Hughes Settles Maverick Suit for $11 Million

Hughes Aircraft said Friday that it agreed to settle for $11 million a civil suit brought by the Justice Department involving the pricing of the Maverick missile.

The terms of the settlement provide for no admission of guilt by Hughes and an agreement by the Justice Department that it will not pursue further civil or criminal actions against the firm, company spokesman Richard Dore said.

In addition, the Air Force has told Hughes that it will not seek a suspension or debarment action against the firm, a penalty that military services sometimes impose on contracting wrongdoers.

The case was originally brought by an employee, Donovan Jacobs, under the federal False Claims Act, which allows individuals to sue contractors on behalf of the government and share in any awards.

The Justice Department joined the case while it was still under court-ordered seal. The settlement is the first public information about the case.

The allegations involved the certification of cost and pricing data on the Maverick missile, an air-to-ground anti-tank missile that was widely used in the Persian Gulf War. Dore said Hughes’ costs were actually lower than those of its competitor, Raytheon, by $28 million.

“We met with the Department of Justice, and after seeing what their claims were, we just felt it was to our benefit to settle the matter,” Dore said. “To us, it was a contract dispute on pricing.”

Dore said that under the agreement, the Department of Justice would receive $9 million and Jacobs would receive $2 million. That would rank among the largest awards given to a single whistle-blower.