GE settles US claims it sold improperly inspected parts to Army, Navy

FILE PHOTO: The General Electric Co. logo is seen on the company's corporate headquarters building in Boston

By Jonathan Stempel

(Reuters) - General Electric's aerospace unit agreed on Monday to pay $9.4 million to settle federal government claims that a Massachusetts plant sold parts to the U.S. Army and Navy that were not properly inspected or did not meet specifications.

The U.S. Department of Justice said GE Aerospace's plant in Lynn, Massachusetts, skipped at least two inspections, did not consistently use functional gauges to inspect features on some parts, and sold engines that contained improper metal fragments.

Investigators said failing to conduct inspections and selling nonconforming parts could compromise military hardware and national security, and even endanger service personnel.

The settlement resolves claims that Evendale, Ohio-based GE Aerospace violated the federal False Claims Act, the government's primary legal means to address alleged fraud it experiences, between July 2014 and December 2019.

GE Aerospace was credited in the settlement for its cooperation and remediation efforts, which the company said began more than five years ago. About $5.4 million of the settlement constituted restitution.

"Safety is our top priority," GE Aerospace said in a statement. "While these issues had no impact on the safety of the aircraft involved, we implemented significant corrective actions to ensure this does not occur again."

GE, based in Boston, in 2021 announced plans to split into three companies focused on aviation, energy and healthcare.

It spun off the healthcare business in January, and plans to spin off the energy business in next year's second quarter. GE would thereafter become a pure-play aviation company known as GE Aerospace.

(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)