Conax: The Cash Was Only Part of the Settlement

In the Conax survival-equipment settlement, Conax Florida Corp. paid $2 million to resolve allegations that it submitted false claims for improperly tested inertia reels and nonconforming voltage references used by the military and NASA. The equipment was designed for moments when an aircrew member needed a harness to hold or a parachute to let go.

The Justice Department’s August 29, 2013 announcement described both a cash payment and an agreement to supply replacement electronic parts for parachute releases. The new parts had a stated maximum value of $2.4 million, more than the cash payment.

What the Survival Equipment Was Supposed to Do

An inertia reel locks an aircrew member’s harness in place on impact, helping secure that person during a crash. The government’s allegation concerned whether Conax tested those reels according to the contract.

A voltage reference is an electronic component inside a water-activated parachute release. The release is designed to separate a parachute automatically from an unconscious or injured aircrew member who lands in salt water. The Justice Department explained the danger plainly: a parachute that remains attached can fill with water and pull the aircrew member underwater.

These devices perform different jobs, but both serve people who may be unable to protect themselves at the moment the equipment is needed. We expect survival equipment to meet the requirements precisely because its user may be unable to compensate for a failure. At the worst possible moment. That is what makes allegations about testing and components in this equipment so troubling.

The Testing and Component Allegations

The government alleged that Conax’s inertia reels were not tested in accordance with contractual requirements and that Conax used nonconforming voltage references. It tied both allegations to false claims submitted to the government. One allegation concerns how the equipment was tested, while the other concerns the electronic part used in it.

In defense product testing cases, test records and certifications can influence whether the government accepts equipment and pays for it. For an inertia reel, we would connect the required test with the original test record and the identity of the product delivered. For a voltage reference, we would connect the required specification with the component actually used and the representation accompanying the finished equipment.

The importance of the component inside a larger safety device also appears in the Justice Department’s Teledyne RISI settlement announcement. In that case, the government alleged that military-aircraft ejection-seat sequencers contained microelectronic parts outside Navy-approved specifications, bought from a broker that was neither the original manufacturer nor an authorized reseller. The comparison is concrete: an electronic part inside aircrew safety equipment can be the subject of the government’s false-claims allegation. Knowing the finished assembly is only part of knowing what was delivered.

What Conax Paid and Agreed to Replace

Conax agreed with the Defense Logistics Agency to provide 4,969 new electronic parts for parachute releases. Recovering money addresses the government’s payment; supplying new components addresses the hardware. The replacement agreement made the physical parts part of the resolution, alongside the cash already paid.

The Defense Department’s inspector general explains why correcting the hardware matters alongside recovering money. In its Semiannual Report to the Congress for April through September 2018, it described the continuing operational consequences of product substitution:

The inspector general places defective, substandard and substituted products alongside counterfeits in its account of supply-chain investigations. Its point is that a substituted product can remain an operational problem while it stays in the supply chain. For someone who knows which voltage reference went into which parachute release, that gives the component trail a practical purpose beyond explaining a bill. We connect that knowledge to the product the government received and the requirement it was supposed to meet.

What Evidence Is Needed to Prove Fraud?

For allegations like Conax’s, the useful evidence connects the contract requirement, the tested or supplied part, and the government’s payment. We examine original test cards, sampling plans, lot identities and specifications alongside the records used for acceptance. That comparison keeps the technical issue attached to the equipment the government bought.

The supply chain can divide those records among different businesses. Purchase orders can connect a component vendor to the subcontractor or prime buying its parts. For a component allegation, we follow that purchase and delivery trail back to the part’s source and forward to the finished product.

A testing employee may know how the reel was tested, while someone working with purchased components may know which voltage reference went into the release. We work with that knowledge to connect the original records, the applicable requirement and the statement that reached the customer. The point is to explain how the government came to pay for equipment that allegedly failed to meet what the contract required.

The Former Employees Behind the Civil Case

Two former Conax employees brought the qui tam case that the civil settlement resolved. The Justice Department credited NASA and Defense Criminal Investigative Service agents’ investigative work. Employees brought the case, and the government’s investigators helped establish the basis for the resolution.

The resolution provided for the former employees to receive a share of the government’s recovery. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Technical knowledge of the product, connected to the government’s bill, is the starting point for our work with an insider.

You Know the Test or the Part

If you know how a restraint was tested, which component went into a parachute release, or what the customer was told, speak to one of our Whistleblower Experts. We build the case around that technical knowledge and bring in defense contractor whistleblower lawyers who understand testing, component specifications and government payment. We stay beside you through that work, building your strongest defense contractor whistleblower case from what you know about the equipment.