FARGO - Government inspectors are changing the way they monitor a tribal company that makes protective cloth for military equipment, lawyers say.

Sioux Manufacturing Corp., a business owned by the Spirit Lake tribe, agreed to pay $1.9 million to settle a lawsuit filed by two former employees on behalf of the government. The company was accused of failing to follow specifications in making Kevlar cloth material, a protective synthetic fiber used in helmets and body armor.

The plant has an onsite government inspector, but that person had not been responsible for checking the fabric weaves in question, Assistant U.S. Attorney Shon Hastings said.

"That wasn't part of his responsibility," she said. "It is now."

Sioux Manufacturing attorney Sarah Vogel said the company welcomes the change in inspection duties.

"We're glad. We're fine with that. That's excellent," Vogel said. "They say (the inspector) is a real fussbudget, too. That's exactly what they want."

Carl McKay, president and chief executive officer of Sioux Manufacturing, has denied any wrongdoing and called the settlement a business decision.

The lawsuit against the company was filed by former employee Jeff Kenner and his supervisor, Tamra Elshaug, who received $406,350 apiece as their share of the settlement. A federal law allows private citizens to act as "relators" and sue on behalf of the government.

Kenner and Elshaug claimed they were fired for retaliation. Vogel said the two former employees were fired after an afternoon tryst, for violating company policy. U.S. Attorney Drew Wrigley said there was no doubt about problems with the cloth weave.

Vogel was especially upset by an allegation in the lawsuit that "numerous U.S. soldiers" were injured or killed by enemy bullets because of "greatly diminished Kevlar shielding." No deaths or injuries due to the Kevlar have ever been documented, Wrigley said.

"That (allegation) shows the lack of credibility in the entire complaint," Vogel said.

The helmets used by the Army are assembled by Federal Prison Industries Inc. McKay said UNICOR has placed $16 million in orders since Sioux Manufacturing was raided by federal agents in June 2006.

"It's time to put this behind us and move on," McKay said.