Defense Firm Whistle-Blower Wins $859,000

A former business manager at General Dynamics has won an award of $859,000 after a jury decided he was wrongly fired for raising allegations that the company had improper billing procedures and allowed extensive cost overruns.

The San Diego County Superior Court jury Tuesday granted $500,000 in punitive damages to Randall J. Holmes, which follow $359,000 in compensatory damages awarded Friday.

Holmes, 52, was fired in 1984, just days after he said he alerted company supervisors that he had spotted improper billings and overruns as part of his work as a business manager assigned to the controller’s office of the giant defense contractor.

“I feel this sends a clear message to those people working in the defense industry,” Holmes said Tuesday night. “If defense workers see any mismanagement or fraud or waste, they should pick up the phones and use the hot lines to call Washington.”

Jack Isabel, a General Dynamics spokesman, said the company will appeal.

“The verdict comes as a surprise to us,” he said. “Our counsel feels there was a total lack of evidence to support the case. And we intend to follow counsel’s recommendation to appeal the decision.”

After a two-month trial, the jury determined that Holmes, who spent 13 years with General Dynamics in San Diego, was fired in direct retaliation for raising allegations that the company was violating the federal False Statements Act.

He alleged that there were improper billing procedures on two aircraft projects, and that cost overruns that should have been borne by General Dynamics were hidden when the company converted those costs into new projects dealing with the Phalanx cruise missile, the F-16 aircraft and the M-1 tank.

Those overruns, he alleged, amounted to about $10 million--money he and his lawyer said the government later absorbed.

“They converted a General Dynamics problem into a government problem,” said the lawyer, Michael Thorsnes.

Holmes, in explaining how he identified the overruns and other problems, said: “I have a background in data systems. When you’re doing work like that, you’re trained to find problems and track them down. And all of the thrust of my background was in that area.

“So, when you’re looking at columns of figures, you can spot things like this.”

Thorsnes said that, before his client was fired, Holmes had built an exemplary work record that included achievement awards, numerous commendations and several other honors.

“Mr. Holmes had had a distinguished and unblemished career,” Thorsnes said.

Holmes said he now works in the health care industry. His wife, Judith, had also worked for General Dynamics, but she was fired in 1983. The jury found that she too was dismissed “without good cause.”

Thorsnes said that, although no criminal charges have been filed in the case, he hopes the verdicts will prompt a federal investigation into Holmes’ allegations.

“Because of the jury’s action,” he said, “an investigation may and should proceed.”