofit for the Coast Guard. The company was hired in 2002 to lengthen and modernize all 49 of the Coast Guard fleet, as part of the Coast Guard’s effort to be better prepared to respond to threats in the wake of the September 11, 2001 attacks.

However, the first eight boats Bollinger delivered buckled and cracked soon after they were put into service, and the vessels ultimately had to be scrapped. The Coast Guard spent about $95 million on the retrofitting program before it was scrapped. The False Claims Act suit claims that Bollinger fraudulently covered up fundamental flaws in their work.

The Justice Department alleged that Bollinger gave the Coast Guard engineering calculations falsely representing the strength of the boats and thereby compromised the ability of the Coast Guard to fulfil its duties.

Alleges Bollinger knew of the fraud.

According to the Justice Department Bollinger ran the calculations three times and provided the Coast Guard with the highest and most incorrect calculation. The calculations Bollinger provided, the Justice Department says, suggested the boats had two times greater hull strength than was the case. The Justice Department alleges that Bollinger was aware of the misrepresentation and had information that the claims were exaggerated, but failed to reveal the true strength of the boats to the Coast Guard. Furthermore, the suit alleges that Bollinger failed to follow quality assurance procedures mandated by their contract.

Bollinger denied those allegations and has fought the case in court for almost a decade.

“Those who expect to do business with the government must do so fairly and honestly,” said Benjamin Mizer, head of the Justice Department’s Civil Division. “We expect the utmost integrity and reliability from the contractors that design and build equipment that is essential to public safety and our national defense.”

The claims resolved in the settlement of United States v. Bollinger Shipyards, et al. Case No. 2:12cv-00920 (E.D. La.) are only allegations; because the suit has been settled, there has been no determination of liability.