Suit Alleging Northrop Test Fraud Dismissed : Justice Dept. Backs Off Case That Was Spurred by Control Device Explosion
Northrop announced Wednesday that, at the federal government’s request, a judge has dismissed a $3-million civil fraud suit alleging that the company had failed to properly test MX missile guidance devices.
The suit had been precipitated by an explosion during a government test of an MX heat exchanger in 1986. The exchanger, which is intended to control the temperature of the missiles’ guidance system, is one of 19,401 parts in the MX’s inertial measurement unit. The government suit against Northrop had been filed in U.S. District Court here in August, 1987.
“This is a very big development,” said a Northrop lawyer, who spoke on condition that he not be identified. “This is a situation where Northrop was accused of something that didn’t happen and the government has agreed it didn’t happen.”
Northop spokesman Tony Cantafio said: “The MX guidance components built by Northrop have consistently met or bettered Air Force reliability requirements since the units entered service in 1986.”
Northrop did agree, however, to reimburse the government $45,050 under the terms of its contract for damage done to government testing equipment during the explosion, according to Cantafio.
Legal Problems Not Over
The 1986 explosion incident occurred when an Air Force inspector asked to witness a heat exchange pressure test as part of his duties at Northrop, according to testimony by Col. Thomas Speed, the Air Force manager for the MX program, before the House Armed Services Committee in June, 1987. Congressional sources said at that time that the inertial measurement unit shot up to the ceiling in the explosion and one individual was injured.
No Justice Department official was available to comment Wednesday on its decision to dismiss the case.
U.S. District Judge David Kenyon signed an order bringing the case to an end on Aug. 2, but no formal announcement of that decision was made until Wednesday afternoon.
The decision to drop the case, however, does not end Northrop’s legal problems over the MX missile.
Pending is a civil fraud suit filed by several former, and one current, Northrop employees alleging a variety of wrongdoings by the company in connection with its work on the MX.
The suit was brought under provisions of the False Claims Act, which allow private citizens to bring suits on behalf of the government. The law allows private citizens to collect damages by acting as the public’s representative.
That case, also pending before Judge Kenyon, alleges that Northrop defrauded the Air Force in supplying key portions of the guidance system for the MX missile. The former Northrop employees who filed the suit allege that Northrop knowingly used defective parts on the electronic guidance system and that the company falsified tests of electronic parts.
Northrop has vigorously denied the charges and has challenged the constitutionality of the law under which the case was brought.
The suit was filed by Claremont attorney Herbert Hafif. Philip Benson, one of Hafif’s partners, said Wednesday that he was confident that the firm would prevail in the case. He said he was not shocked that the Justice Department had dismissed its case because “the government has limited resources available to them. It doesn’t surprise me that they occasionally find themselves overwhelmed.”
The Hafif firm has filed five “whistle-blower” lawsuits alleging that Northrop committed various acts of fraud in the MX, B-2 bomber and other defense programs. The Justice Department--which by law joins in such private suits if it decides they are meritorious--has declined to participate in two of the cases. One of those cases involved problems related to the heat exchanger, and at the time the Justice Department said it had already investigated the allegations and found no basis to pursue them further.
Congressional Hearings
Two other cases brought by Hafif’s firm are being reviewed by the government for possible participation, and a fifth was dismissed on technical grounds.
One Hafif case pending in federal court here alleges that Northrop produced defective guidance systems for the MX missile. And another contends that Northrop set up fictitious companies to buy missile guidance parts outside the normal purchasing system.
The allegations against Northrop sparked congressional hearings on Northrop’s work on the MX. When the issue of problems with heat exchangers was raised at hearings held in June, 1987, David Ferguson, Northrop’s vice president for electronics blamed the failure on a breakdown in the company’s testing system.
Ferguson testified that Northrop employees who falsified testing records were later disciplined. He said only five heat exchangers were not retested and then certified. When the government filed its suit in August, 1987, the Justice Department alleged that Northrop had not properly tested 20 heat exchangers.
