Rockwell Suspended From Receiving New Government Contracts

Times Staff Writer

The Air Force on Thursday suspended Rockwell International from receiving new government contracts or renewing old agreements one day after the company, which builds the space shuttle and the B-1B bomber, had pleaded guilty to overcharging the service.

Air Force Secretary Verne Orr said the prohibition would remain in effect “until I’m sure that Rockwell has taken all steps necessary to safeguard against a recurrence.”

While the temporary debarment blocks Rockwell--which is based in Pittsburgh and runs major factories in Southern California--from receiving new contracts in coming weeks, it could also mean no more than a relatively brief delay in signing some agreements, Air Force officials acknowledged.

However, said one Air Force officer familiar with Pentagon procurement procedures, those contracts for which another company is in a position to submit attractive bids “could go to someone else” instead of Rockwell.


He said that, when General Electric, another major military supplier, was recently suspended for a short period from bidding on government contracts, the company “did lose some business while the suspension was in effect.” That action stemmed from an indictment charging a GE division with defrauding the government of $800,000.

B-1B Contract Unaffected

Rockwell was recently awarded a major contract tied to its production of the B-1B bomber. That contract is unaffected by Orr’s decision. But the company, teamed with Plessey Co. of Britain, is locked in a fight with GTE Corp. and a French firm, Thomson-CSF, to obtain a $4.3-billion contract to produce a combat communications system for the Army.

In response to Orr’s decision, Rockwell, the second-largest Pentagon contractor, said in a statement: “We are confident we can satisfy the concerns of the secretary of the Air Force and continue to demonstrate our responsibility as a defense contractor.” The company pleaded guilty in an agreement filed in U.S. District Court in Dallas to 20 counts of fraud, stemming from overcharges by Collins Communication Systems, a Rockwell division, in 1982.


Justice Department officials said six Rockwell employees took part in filing phony time cards. The time cards covered work on an automated data-processing system aboard EC-135 flying command post aircraft. The contract under which the work was conducted was valued at $3.6 million.

Under Orr’s decision, announced after the New York financial markets had closed, Rockwell has 30 days in which to challenge the action. An Air Force statement said that the secretary would consider the company’s response, as well as a “corrective action plan” that Rockwell already has submitted, although the contract ban will remain in effect for at least the 30-day period.

Missile, Satellite System

Rockwell did $11 billion in business last year, 60% of it with the government and nearly all of that with the Pentagon, according to spokesman Don O’Neal. Rockwell produces the Army’s laser-guided Hellfire missile, bombs and the Navstar global positioning satellite system used by aircraft and ships.


“We have been cooperating fully with the Air Force and will continue to do so,” O’Neal said. “We look to an early resolution of this matter.”

In a statement, Orr said that he took the action “to send another clear signal that the Air Force simply won’t tolerate this or other kinds of fraud regardless of the size of the contractor.” But he pointed out that Rockwell had been “forthcoming in all aspects of the investigation.”

Under the agreement, Rockwell is to pay $1 million to the government--twice the amount of the overcharges and the cost of the government investigation that led to the plea. Its also faces a $200,000 criminal fine when it is sentenced Dec. 13 in U.S. District Court.