Judge Throws Out B-2 Radar Fraud Lawsuit
A federal judge on Friday dismissed allegations brought in a federal whistle-blower lawsuit that Hughes Aircraft defrauded the Air Force on the radar system for the B-2 bomber.
The suit, filed by Hughes executive William Schumer, alleged that the Los Angeles aerospace firm had illegally pooled the development costs for four military radars, including the B-2’s, and shifted charges between contracts, resulting in overcharges of $40 million.
Hughes asked U.S. District Judge Mariana R. Pfaelzer to dismiss the case, arguing that Schumer was not the original source of the allegations. Pfaelzer denied that motion, but she granted another company motion asking for “summary judgment,” deciding against Schumer on the merits of the case, according to court filings and attorneys in the case.
A formal court order detailing the reasons for the ruling had not been issued Friday, according to a court clerk. Pfaelzer declined to be interviewed.
“From Hughes’ standpoint, we are pleased with it and it supports what we had been contending the whole time,” Hughes spokesman Richard Dore said. “The judge ruled that there was no basis in law for (Schumer’s) complaint and granted the dismissal.”
When Schumer filed the suit in September, 1989, the B-2 bomber program was so secret that the suit could refer to the B-2 radar only by a non-classified euphemism, the “2301 Special Program Contract.” The suit was brought under the federal False Claims Act, which allows individuals to sue contractors on behalf of the government and share in any awards.
Schumer, who was director of contracts at the Hughes division in El Segundo that built the radar, is believed to be the highest-ranking executive ever to bring such charges against his employer. Schumer, who has a law degree but is not a practicing attorney, said he negotiated the original B-2 radar contract for Hughes.
“It is not disappointing so much as it is baffling,” Schumer said Friday. “I am far from finished and remain convinced that my refusal to participate in what I considered at the time, and still consider to be, fraudulent acts was the right decision. I don’t regret that one iota.”
Schumer alleged in his suit that Hughes set up a secret agreement within the company to pool research and development costs for the B-2 radar and improvement programs for the F-14, F-15 and F-18 jet fighter radars. He alleged that the cost pool was not disclosed to the Air Force and was used to shift costs to the B-2’s contract, which had no cost ceiling.
Schumer alleged that he refused instructions from his superiors, who asked him to draft an internal legal agreement to facilitate the pooling system. He was later transferred to the Hughes missile systems group in Canoga Park.
The Schumer case was scheduled for trial this summer. Any appeal will depend on Pfaelzer’s formal orders, according to Phillip Benson and Herbert Hafif, Schumer’s attorneys.
“We won’t really know what the scope of her order is until we read it,” Benson said.
