Washington, D.C. -- Hughes Aircraft Company will pay the United
States $4,050,000 to settle claims the company failed to perform certain
tests oncomponents used in advanced electronic equipment such as radar units
formilitary aircraft, missile guidance units and delicate tracking equipment,
the Department of Justice announced today.
Assistant Attorney General Frank W. Hunger, in charge of the CivilDivision,
said the agreement settled a fraud suit brought originally on May29, 1990,
in U.S. District Court in Los Angeles by two private citizens,Margaret Goodearl
and Ruth Aldred, and a non-profit corporation, TaxpayersAgainst Fraud. The
government intervened and took over the case after alengthy investigation.
In filing an amended complaint, the Department alleged that from early1985
and continuing at least though January 9, 1987, Hughes failed toperform
certain environmental screening tests on the electroniccomponents--microcircuits
known as hybrids--that were manufactured, testedand shipped by Hughes from
its Microelectronic Circuits Division at NewportBeach, California.
The complaint further alleged that Hughes supervisors instructedemployees
in the Environmental Test Area, including Goodearl and Aldred, toomit tests,
to shorten required procedures, to pass hybrids that had failedparticular
tests, to perform unauthorized and undocumented rework on hybridsthat had
failed particular tests and to perform the tests by falsifying thedocuments
accompanying each piece through the manufacturing process to showthat the
tests had been properly done.
As a result, the company allegedly submitted false claims on all of
theprime contracts it held or, where Hughes was the subcontractor, caused
theprime contractor to do so.
Approximately 75 government programs involving all branches of themilitary
were affected, including the Navy's F-14, F-18 and A6E aircraft,the Air
Force's F-15 aircraft, the AAMRAM and Phoenix missile programs, andthe Army's
M-1 tank.
The suit was filed under the qui tam provisions of the False ClaimsAct,
31 U.S.C. 3729-31. Private citizens bringing an original actionunder the
act are known as "relators" and are entitled to an award of aportion
of the amount recovered by the government not to exceed 25 percentin these
circumstances. Under the agreement settling the case, the relatorswill receive
an award of $891,000 out of the $4,050,000 payment to thegovernment. Hughes
will pay a separate and additional $450,000 to relators'counsel to cover
attorneys' fees, costs and expenses.
In a related criminal case that concerned only charges relating to
theAAMRAM program, Hughes was convicted in 1993 of conspiring to defraud
thegovernment by knowingly and deliberately producing hybrids that had not
beentested in the manner specified by the contract and applicable militaryspecifications.
Hughes was fined $3.5 million.
Hughes's conviction and fine were affirmed on appeal, United States
v.Hughes, 20 F.3d 974 (9th Cir.), cert. denied, 115 S.Ct. 482 (1994). A
Hughessupervisor was acquitted of criminal charges in the same case.
The civil action was handled by the Department's Civil Division,Commercial
Litigation Branch, with assistance from the Air Force Office ofSpecial Investigations
and the Defense Criminal Investigative Service.