TRW Finds $2.5 Million in Overcharges on Military Contracts, Returns Money

TRW said Monday that it has identified $2.5 million in overcharges to the government made by its military electronics and avionics division in San Diego. The company said it has returned the money to the government and has disciplined 12 management employees of the division.

TRW said two managers were terminated but declined to identify them. It is believed, however, that the two were high-ranking officials at the division and included the head of the 850-employee organization, Hugo Poza.

Reached at his home Monday, Poza declined to comment.

The improper charging on Pentagon contracts was found in an internal company investigation, the findings of which were turned over to the Defense Department’s inspector general’s office.

Until the Pentagon reviews the case, it remains unknown whether any criminal liability exists, either for TRW or its employees. So far, the government has allowed TRW to complete its probe without commencing its own concurrent investigation.

The overcharges resulted in part from billing federal work to improper financial accounts, said Julie Meier Wright, a spokeswoman at TRW’s electronics and defense sector, based in Redondo Beach.

For example, Wright said, some items apparently were charged to general defense overhead accounts rather than directly to a fixed-price-type contract. That would have the effect of spreading potential cost overruns that the company would normally absorb to accounts that the government would pay.

The dozen employees who were disciplined apparently did not directly benefit from the wrongdoing, but they stood to benefit indirectly by salary bonuses tied to the performance of the division, Wright said. In addition to the San Diego incident, TRW earlier this year said it was investigating improper charging at its Sunnyvale unit.

That investigation was completed, and the results were turned over to the government. No monetary restitution was made.

The San Diego division was established in 1981 to pursue aircraft electronics work, as opposed to spacecraft and related electronics that is the mainstay of the Redondo Beach operation.

TRW said it considers the irregularity “extremely serious.”