It’s been just over a month since a lawsuit alleging Austal USA routinely submitted false claims to the U.S. Navy was unsealed, and the Mobile shipbuilder has since issued a scathing response asking a federal court to “dismiss the action in its entirety rather than require Austal” to answer the allegations.

The case, William Gates vs. Austal USA, was filed in June 2014, but only made public in February after the U.S. Attorney’s Office opted not to back the five ex-employees who initially filed the complaint.

Those employees, referred to as relators, are allowed under the False Claims Act to file actions on behalf of the government, which is informally called “whistleblowing” when the relator is or was employed by the accused organization. Persons filing complaints under the FCA also stand to receive a portion of any recovered damages.

Sen. Jeff Sessions visited Austal last week.

Sen. Jeff Sessions visited Austal last week.


Since reporting on the lawsuit last month, Lagniappe has attempted to contact several spokespersons within the Navy, the Department of Defense and the U.S. Department of Justice to find out why prosecutors opted not to join the lawsuit, but each organization has declined to comment on the matter.

Attorney Thomas M. Loper, who is representing the plaintiffs, said it is “not uncommon” for the government to initially stay out of these types of lawsuits. Loper also said that until recently, Austal hadn’t responded to the complaint in any way.

According to the original complaint, Austal’s defense contracts with the Navy include specific requirements defining the number of people in each trade class and company rank permitted to work on each vessel. Accordingly, Austal’s compensation increases along with the specified ranks.

Plaintiffs alleged Austal was regularly billing the Navy “supervision time” for work performed by others compensated a lower rate, which the complaint claimed was evidenced by several employees who say they were given timesheets that listed them in supervisory roles, though they weren’t being compensated as such.

In separate count, the complaint also suggests Austal routinely billed work incorrectly, to obscure the total time spent completing certain portions of projects. The complaint said projects were “routinely closed out in the billing system when the time budgeted to the project by the Navy had all been used even though the work was not completed.” The work would then be completed in Final Assembly, and billed to the Navy accordingly.

As Austal argued in its recent motion, operations are monitored by “numerous Navy, Defense Contract Audit Agency and Defense Contract Management Agency” personnel members, many of whom operate on site in Mobile.

Though Austal hasn’t issued a statement publicly, the shipbuilder’s attorney, William Daniels Jr., vehemently denied any and all allegations in a motion to dismiss the case filed late last month  — suggesting the relators’ “misdescription of how Austal bills and is paid for its efforts” could be what “led to the United States’ decision to not join this lawsuit.”

“Austal would like to affirmatively state that it has complied with all contractual, regulatory and statutory obligations in performance of its contracts with the United States,” the motion reads. “Austal takes its commitments under the law and its federal contracts very seriously, and flatly denies that it has knowingly, with deliberate ignorance, or with reckless disregard for the truth, presented or caused to be presented any false or fraudulent claims for payment to the Federal government.”

After the case was unsealed in February many news outlets, both local and national, wrote about the allegations. Since publishing our previous story on March 3, Lagniappe has received communications from several people claiming to be current or former employees who claimed they had been involved in similar situations.

In the original lawsuit, three of the five relators alleged the shipbuilder “retaliated” against them by “scrutinizing” their work in ways the company had not previously practiced. However, in its motion to dismiss, attorneys for Austal said the company “has not engaged in any form of retaliation against any of the Relators in this litigation or, for that matter, or any of its employees.”

Though the company has effectively denied all three main allegations, Austal still hasn’t filed a formal response to the complaint. But, the defendant’s motion to dismiss cited several “procedural defects” it claims warrants a dismissal and asked court to address those before requiring Austal to incur additional expense by responding to the complaint.

Among the claims are that service to the company was properly issued and that certain federal rules of civil procedure weren’t followed, Austal’s attorneys have also asked the case be thrown out because the plaintiff’s have “failed to state a claim upon which relief can be granted.”

Austal has also requested a hearing to address the procedural issues it raised with the plaintiff’s complaint, but no date has been set for a hearing at this time.

U.S. Sen. Jeff Sessions visited Austal last week but did not take questions concerning the suit.