Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2018 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies |
Commitments and Contingencies
Contingencies
In November 2016, a lawsuit, Arrieta et al vs. Prime Turbines LLC et al, was filed in the District Court of Texas in Dallas County, by Edgar Arrieta, and four other plaintiffs against VSE subsidiaries, Kansas Aviation of Independence, L.L.C. and Prime Turbines LLC, and three other unrelated defendants. The other named defendants are Pratt & Whitney of Canada Corporation, Cessna Aircraft Company and Woodward Inc. The plaintiffs allege that on April 1, 2016, a plane crashed resulting in the death of three plaintiffs and serious injuries to six other plaintiffs and that VSE's subsidiaries were negligent in providing maintenance, service and inspection of the airplane engine prior to the crash. Plaintiffs are seeking monetary relief over $1.0 million from the defendants. Trial is scheduled for November 2018. VSE together with its insurance carrier, will aggressively defend the proceedings. While the results of legal proceedings cannot be predicted with certainty and the amount of loss, if any, cannot be reasonably estimated at this time, we believe the likelihood that this lawsuit will have a material adverse effect on our results of operation, financial condition, or cash flows is remote.
On or about April 19, 2018 Joseph Waggoner and Clifford Tefteller, on behalf of themselves and all similarly situated individuals, filed a lawsuit against VSE Corporation, XOTECH Solutions, LLC (Tefteller's employer) and White's Paint and Blast (Waggoner's employer) in the United State District Court, Eastern District of Texas, Texarkana Division, alleging overtime compensation entitlement at a rate of one and on-half times their regular rate of pay for all hours worked over 40 hours in a workweek. The plaintiffs are seeking to certify the case as a collective action for similarly situated individuals. The plaintiffs work under a contract between defendants and the United States Army at the Red River Army Depot in Texas. The plaintiffs assert that employees' fifteen minute unpaid work breaks should have been included as "working hours" for the purposes of calculating overtime. While the results of legal proceedings cannot be predicted with certainty and the amount of loss, if any, cannot be reasonably estimated at this time, we believe the likelihood that this lawsuit will have a material adverse effect on our results of operation, financial condition, or cash flows is remote.
In a letter dated May 21, 2018, Dyncorp International ("Dyncorp") notified VSE's subsidiary Prime Turbines LLC that the U.S. Air Force ("USAF") had filed a claim against Dyncorp for approximately $27 million in respect of work performed by Dyncorp and Prime Turbines in support of the USAF program for servicing fuel nozzle tips on aircraft engines. Dyncorp's notification also asserts that Dyncorp believes any liability arising from the USAF claim will be borne by Prime Turbines under its agreement dated August 21, 2013, with Dyncorp. As the events leading to the USAF claim against Dyncorp, including the work performed by Prime Turbines as a subcontractor, occurred prior to VSE's acquisition of Prime Turbines in January 2015, VSE notified the sellers of Prime Turbines of the Dyncorp and USAF claims and VSE's intention to seek restitution from the sellers for any damages arising from such claims. While the sellers have not acknowledged any liability in respect of Dyncorp's claim against Prime Turbines, they have assumed the defense of such claim under the acquisition agreement between the sellers and VSE. VSE believes that Dyncorp and Prime Turbines together with its insurance carrier, will appeal the USAF claim against Dyncorp and will otherwise aggressively defend against such claim. While the results of any resulting legal proceedings cannot be predicted with certainty and the amount of loss, if any, cannot be reasonably estimated at this time, we believe the likelihood that this claim will have a material adverse effect on our results of operation, financial condition, or cash flows is remote.
Other Matters
In addition to the above-referenced legal proceedings and Dyncorp claim, we may have certain claims in the normal course of business, including legal proceedings, against us and against other parties. In our opinion, the resolution of these other claims will not have a material adverse effect on our results of operations, financial position, or cash flows. However, because the results of any legal proceedings cannot be predicted with certainty, the amount of loss, if any, cannot be reasonably estimated.
Further, from time-to-time, government agencies investigate whether our operations are being conducted in accordance with applicable contractual and regulatory requirements. Government investigations of us, whether relating to government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed upon us, or could lead to suspension or debarment from future government contracting. Government investigations often take years to complete and many result in no adverse action against us. We believe, based upon current information, that the outcome of any such government disputes and investigations will not have a material adverse effect on our results of operations, financial condition, or cash flows.
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