Crane Co. Pays Government $7.6 Million to Settle False Claims Act Allegations

The federal government alleges that the Crane Co. did not comply with Defense Department Qualified Products List (QPL) regulations, which require product suppliers to submit to government inspection prior to becoming qualified and prior to being eligible to bid on government contracts.

The government also alleges that the company violated the Berry Amendment, which requires the Pentagon to give preference in procurement to domestically produced, manufactured or homegrown products. The government has alleged that some of Crane’s valve products did not comply with the amendment’s provisions, as well as the Buy America Act, in that some of the components were not domestically produced.

Walter Klepacz, a former Crane Co. employee, originally filed a suit against the company under the qui tam provisions of the False Claims Act. The complaint alleged that Crane violated the False Claims Act from as early as May 2003 by deliberately disregarding the military’s specification requirements.

According to the Justice Department, Crane allegedly delivered valves to government prime contractors for use on Navy vessels and the Coast Guard’s new National Security Cutters procured under that agency’s Integrated Deepwater Improvement program. The valves were supplied for installation on vessels used in critical search and rescue and combat operations, including on vessels used in support of ongoing operations in Iraq and Afghanistan.

The Justice Department noted that the settlement resolves Crane’s potential liability under the False Claims Act arising from Klepacz's complaint and the government’s additional allegations.

Peter Keisler, assistant attorney general for the Justice Department’s Civil Division, asserted that the settlement “will help ensure that the exacting quality standards called for by the government endorsements will be met by contractors in the future.”

Crane Denies Violating False Claims Act

In a press release, Crane noted that the settlement agreement pertains to “certain valves sold by the company's Crane Valves North America unit that ultimately were delivered to the U.S. Navy.” According to Crane, “[t]he company unintentionally failed to provide prior notice to the Navy and update the Navy's Qualified Products Listing to reflect a 2003 change in manufacturing location from California to Texas.”

While Crane acknowledged the failure to notify the Navy and the failure to update the QPL, the company said that it denies that the omission violated the False Claims Act.

“Crane cooperated fully with this investigation, and with this settlement we resolved all the issues raised by the Department of Justice and the Navy,” Crane President and CEO Eric Fast said. “The failure to notify the Navy was unintentional and there was no misconduct by Crane Co. personnel. We felt it was best to put this matter behind us to avoid a costly legal proceeding.”