Taxpayers to Fund Lockheed Workers’ Health Claim Settlement : Defense: Firm will pass along the $33-million expense for employees’ toxic exposure as a ‘legitimate cost’ of building Stealth and other aircraft, a spokesman says.

Most of Lockheed Corp.’s $33-million settlement of Burbank production workers’ toxic exposure claims will be recovered from taxpayers, a company official said.

The aerospace and defense giant, which admitted no liability last summer when it settled claims by 624 workers, plans to recover most of the money through charges in its government contracts, Lockheed spokesman Keith Mordoff said. The workers maintained that they had suffered a variety of injuries from exposure to toxic chemicals during production of Stealth fighters and other military aircraft in the 1970s and 1980s.

Lockheed will apportion the settlement cost among its customers as is the normal practice, Mordoff said. Because the Department of Defense and other federal agencies account for more than 80% of Lockheed’s sales, Lockheed charges them that share of costs through pricing of its hardware and services.

Mordoff called the settlement “a legitimate cost of doing business,” adding that “such costs are allocated to all of our customers--not just the government.”

A public information officer for the Defense Contract Management District West in El Segundo said officials could not comment on an expense claim they have not seen.

“As far as we know, there has been no discussion or correspondence on the subject,” spokeswoman Gay Maund said. “We have to see if we get anything, and we have to see what it says.”

Although terms of last June’s settlement were to remain secret by agreement between Lockheed and other parties in the case, Lockheed agreed to pay $33 million to get the workers to dismiss their claims. The company put up another $300,000 so that a private judicial panel could distribute the funds among the workers--whose health complaints ranged from minor ailments to memory loss and cancer.

With Lockheed gone, the case proceeded against more than 20 chemical firms that supplied solvents, resins and epoxies used in making aircraft. The companies were accused of failing to provide adequate warnings of the risks of their products.

After an 8 1/2-month trial, including 12 weeks of jury deliberations--apparently a record for a civil trial--a mistrial was declared last month when jurors could not reach a verdict on the claims against the chemical suppliers.

Lawyers for the workers have said they will seek a retrial, although no date has been set.

The Lockheed payment was the company’s second-largest settlement of claims of unsafe working conditions in Burbank. Without admitting liability, the firm in 1989 paid $1.5 million to the U.S. Occupational Safety and Health Administration, which had cited it for hundreds of safety lapses, many involving the use of chemicals.

Mordoff called the latest settlement an allowable expense under government contracting regulations that “essentially tacks onto the price of our products. We see the settlement as having minimized costs because it prevented protracted litigation with hundreds of plaintiffs.”

But in a related type of liability--environmental cleanup--government reimbursement of Lockheed and other defense contractors has been attacked by some environmentalists and members of Congress.

Lockheed officials are expected to testify in Washington on Thursday at a hearing on the issue before the House Government Operations subcommittee on national security.

The hearing and an investigation by the General Accounting Office were prompted by disclosures that the Pentagon may spend more than $1 billion to reimburse cleanup costs of big contractors through payments under defense contracts.

The biggest example is Lockheed, expected to spend at least $263 million to clean up contaminated soil and ground water in Burbank--and then to pass on most of the expense to the government.

Rep. John Conyers Jr. (D-Mich.), a leading congressional critic, has called the reimbursements “secret bailouts” that show that “no one (at the Pentagon) is really minding the store.”