U.S. Lifts Suspension on Hughes Unit

Hughes Aircraft Co. said Monday that the Air Force has lifted its month-old suspension against Hughes’ missile systems group headquarters in Canoga Park, allowing the unit to resume bidding on programs and receiving government contracts.

The missile unit had been suspended from getting new contracts by the Air Force Debarment and Suspension Review Board on May 9. The suspension resulted from Hughes’ guilty plea to two felony counts in federal court last March.

Hughes admitted in the case that its executives illegally obtained secret Pentagon documents in an effort to gain competitive advantage. In pleading guilty, it agreed to pay $3.6 million in penalties.

At the time of the suspension, the Air Force also threatened to bar the missile facility from bidding on new government work for up to three years. Although many companies have been suspended from receiving government work, no major contractor is known to have been slapped with a long-term bar--or “debarment,” as the Air Force terms it.

The lifting of the suspension, which was effective Monday, returns the Hughes unit to its status as a “responsible contractor,” meaning that it has cleaned up its criminal problems and is now complying with government procurement regulations.

Hughes said that, under the terms of its settlement with the Air Force, it will continue its companywide ethics training program, issue new procedures and conduct training aimed at improving its marketing and security practices.

“With the help of the Air Force, we put together a plan of action to make sure that this doesn’t occur again,” said Hughes spokesman Richard Dore.

An Air Force spokesman confirmed Monday that the suspension had been lifted, but said no other details were available.

The Hughes missile systems group is based in Canoga Park and has plants in Tucson and LaGrange, Ga. The suspension applied only to the Canoga Park plant, which is the research and development center for the group. The plant has 2,100 employees, mostly scientists and engineers.

Dore said Hughes was forced to forgo bidding on one relatively small government contract with an estimated value of $2 million during the suspension. The missile systems group had sales of more than $1 billion in 1989, Dore said.

But a long-term suspension or debarment could have crippled the entire missile systems group, since the Canoga Park unit’s work provides the basis for future programs, industry sources said at the time of the suspension.

The criminal plea entered by Hughes was part of the large “Operation Undercover” criminal probe, in which GTE, Boeing and RCA also have entered guilty pleas. In the Hughes case, the company admitted that it had acquired numerous classified documents from 1978 through 1985 and filed them under false titles to conceal them from government auditors.