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Northrop Settles Two U.S. Suits

August 21, 2003|Peter Pae | Times Staff Writer

Northrop Grumman Corp. has agreed to pay $80 million to settle two whistle-blower lawsuits stemming from allegations that the defense contractor overcharged the government on a commercial tanker program and sold the Navy defective military equipment, the Justice Department said Wednesday.

The settlements, which were expected, involved payments far less than the initial claims levied against the Century City-based defense contractor.

In the case against Northrop's Newport News Shipbuilding subsidiary, government officials alleged that it overcharged the Pentagon $72 million for work on a commercial tanker program. Under the settlement, Northrop will pay the Justice Department $60 million.

In the second case, Northrop agreed to pay $20 million to settle allegations that in the late 1980s and early 1990s it knowingly sold the Navy target drones that contained defective parts. The government had sought $210 million.

Northrop at one point faced four whistle-blower suits stemming from allegations -- some more than a decade old -- that it violated accounting rules to defraud the government.

But the company has now settled three whistle-blower cases, including agreeing to an $111-million payment in June to settle federal allegations that TRW Inc., a defense contractor it acquired last year, overcharged the government for various space projects. The government had sought $56 million.

The fourth case, which claims that Northrop inflated costs for electronic equipment used in bombers and fighter jets, is pending in federal court.

In all, Northrop faced the possibility of paying $1.4 billion in damages if it lost all four suits. Under the federal False Claims Act, the damages can be tripled.

Northrop's shares fell $1.86 to $94.22 Wednesday on the New York Stock Exchange.

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