U.S. Bars Contracts for Sundstrand : Overcharges to Pentagon Result in Indefinite Suspension

The Pentagon has indefinitely suspended all future business with Sundstrand Corp., the Illinois aerospace firm that last week admitted overcharging the government tens of millions of dollars on defense contracts.

Sundstrand, based in Rockford, Ill., agreed to pay a record $115 million in fines and penalties for padding bills for military hardware, giving Defense Department workers and their wives gifts and illegally billing taxpayers for saunas, country club dues, baby-sitters, snowplowing and servants for company executives.

Bars Future Bidding

The suspension action against Sundstrand was taken Wednesday by the Defense Logistics Agency, but it applies to contracts with all government agencies. It covers the parent company as well as six Sundstrand subsidiaries.

The suspension does not affect current contracts, but bars Sundstrand from bidding on all future military work. It can be lifted after further investigation or made a permanent debarment, according to Larry J. Wilson, a Defense Logistics Agency spokesman.

Officials of the company argued that the firm has reorganized, dismissed several guilty executives and ceased all illegal practices and therefore should not be punished by suspension, Wilson said.

But, the Pentagon said in a statement Wednesday, “corrective actions undertaken thus far have not been adequate to convince DLA that the company is a suitable business partner for the government.”

A company spokesman did not return telephone calls seeking comment.

The charges against Sundstrand are not related to the ongoing investigation of corruption in Pentagon weapons-buying being conducted by the FBI and the U.S. Attorney’s office in Alexandria, Va. That inquiry is expected to yield indictments of Pentagon officials and defense consultants by the end of the year.

Sundstrand, which supplies electronics, hydraulic systems and “black box” flight recorders for aircraft, last year did $574 million in business with the military. It has 16,000 employees and had $1.4 billion in total sales in 1987.

Personal Expenses

The offenses that led to last week’s guilty plea began in 1980 and involved sophisticated efforts to cover up entertainment of government officials and payments of personal expenses of Sundstrand officers, prosecutors said.

A federal grand jury in Chicago is continuing a criminal investigation of Sundstrand and some Pentagon officials who did business with the firm. Anton R. Valukas, the U.S. attorney for Northern Illinois, said that the inquiry should be completed within two or three months.