The Justice Department has declined to join a civil lawsuit against Northrop brought last year by employees who alleged that the company had produced defective guidance systems for the MX missile.
The employees' allegations were part of a national controversy that erupted over Northrop's problems in producing the MX guidance equipment, known as inertial measurement units.
Northrop experienced significant delays in delivering the complex guidance devices and became the target of both criminal and civil investigations. Last year, it was sued for fraud by the Justice Department, and Northrop's problems were examined at four congressional hearings.
The government decision not to join or "intervene" in the suit represents a substantial boost to the company, but several criminal investigations remain and at least four other civil lawsuits are pending against the Los Angeles-based aerospace firm.
Plaintiffs Will Pursue Case
The suit that the Justice Department has decided not to join was brought by eight former and current Northrop employees under the federal False Claims Act, which allows individuals to sue contractors on behalf of the government and share in any settlement. Under the law, the government can join in the prosecution or decline to do so.
The decision against joining the lawsuit was announced by the Justice Department on Thursday, but the action was filed under seal in U.S. District Court in Los Angeles on Sept. 28.
Herbert Hafif, the Claremont attorney who represents the plaintiffs, said he would continue to pursue the case without government help.
In explaining the decision not to enter the case, the Justice Department issued a statement saying, "There is not a sufficient basis . . . to enter the case at this time." Officials declined to elaborate.
The implication of the decision, however, is that the case either may be weak or that it lacks merit. But Hafif said the Justice Department decision was based at least in part on the death of one of the case's key plaintiffs, Stephen Wheeler, last June.
"It is hard to prove your case when your major witness is dead," Hafif said. "I am sure it was one of the major factors in the Justice Department decision."
Northrop officials noted that the decision was the second time the Justice Department has examined a Hafif lawsuit against the company and "determined that the cases did not merit further participation."
A previous case that made some of the same allegations was dismissed on a legal technicality by a federal court. The dismissal did not resolve the merits of the allegations that the quality of the missile guidance system was deficient.
Northrop said Thursday: "The quality and reliability of the inertial measurement units Northrop builds has been measured consistently since the system became operational in December, 1986, and has consistently met or bettered Air Force expectations."
The company has made significant progress in improving delivery rates of the guidance devices and has been gradually catching up to its Air Force schedule. It remains behind schedule, however, and the service was withholding about $10 million in contract payments at the end of September. That amount is down from a peak of $145 million in December, 1987.
Asked if the company considers the Justice Department decision to be a victory, a Northrop spokesman declined to comment.
Hafif has filed three other cases that the Justice Department may join. One involves allegations that Northrop set up fictitious companies to buy missile guidance parts outside the normal purchasing system. A second alleges that Northrop overcharged the Air Force by $400 million in the development of the stealth bomber. The third alleges that Northrop failed to properly test guidance devices for an Air Force cruise missile.