Update: U.S. sues contractor for early replacement of tires

ORLANDO, Fla.—The U.S. government has filed suit against a Germantown, Md.-based company and its subcontractor for allegedly defrauding the National Aeronautics and Space Administrationin tire sales to the Kennedy Space Center.

However, the companies called the charges “unwarranted” and promised to fight them.

URS Federal Services Inc. and Yang Enterprises Inc. illegally charged NASA and the General Services Administration of more than $387,000 through “the undocumented and unreasonable early replacement of tires” at the Kennedy Space Center, the U.S. Department of Justice charged in a complaint filed Sept. 2 before the U.S. District Court for the Middle District of Florida.

According to the complaint, NASA awarded a $1.461 billion Cost Plus Award Fee contract to URS to perform various tasks at the Kennedy Space Center, including management of a fleet of approximately 400 vehicles. Both NASA and the GSA are responsible for overseeing the contract, it said.

URS was the prime contractor, but at some point designated Yang Enterprises as subcontractor for vehicle management at the space center, the document said.

URS and Yang used outside vendors to supply tires and vehicle service, which the contract allowed, according to the complaint.

“Because GSA is so concerned about the cost of tire repairs, GSA has created a ‘billback program' wherein certain government agencies are directly billed for early tire replacements,” it said. “Through the billback program, replacement of tires with less than 20,000 miles of wear are billed to the relevant government agency (in this case, NASA), rather than to GSA directly.”

The GSA chose the 20,000-mile threshold because most tires should run at least 20,000 miles before replacement, the complaint said. The document quoted tire repair experts as saying that most tires don't need to be replaced before 25,000 miles, barring punctures or other irreparable damage.

However, between October 2008 and April 2015, URS and Yang billed NASA for replacements of tires with less than 10.000 miles of use on 44 vehicles, and for tire replacements with less than 15,000 miles of use on another 193 vehicles.

This meant that roughly 10 percent of the Kennedy Space Center's vehicle fleet had tires that did not last 40 percent of their expected service life, and nearly half of the rest had tires that did not last 60 percent of their expected service life, the complaint said.

One vehicle in particular—designated Vehicle G43-0888L—had six tire replacements costing more than $1,800 between July 2012 and October 2014, the document said. None of the tires had more than 17,435 miles of use, and some had only 4,000 to 5,000 miles of use, it said.

The complaint also quotes a Feb. 20, 2014, e-mail from Stephen Baughn, a GSA fleet manager. Baughn told of an outside auto service vendor that informed the GSA of suspicious tire wear on a NASA vehicle managed by URS and Yang.

“The tire being replaced was completely bald and had a wear pattern of a vehicle with a serious alignment problem, and the alignment checked out perfect on this vehicle,” Baughn wrote in the e-mail.

The wear on the tire was consistent with that on a front tire, but the tire was mounted on a rear axle, Baughn also said.

The government filed suit under the False Claims Act, accusing URS and Yang of knowingly or recklessly filing fraudulent claims for payment. It seeks repayment plus interest, cost and expenses, and treble damages if the court rules that URS and Yang knowingly filed those claims.

A URS spokesman said the company was disappointed by the lawsuit and is prepared to defend itself vigorously against the government's accusations.

“The company takes its responsibilities as a government contractor very seriously and has a determined track record of serving our customers with honesty and integrity,” the URS spokesman said. “We are very confident that this lawsuit will ultimately be proven to be without merit.”

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