District of Vermont

Burlington, Vermont – The Office of the United States Attorney for the District of Vermont announced that Preci Manufacturing Inc. (Preci) has agreed to pay $150,000 to resolve allegations that it violated the False Claims Act by selling parts to the United States military that Preci failed to test, despite clear contract testing requirements meant to ensure the strength and durability of the parts.

Preci, located in Winooski, Vermont, manufactures nuts, bolts, and other fasteners, which it supplies to the federal government. The fasteners provided by Preci are used in military equipment, including aircraft, and thus require precise manufacturing protocols and careful post-production testing. The United States’ investigation uncovered evidence that Preci repeatedly flouted safety requirements, with employees directed to skip mandatory testing. The government alleges that these deceptive acts violated the False Claims Act, a civil fraud statute that prohibits the knowing submission of false claims to the government.

“Preci’s sales to the United States of parts that it chose not to test are reprehensible, with Preci appearing to have prioritized its own profits over the safety of the products it provided to the military,” said United States Attorney Nikolas P. Kerest. “Our office takes seriously allegations related to cutting corners and evading regulations and will continue to pursue companies that betray the trust of the government and the public.”

Specifically, between January 1, 2016 and December 31, 2019, Preci sold fasteners to the federal government, including through contracts that imposed strict testing requirements on Preci but did not require government inspection prior to delivery. As set forth in the settlement agreement, Preci admits that, for some of the parts it sold to the government under these contracts, it failed to perform required testing, including but not limited to stress durability testing, fatigue testing, double shear testing, and tensile testing. Preci admits that it then submitted claims for payment as if it had met all contract specifications, when in fact the company knowingly provided untested parts to the government.

“The integrity of the U.S. Department of Defense (DoD) supply chain is of vital importance to the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS),” stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “The DoD expects its contractors to adhere to contract requirements and provide quality products to the U.S. military. The DCIS will continue to work with its law enforcement partners and the Department of Justice to hold DoD contractors accountable for circumventing testing protocols and putting America's servicemembers at risk.”

To resolve the claims against it, Preci has agreed to pay to the United States a total of $150,000.

“The Department of the Army Criminal Investigation Division (CID) has strong partnerships with other federal and state law enforcement agencies focused on investigative efforts to collectively identify, disrupt, deter, and dismantle unlawful activity,” said Supervisory Special Agent Michael D. Conner, CID, Northeast Fraud Resident Agency. “We are thankful for the collaborative efforts from all agencies involved, and resolutions such as this one show our resolve in bringing to justice those who would seek to defraud the U.S. Government and put the safety of our Soldiers at risk”

Assistant United States Attorney Lauren Almquist Lively handled this matter for the United States Attorney’s Office for the District of Vermont. Investigative support was provided by the DoD DCIS and the Department of the Army CID. Attorneys Zachary M. Dayno and Matthew B. Byrne of Gravel & Shea PC represented Preci.

The settlement agreement between the United States and Preci is available at this link: Preci Signed Settlement Agreement.

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