Fraudulent Pricing Claimed : Justice Dept. Pulls Out of Hughes Helicopter Suit

The Justice Department said Friday that it was withdrawing from involvement in a false claims suit in which a former employee of Hughes Helicopter Co. charged that the firm engaged in fraudulent pricing on parts for the Army’s Apache helicopter.

Department lawyers notified a federal judge in Los Angeles Thursday that, while a government audit of thousands of documents confirmed certain facts in the complaint, the inquiry did not produce enough evidence to demonstrate damage to the government.

Defendants in the suit include Hughes; the McDonnell Douglas Helicopter Co., which purchased Hughes in early 1984; two of the firm’s program managers and a subcontractor, Parker Hannifin Corp.

The action was brought March 24, 1987, under the False Claims Act by Roderick Stillwell, who worked for about six months as a subcontracts administrator for Hughes in late 1983 and early 1984.

$175 Million Questioned

The act provides cash incentives for employees of defense contractors to expose frauds against the government and provides for the Justice Department to investigate their allegations and, where appropriate, to join the suits.

Stillwell, who said he resigned under pressure after complaining about the fraud to his bosses, alleged in the suit that Hughes underbid to “buy in” on the Apache contract by submitting unrealistically low prices. He alleged that the firm then submitted false requests for reimbursement of tooling charges incurred on a later Parker subcontract to recoup its undeclared costs.

The Justice Department intervened in the lawsuit Sept. 22, 1987, and two months later, filed an amended complaint alleging that Hughes shifted $175 million in costs incurred to successive contracts.

On Aug. 1, 1988, the court struck the amended complaint.

While the department withdrew from intervention in the original complaint, Stillwell remains free to pursue it.

Besides the companies, the defendants include two former Hughes employees, Edward Vukonovich, the former section manager for major subcontracts on the Apache, and James Coyne, the director of the Apache procurement program.