Hughes Aircraft Sues ITT Over Canceled Navy Job

Hughes Aircraft Corp. has sued ITT Corp., its partner in a canceled defense contract, for $8.1 million plus additional damages in the wake of the project’s cancellation last year.

The suit, filed in Orange County Superior Court last week, contends that ITT owes Hughes the money under a contractual agreement to share the cost of developing the Navy’s now-defunct Joint Tactical Information Distribution System. Hughes alleges that ITT’s failure to settle the account constitutes a breach of the contract between the two companies.

A Hughes official also said that filing the suit was a “procedural” move that could help resolve stalled negotiations with ITT and avoid an actual court hearing.

The project, developed by a joint venture operated by Hughes’ ground systems group in Fullerton and ITT’s defense space group in New Jersey, was canceled last October in a military cost-cutting move. The Navy spent $100 million on the system before canceling it.

An ITT spokesman, while conceding that Hughes had advanced more money to the joint venture than did ITT, said his company has rejected the multimillion-dollar billing from Hughes.

A Hughes spokesman said the two companies have been negotiating over the disputed amount for several months in hopes of reaching an out-of-court agreement. He said Hughes had not yet served ITT with the suit and did not have any current plans to do so.

“If they haven’t served us, it doesn’t seem too serious,” said Richard Landman, director of business development for ITT’s defense space group. “In negotiations, there are a lot of things that are for real and a lot of posturing.”

In its statement, Hughes said it hoped its dispute with ITT could be resolved “without further action.”