Pentagon Debars Unit of Teledyne : Aerospace: Further layoffs are predicted by maker of relay switches, which was convicted of fraud in its testing program.

The Defense Department announced Tuesday that it has halted all purchases from a division of Los Angeles-based Teledyne Industries for a year, branding the company “not presently a responsible contractor.”

The decision affecting Teledyne Relays is the first such action against a major defense contractor--in this case, the nation’s 40th-largest--in years. It comes at a time of mounting legal and financial troubles for the Century City-based firm.

The Pentagon’s action will probably bring further layoffs at the subsidiary, said Berkley Baker, spokesman for Teledyne Industries, parent company of Teledyne Relays. Curtailment of Defense Department contracting over the last six months has already led to reductions of more than 30% in the Teledyne Relays work force, which stood last year at just over 500.

The action follows the conviction in November of Teledyne Relays for massive fraud in the testing of electronic relay switches. The firm paid a $17.5-million fine, the largest penalty ever imposed on a defense contractor in a criminal case.

The case revealed that Teledyne Relays sold the government millions of relay switches that did not meet government standards.

The Pentagon said Tuesday that another factor in its decision to bar the division was a 1989 conviction of another Teledyne Industries unit, Teledyne Electronics, in a fraud case. After that conviction, the Pentagon said, Teledyne did not make promised changes in ethics policies.

Since 1989, the Pentagon said, Teledyne “has periodically reported” that it had established such programs, when none existed before July, 1992.

The relay switches produced by Teledyne are used in a number of U.S. weapons and space systems, including the Patriot missile and the space shuttle, and help carry electronic signals throughout the nation’s high-technology arsenal. About 12 million relays are believed to have been produced during the period in which the fraudulent test program was conducted.

In 1992, Teledyne Industries received $401.5 million in U.S. military contracts. Only Teledyne Relays--which accounted for about 5% of those contracts--will be affected by the debarment, the Pentagon said. About half of Teledyne Relays’ business last year was with the Defense Department, Baker said.

“We’re disappointed in the action and we think it’s unjustified,” Baker said. “The test procedures and product quality are no longer an issue. We’re being suspended for actions that took place before July, 1992, that address administrative procedures and not the quality of our product. To the best of our knowledge, there hasn’t been any confirmed malfunction of the product in application.”

Baker said the Defense Logistics Agency had not yet formally notified the company of its action.

“We think this is an excellent first step by the government,” said Janet Goldstein of Hall & Phillips, a West Los Angeles law firm representing two men in a civil action for damages against Teledyne Relays for its allegedly fraudulent testing practices. The Justice Department has joined that suit.

Times staff writer Henry Weinstein contributed to this story.