TRW Admits It Overcharged on Pentagon Work : Pleads Guilty in Court; Agrees to Pay $3 Million in Fines and Penalties

Defense contractor TRW Inc. pleaded guilty Thursday to conspiring to overcharge the government for military aircraft and tank parts and agreed to pay $3 million in fines and penalties.

“TRW as a company deeply regretted that the events occurred. We have taken steps to try and prevent a recurrence of those incidents,” said William B. Lawrence, the company’s vice president and assistant secretary.

Lawrence waived the company’s right to a trial and entered a guilty plea before U.S. District Judge George W. White.

The $3 million in fines and penalties was one of the largest such payments ever assessed against a defense contractor, according to U.S. Atty. Patrick McLaughlin.

TRW also agreed to make an irrevocable advance payment of $3 million to be applied toward restitution to the Defense Department. The amount of restitution is to be decided in a pending civil case.

TRW has estimated that its Compressor Components division overcharged the government between $3 million and $11 million from 1973 to 1984, Lawrence said. McLaughlin declined to discuss the amount the government would seek in the civil case.

Earlier Refund

Thursday’s guilty plea concludes a federal grand jury investigation that began in 1984, when TRW voluntarily disclosed that its employees had engaged in questionable conduct, McLaughlin said.

Previously, the company had refunded $8.8 million to the government. After Thursday’s agreements, the company will have paid $14.8 million to the government, making it the largest recovery of funds from a defense contractor in a voluntary disclosure case, McLaughlin said.

TRW pleaded guilty to conspiring to inflate labor expenses it charged the government for the manufacture of military aircraft engine parts between 1973 and 1984; to inflating labor costs on compressor fan blades for the M-1 tank between 1980 and 1984, and to charging for operations and labor never performed in the manufacture of blades for the J-79 aircraft engine.

Lawrence said TRW has instituted employee responsibility programs approved by the Defense Department to prevent future overcharging and sold the Compressor Components division in 1986 as part of a corporate restructuring.

He said the company’s internal investigation in 1984 uncovered overcharging but found that the conspiracy was limited to low-level managers.

Four former TRW employees have pleaded guilty to conspiring to defraud the government, and a fifth, Charles Broome, 64, is to be tried Sept. 6 on charges of conspiracy and making false statements, McLaughlin said.

Lawrence said he did not expect Thursday’s settlement to affect other TRW defense contracts or attempts to bid for additional defense work.

“We have worked very closely with the Department of Defense with respect to these matters,” he said. “And in our view there is no significant risk we would be debarred.”

In a related 1987 settlement, the Defense Department agreed not to bar TRW from government contracting based on the Cleveland case, the company said in a statement.