Northrop Faked Missile Tests, U.S. Says in Suit : Justice Department Joins $60-Million Civil Action Against Aerospace Giant

The Justice Department has charged that Northrop systematically falsified tests on guidance components for nuclear-armed cruise missiles, it was disclosed Thursday.

The federal government has joined forces with two former Northrop employees in a $60-million civil lawsuit they brought against the aerospace firm in November, 1987. The lawsuit was unsealed Thursday in U.S. District Court in Los Angeles.

The employees alleged that the plant manager of a Northrop facility in El Monte was involved in the improper testing and that their complaints went unheeded. The former Northrop employees, Leocadio Barajas and Patricia Meyers, were responsible for quality assurance.

After a lengthy investigation, the Justice Department last month decided to intervene on behalf of the employees and join in the case. Such intervention is permitted under the federal False Claims Act that Northrop is charged with violating.

A federal grand jury in Los Angeles is conducting a separate criminal investigation of the alleged test falsifications, along with several other controversial matters involving Northrop.

Political Payoffs Being Examined

The $60-million civil suit and the subsequent participation of the Justice Department is just the latest legal woe that has confronted Northrop. This is the second time the Justice Department has sued Northrop for falsifying tests. In August, 1987, the firm was sued by the government for $3 million for allegedly conducting improper tests on the MX nuclear missile guidance system.

Earlier this week, it was disclosed that Northrop Chairman Thomas V. Jones has been subpoenaed by a congressional committee looking into whether the firm made political payoffs in South Korea in the mid-1980s.

The civil suit, which had been sealed at Northrop’s request, alleges that the firm both failed to test and falsified tests on critical guidance parts known as flight data transmitters, which were produced at a small Northrop facility in El Monte and later Pomona with about 30 employees. The transmitters were part of the Air Launched Cruise Missile, produced by Boeing.

Northrop closed down the Pomona facility in October, 1987, and fired the plant manager and three other employees.

At a congressional hearing chaired by Rep. John Dingell (D-Mich.) that month, former Northrop Vice Chairman Frank Lynch admitted that tests were falsified and that information about the incidents was reported by employees to the Air Force.

Asked why the employees did not take complaints to management, Lynch told Dingell, “Unfortunately, the manager of the plant was involved in the falsification of the tests.”

According to the suit, Barajas was employed by Northrop from 1981 to 1987 as a quality assurance test engineer on the transmitter units. Meyers worked for Northrop from 1981 to 1985 as a quality control inspector.

The transmitters were supposed to be exposed to heat and cold to screen out defective units, a procedure called a “production reliability verification test.”

The suit alleges that from 1981 to 1983 technicians failed to even read those results. And between 1983 and 1986, test technicians “regularly falsified” results when a unit failed. As a result, all the units produced since 1983 “must be deemed suspect ,” the suit claims.

In addition, the suit alleges that Northrop failed to perform portions of “acceptance tests “ on virtually every flight data transmitter between 1981 and 1986. It said the firm created the data.

Seeks Heavy Penalty

The suit said Northrop shipped about 1,764 flight data transmitters, costing $8,000 to $9,000 each, over the life of the program. It said the total value of Northrop’s work was about $20 million and seeks recovery of that full amount. In addition, it seeks a tripling of the damages and a $3-million civil penalty.

Under the False Claims Act, individuals can sue government contractors on behalf of the government and share in any damages. The government can join in the prosecution, which occurred in the Northrop case on Feb. 15, according to U.S. Atty. Robert Bonner.

Normally, such cases are unsealed once the Justice Department decides to enter the case or declines. But Northrop obtained an order to seal the case after Feb. 15.

The Justice Department and attorneys for the employees successfully argued before Judge David Kenyon on Thursday to lift the seal.

Northrop spokesman Tony Cantafio declined to comment on why Northrop sought to have the case sealed.

Herbert Hafif, the Claremont attorney representing the employees, said: “They are simply trying to avoid the bad publicity.”

Securities analyst Joseph Campell of Paine Webber said it was not surprising that the government sued Northrop since Northrop has admitted mistakes were made.

“The government joining the case gives weight to the allegations but not to the amount (of claimed damages),” Campbell said. “It is a lot of money.”

Cantafio said the company has not set up a reserve to cover potential damages in the case.

Robert Kilborne, an attorney who also represents the employees, said: “The government has now verified that our allegations are true.”

Didn’t Meet Specifications

Asked to comment on the $60 million in damages cited in the suit, Cantafio noted that the total value of the cruise missile contract was only $20 million, which “implies that they did not receive any of the more than 1,700 units they are using on cruise missiles, which according to a General Accounting Office report in 1987 are reliable and performing their intended mission.”

But Kilborne said the same GAO report found that nine out of 10 flight data transmitters did not meet their specifications.

Howard F. Daniels, an assistant U.S. attorney in Los Angeles, said the GAO report is outdated now. “At the time it was done, I don’t think anybody had a handle on what was happening,” he said in a telephone interview.

The case is not expected to come to trial for at least a year, Kilborne said.

Hafif and Kilborne have filed at least five suits against Northrop. The Justice Department declined to enter two cases. On another MX case, the Justice Department filed the $3-million claim. A fifth case on the use of fictitious businesses to buy missile parts is still sealed.