U.S. Joins Hughes Whistle-Blower Suit

The U.S. Department of Justice joined a whistle-blower lawsuit against Hughes Aircraft Co. on Thursday, alleging that the company overcharged the government by $5 million during the early 1980s by switching charges among contracts for radar systems.

The suit, brought under the federal False Claims Act, was originally filed in May, 1989, by John N. Perron Jr., who continues to work at Hughes’ radar systems group in El Segundo, said Perron’s attorney, Dean Francis Pace.

A Hughes spokesman denied the allegations and said the case was unwarranted. It is the first time the Justice Department has entered a whistle-blower case against Hughes. Of three prior False Claims suits against Hughes, one has been dropped, one is expected to be dropped and the third is continuing without Justice Department participation, the spokesman said.

Perron alleges in his suit that from 1981 through 1985, the firm’s environmental test laboratory in El Segundo falsified employee time records and concealed a fraudulent charging scheme in which costs that should have been billed to a fixed-price contract were instead billed to a cost-plus contract. By that means, the government was forced to bear the excess costs, the suit alleges.

The fixed price contracts were for the F-14, F-15 and F-18 radar systems. The cost-plus contract was for the Roland missile system.

The suit claims that the company destroyed time cards prepared by employees, altered other time cards and demanded employees sign blank time cards that were later used to make false entries.

In a second allegation, Perron said the company continued to submit charges for the four programs at a time in 1986 when the Air Force had refused to accept deliveries of missiles from Hughes and there was a suspension of production.