Team Infidel
Forum Spin Doctor
New York Times
April 3, 2009
Pg. B4
By Christopher Drew
The Justice Department said Thursday that the Northrop Grumman Corporation had agreed to pay $325 million to settle a lawsuit over defective satellite parts in the largest settlement ever by a defense company in a case brought under a federal whistle-blower law.
But at the same time, the government agreed to settle for $325 million a separate dispute related to a canceled missile contract. As a result, the transactions offset each other financially for the company.
Northrop Grumman, based in Los Angeles, had set aside $112.5 million in 2006 to cover a possible settlement and expenses in the whistle-blower case. It said it would end up with a net gain in the current quarter as it recovered some of that reserve.
The lawsuit was brought by a scientist, Robert Ferro, and joined by federal authorities. It contended that TRW Inc. tried to stop Mr. Ferro, who worked for a subcontractor, from disclosing his finding about faulty electronic components on military and intelligence-gathering satellites. TRW was later acquired by Northrop Grumman.
Mr. Ferro’s lawyer, Eric R. Havian, said his client would be awarded $48.8 million for bringing the hazards to the government’s attention. The whistle-blower law, called the False Claims Act, requires the government to reward whistle-blowers with 15 to 25 percent of what the government recovers.
The lawsuit said Mr. Ferro discovered in 1995 that certain transistors made by TRW were likely to fail. But TRW did not tell the government about the problems, the lawsuit said, and blocked Mr. Ferro’s effort to include the information in a report to the Air Force after a satellite experienced critical failures in 2001.
“TRW deliberately suppressed Robert Ferro’s findings and sold the components to the government, knowing that those parts were likely to fail,” said Mr. Havian, a lawyer at Phillips & Cohen in San Francisco.
“Even after a satellite in space experienced serious anomalies, TRW still refused to reveal the problems found earlier with the components and had the gall to charge the government millions to investigate what went wrong with the satellite,” Mr. Havian said.
Northrop Grumman said in a statement that it believed that TRW had “acted properly under its contracts” and that the company had substantive defenses against the claims.
The other settlement involved a claim that Northrop had brought against the Air Force in 1996. In that case, the company sought more than $1 billion in compensation after the government terminated its contract to produce a tactical weapon called the Tri-Service Standoff Attack Missile, the Justice Department said.
April 3, 2009
Pg. B4
By Christopher Drew
The Justice Department said Thursday that the Northrop Grumman Corporation had agreed to pay $325 million to settle a lawsuit over defective satellite parts in the largest settlement ever by a defense company in a case brought under a federal whistle-blower law.
But at the same time, the government agreed to settle for $325 million a separate dispute related to a canceled missile contract. As a result, the transactions offset each other financially for the company.
Northrop Grumman, based in Los Angeles, had set aside $112.5 million in 2006 to cover a possible settlement and expenses in the whistle-blower case. It said it would end up with a net gain in the current quarter as it recovered some of that reserve.
The lawsuit was brought by a scientist, Robert Ferro, and joined by federal authorities. It contended that TRW Inc. tried to stop Mr. Ferro, who worked for a subcontractor, from disclosing his finding about faulty electronic components on military and intelligence-gathering satellites. TRW was later acquired by Northrop Grumman.
Mr. Ferro’s lawyer, Eric R. Havian, said his client would be awarded $48.8 million for bringing the hazards to the government’s attention. The whistle-blower law, called the False Claims Act, requires the government to reward whistle-blowers with 15 to 25 percent of what the government recovers.
The lawsuit said Mr. Ferro discovered in 1995 that certain transistors made by TRW were likely to fail. But TRW did not tell the government about the problems, the lawsuit said, and blocked Mr. Ferro’s effort to include the information in a report to the Air Force after a satellite experienced critical failures in 2001.
“TRW deliberately suppressed Robert Ferro’s findings and sold the components to the government, knowing that those parts were likely to fail,” said Mr. Havian, a lawyer at Phillips & Cohen in San Francisco.
“Even after a satellite in space experienced serious anomalies, TRW still refused to reveal the problems found earlier with the components and had the gall to charge the government millions to investigate what went wrong with the satellite,” Mr. Havian said.
Northrop Grumman said in a statement that it believed that TRW had “acted properly under its contracts” and that the company had substantive defenses against the claims.
The other settlement involved a claim that Northrop had brought against the Air Force in 1996. In that case, the company sought more than $1 billion in compensation after the government terminated its contract to produce a tactical weapon called the Tri-Service Standoff Attack Missile, the Justice Department said.