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KMS Discovers Irregularities in Billing Defense Department

July 9, 1987

ANN ARBOR, Mich. (AP) _ KMS Industries Inc., a high-technology research and development company, has discovered billing irregularities in two Defense Department contracts, a company official said Wednesday.

KMS Senior Vice President Terry Liddy said he had few details of the in- house investigation of the problems, which were discovered within the past 10 days.

He said it appeared that two aerospace contracts, one of them begun in 1985, were involved. He did not know the date the other began.

″Although the matter appears to be serious, the company stands ready and able to reimburse the government for any discrepancies,″ KMS said in a news release.

Liddy said that although no specific amount had been determined, it could be in the hundreds of thousands of dollars.

He said there appears to be no evidence of criminal activity involving the billing problems. The discrepencies were discovered during an internal audit, Liddy said.

″It’s just important for us to, at least, get a letter out to the IG (Inspector General),″ Liddy said, adding that the letter was sent to the Defense Department on Wednesday.

KMS reported revenues of $20.1 million in 1986, up about 15 percent from $17.1 million the year before. The company is involved in research and development in biotechnology, diagnostic instrumentation for aerospace systems and laser-induced production of nuclear fusion.

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