El Cajon Firm Expected to Plead Guilty in Defense Contract Case : Overpricing: Ametek-Straza, a submarine sonar maker, has agreed to a plea bargain in the fraud case and will pay the government $5.1 million in damages, sources say.

An El Cajon submarine sonar maker is slated to plead guilty Monday in San Diego federal court to two criminal counts of defense contracting fraud and, in a related civil case, pay the government $5.1 million in damages, sources close to the plea bargain confirmed Friday.

Ametek-Straza is due to plead guilty to two counts of overpricing in connection with the 1986 bids for sonar systems used on two classes of Navy nuclear submarines, sources confirmed. The systems work but were sold at inflated prices, sources confirmed.

The civil case involves charges of overpricing on labor from 1983 to 1987, sources said. Like the criminal case, it arose from a tip from a disgruntled former employee--who stands to pocket $765,000 of the $5.1 million under a novel anti-fraud federal law designed to reward “whistle-blowers.”

The criminal case will result in a $110,000 fine, sources said. Ametek’s eligibility for future defense contracts remains to be resolved, sources said.

Ametek is scheduled to agree to the plea bargain Monday morning before District Judge Gordon Thompson Jr., according to documents filed late Friday at the courthouse.

The bargain was struck after repeated and intense negotiations that dragged on for much of this year, sources said. The company retains the ability to back out of the pact until Monday’s court session.

Alan J. Ludecke, the San Diego lawyer for the former Ametek employee who tipped federal agents to the case, declined Friday to comment on details of the deal. But he called his client, who remains anonymous, a “sort of a hero.”

“Most people like my client have to make a living and they have to support a family,” Ludecke said. “To do so and work in the (defense) industry, obviously they jeopardize their ability to provide for their family” by coming forward with allegations of overpricing, he said.

“It takes great courage, I think, to make that kind of allegation and provide proof,” he said. Ludecke declined to offer any other details about his client.

Assistant U.S. Atty. Phillip L.B. Halpern, who prosecuted the criminal case, declined to comment Friday on the case. Ametek’s Los Angeles-based lawyers could not be reached for comment.

Ametek officials did not return a call late Friday to company offices. The company’s Straza division now appears in the phone book as Ketema--or Ametek spelled backward.

Sources, who asked to remain unnamed, said the plea bargain explains a September, 1987, raid at the El Cajon offices by about 2 dozen agents from the Defense Criminal Investigative Service and the Naval Investigative Service. Agents toiled 12 hours to pack and cart away files in a 2 1/2-ton truck.

The criminal case involves the sale price on two submarine sonar systems used, in part, for navigation under ice, sources said. The Navy uses one system, called the AN/BQS-15, in its Los Angeles-class nuclear attack subs, while it deploys the other one, the AN/BQS-6, in its Trident nuclear attack subs, sources said.

Federal law for the bidding under which the systems were sold to the Navy requires a contractor to provide up-to-date data detailing production costs, sources said. The Navy then uses that information to determine how much it will pay, sources said.

The Navy uses this bidding system in single-source contracts--that is, those where no other company stands ready to offer a competitive bid because no other firm makes the product.

The first criminal count deals with pricing information supplied in April, 1986, while the second dates from June, 1986, sources said.

If Ametek had supplied more current information, the government would have saved money, sources said. They did not disclose the amount of the potential cost savings.

The civil suit, meanwhile, was brought in Ludecke’s name on behalf of the former Ametek employee. Under the 1986 revision to an 1863 law called the False Claims Act, a private citizen may file a civil suit in the name of the government alleging fraud by a contractor and share in any financial recovery.

According to sources, the suit against Ametek charges overpricing of labor charges from March, 1983, through September, 1987, on electronics contracts with the Navy.

Of the $5.1-million settlement, the anonymous employee stands to recover 15%, or $765,000, sources said.