Company Pays $7.5 Million on Army Contract Claims

The Cubic Corp. has agreed to pay the Army $7.5 million to settle claims that it defrauded the government in the production of hand-held mine detectors that ultimately had to be recalled from the field.

The settlement was announced Friday after two Cubic employees pleaded innocent in federal court to charges that they falsified test results for the mine detectors.

The actions stem from a 1981 contract awarded to Cubic, a major supplier of electronics systems to the military. Cubic was to have produced 2,300 new mine detectors and upgraded 9,500 old ones that had been used in the Vietnam War.

The Army accepted more than 500 of the detectors, which were sent to several military installations, but were recalled before they were used, according to U.S. Atty. Peter K. Nunez.

Cubic is the only U.S. firm that produces the hand-held mine detectors, which it sells to Egypt, Taiwan and Britain, said William G. Stewart Jr., Cubic’s general counsel.

Stewart defended the mine detector Friday, saying: “It is a good product. The Army has not been able to use it or buy it. Other people are using it and it’s working.”

Government officials said Friday Cubic will not be barred from getting defense contracts because it has demonstrated responsibility in the case and taken the “necessary steps” to avoid a recurrence of the problem. Cubic has annual sales of $360 million, about 40% of which is defense work, mostly U.S. government contracts, a spokesman said.

In a 24-count indictment unsealed Friday, Dennis B. Fink, 39, of San Diego, and William B. Bauder, 55, who has since moved to Tullahoma, Tenn., were charged with conspiring to defraud the United States, falsifying tests, and causing the company to submit fraudulent claims to the Army.