U.S. Won’t Join Employee’s Suit Against Hughes : Defense: Hughes hailed the decision as a victory. The suit claims that the firm overcharged the government by $50 million on four radar programs.

The U.S. Department of Justice has declined to join a $150-million whistle-blower lawsuit filed against Hughes Aircraft by a company manager.

In disclosing the government’s decision, a spokesman for Los Angeles-based Hughes said Tuesday that this is the third time since February that the government has chosen not to join a whistle-blower case against the company.

William J. Schumer filed suit against Hughes in September, 1989, alleging that the firm overcharged the government by $50 million on four radar programs, including the one for the B-2 bomber. At the time, Schumer was a division contracts manager working at Hughes’ Radar Systems Group in El Segundo. He has since been transferred to the company’s Missile Systems Group in Canoga Park where he works as an assistant division contracts manager.

Schumer’s suit alleged that Hughes created six secret internal agreements that illegally provided for sharing development costs among four radar programs. The programs included the Navy F-14, the Air Force F-15, the Navy F-18 jet fighter programs and the Air Force B-2 bomber programs. In some cases, Schumer alleged in his suit, Hughes double-billed the radar development costs, and in other cases, it misallocated costs among fixed-price, incentive-type contracts and cost-plus-type contracts.

“We have steadfastly held that the billing procedures were proper and there was no guilt associated with them,” said Hughes spokesman Richard Dore.

Assistant U.S. Atty. Vincent Terlep Jr., citing Justice Department policy, declined to comment on the reasons the government refused to become involved in the case. The government’s decision was filed May 31 in U.S. District Court in Los Angeles but had not previously been disclosed.

Schumer’s Century City attorney, Dean Francis Pace, said the government’s decision would not deter his client from pursuing the case, adding that his client could collect even more money without the government’s participation.

Under the False Claims Act, individuals can sue contractors on behalf of the federal government and share in any awards. In addition, the government can intervene as a plaintiff if it chooses.

“We are pleased that the Justice Department has not intervened,” Pace said. “We will be able to prosecute the False Claim action vigorously and our percentage of recovery for . . . (Schumer) increases automatically from 15% to 25%.” He added: “The critical issue for Department of Defense procurements is whether a subcontractor has the right to allocate direct costs incurred on one government contract to another government contract. That issue merits not only litigation in the U.S. District Court, but ultimately in my opinion, will merit congressional hearings on the cost misallocations by Hughes Aircraft Co. A subcontractor should not usurp the rights and direction of Congress to allocate costs on whatever weapons system is convenient.”

In June, 1989, a Los Angeles federal judge dismissed the wrongful termination suit filed by Schumer against Hughes. Schumer alleged he was demoted because he refused to join in illegal activities.