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Contractor to pay $2.8 million for overbilling the Navy

Two companies have reached a $2.8 million settlement with the Navy for overbilling taxpayers, the U.S. Department of Justice has announced.

Federal investigators determined that one firm rented equipment from another company that was owned by the same people, according to DOJ.

International Marine and Industrial Applicators, or IMIA, was doing maintenance on the aircraft carrier Ronald Reagan in 2012 at Puget Sound Naval Shipyard in Washington when the infractions occurred, investigators determined.

The company charged the Navy more than $1.4 million to rent equipment from Marine Equipment Supply, an entity wholly owned by current and former IMIA executives, according to a copy of the Aug. 7 settlement obtained by Navy Times.

Alabama-based IMIA didn’t disclose its relationship with Marine Equipment Supply when it invoiced the Navy for the Reagan project, according to the DOJ.

In a written statement emailed to Navy Times on Friday, IMIA spokeswoman Valerie Culver defended the company’s “outstanding work on the project,” which she characterized as a “tremendous success for our Navy customer," and noted that the settlement deal failed to include an admission of fault or liability.

She said that the settlement boiled down to a dispute between IMIA and the government over how to interpret a clause in Federal Acquisition Regulation rules over allowable equipment rental billing rates.

“While IMIA disagreed with the U.S. government’s interpretation, in the interest of moving on and not becoming distracted from our focus on supporting the Navy’s maintenance needs throughout the country IMIA has chosen to bring this 3 ½ year old inquiry to close,” she said.

IMIA’s work was done as part of a $48 million contract awarded in 2010 for sub, ship and carrier preservation work, according to Naval Sea Systems Command officials. The contractor was supposed to blast, paint, touch up and preserve underwater hulls, among other tasks.

It’s not the only government contract captured by IMIA since the dispute arose over equipment rental costs.

IMIA and another company split a five-year $261 million contract issued in 2017 for vessel surface preservation and new coatings, the Department of Defense reported.

Pentagon records reveal that IMIA also received a $141 million contract to preserve Los Angeles, Virginia and Ohio-class submarines s in 2015 another $16.6 million the following year to help maintain the aircraft carrier Nimitz.

Naval Sea Systems Command officials overseeing antifouling work on the ships' bows and other key jobs performed by IMIA did not respond by deadline to messages from Navy Times seeking comment.

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