Northrop to Settle Whistle-Blower Suit
Northrop Grumman Corp. has agreed to pay $1.4 million to settle a whistle-blower lawsuit that accused the defense contractor of overcharging the U.S. Air Force for B-2 bomber instruction and repair manuals, federal prosecutors said Friday.
In the latest allegations of overcharging on the $44-billion bomber program, a former employee accused Century City-based Northrop of violating the federal Truth in Negotiations Act by inflating cost estimates on the manuals.
Northrop officials Friday denied any wrongdoing and said it settled the lawsuit to avoid disruption to the company.
“Northrop denies any liability in this case,” said James W. Taft, a Northrop spokesman. “We assessed the cost of litigation and disruption to our operation and determined it was reasonable to settle.”
In the lawsuit, filed in U.S. District Court in Los Angeles in 1996, the employee, Gary Youker, alleged that Northrop overestimated how much it would cost to purchase the manuals prepared by Boeing Co. and other subcontractors. As a result, the prices paid for the documents by the Air Force were excessive, the lawsuit alleged.
The employee discovered the discrepancy while working as Northrop’s senior materials procurement analyst in 1995, his attorney, Dean Pace, said.
“He went through Northrop management and they refused to act. He contacted special agents and then came to me to file the lawsuit,” Pace said.
The U.S. attorney’s office in Los Angeles said the $1.4 million is about twice the loss caused by Northrop’s inflated cost estimates, but Pace disputed the amount, saying his client has alleged that the overcharge was in excess of $1.4 million.
Under the settlement, Youker, who was subsequently laid off in an unrelated move by the company and now works for the U.S. Postal Service, will receive 19% of the settlement amount, or $266,000. Northrop also agreed to pay his attorney’s fees. A whistle-blower typically receives 15% to 25% of the settlement, Pace said.
The latest allegation is among a string of civil cases that have plagued the B-2 bomber program since its inception in the early 1980s, though many of them were dropped. A number of the company’s B-2 workers were charged with fraud.
