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Capco, a weapons engineering and manufacturing company based in Grand Junction, has entered into a $1 million settlement with the Army over allegations that the company sold grenade launchers with less-durable steel parts.

The 40mm grenade launchers are a replacement for the Army’s venerable M-203 and can be mounted beneath the barrel of an M-4 rifle or used as a separate weapon.

Capco did not admit liability in the settlement and said in a statement Tuesday it has no reason to believe its products were unsafe or ineffective.

“As a company, this chapter has made us smarter and stronger,” Capco CEO Cordell Bennigson said. He added that the company has improved its quality and compliance systems.

The government was alerted to concerns about Capco’s production process by James Cole, who was a quality engineer at the company. He told the company’s vice president of operations and a manager about the faulty parts in April 2017 but was ignored, The Denver Post reported.

Cole said Capco retaliated by laying him off five months later, according to a lawsuit filed under the False Claims Act in November 2017. He will receive about $235,000 of the $1,025,429 settlement.

Capco’s statement did not mention Cole. Capco is based in the western Colorado city of Grand Junction.

“We entrust our defense contractors to manufacture equipment of the highest quality for the men and women who serve our country in the U.S. armed forces,” U.S. Attorney Jason R. Dunn said in a statement.

“Any breakdown in the production process must be swiftly and honestly addressed, and we will hold contractors fully responsible for fraudulently covering up production problems.”

Dunn’s office explained that the False Claims Act provides individuals with knowledge of fraud against the U.S. government the opportunity to bring those allegations on behalf of the United States.

If an investigation corroborates the allegations, they can share the monetary award, as Cole did.

The new grenade launchers were part of a planned Army weapons swap that included a new rifle.

The rifle didn’t work out, but the grenade launcher was adopted.

Capco has more than grenade launchers on its military sales sheet.

The company has earned more than $100 million in contracts from the Pentagon in recent years, from manufacturing new barrels for the M-4 rifle to building ejection seat components for the Navy.

The Associated Press contributed to this report.

“As a company, this chapter has made us smarter and stronger.” Cordell Bennigson, Capco CEO
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