Whistle-Blower’s Lawsuit Alleges TRW Unit Defrauded Government

TRW Inc.’s Space and Technology Group in Redondo Beach allegedly defrauded the government of more than $50 million under a billing scheme involving top company officers, including former TRW executive and current NASA Administrator Daniel Goldin, according to a whistle-blower lawsuit backed by the government.

The 1994 lawsuit, which was made public Thursday, was filed under seal in U.S. District Court in Los Angeles by Richard D. Bagley, a longtime TRW employee who was laid off the previous year.

After a lengthy investigation of the accusations, the Justice Department decided to back at least two of the whistle-blower’s allegations and intervene in the case.

“This suit is a signal to government contractors that the department will investigate and pursue those entities that mischarge the United States and attempt to hide those mischarges through the use of artful accounting procedures,” said Assistant Atty. Gen. Frank W. Hunger of the Justice Department’s civil division.

In a statement issued Thursday, TRW said it “strongly disagrees with the government’s positions and will vigorously defend this lawsuit.”

Under an amended complaint to be filed soon, the Justice Department alleges that from 1990 to 1992, TRW falsely charged the government for in-house research and development and other costs associated with TRW’s attempt to enter the space-launch-vehicle business.

In addition, from 1990 to at least 1995, engineers at TRW’s Space Park facility in Redondo Beach misclassified work for the company’s automotive unit as “long-range marketing,” a move that had the government paying a greater amount of overhead costs, according to claims by the Justice Department.

The government also contends that TRW wrongly charged the Defense Department for work on a prototype satellite solar wing. The Justice Department did not put a dollar figure on the allegations, but attorneys for the whistle-blower estimate the government overpaid by at least $50 million.

It is unclear whether the government will allege any involvement by Goldin, who was general manager of the space and technology group before becoming NASA’s top official in early 1992.

But in his whistle-blower complaint, Bagley said that as director of financial control, he reported directly to Goldin and made Goldin and others aware of his concerns over the charges. Bagley claims his concerns were rebuffed and that he was later relieved of responsibility for the programs involved and ultimately was targeted for layoff.

Officials at NASA and Cleveland-based TRW denied any improper activity by Goldin. “These were issues that were beyond his expertise,” said NASA spokeswoman Peggy Wilhide, “and he referred these and other financial matters to higher-level financial experts.”