U.S. Files Suit Against Northrop

Northrop Grumman Corp., the No. 4 defense contractor, is being sued by the U.S. Justice Department for allegedly overcharging the government by more than $100 million for installing electronics on military aircraft.

The allegations stem from a lawsuit filed under the False Claims Act by two former Northrop employees in 1989. The U.S. attorney’s office investigated the claims until 1992 without filing criminal charges against Los Angeles-based Northrop.

That changed last year when new information came to the attention of the Justice Department. The U.S. attorney filed a new civil suit in U.S. District Court against Northrop earlier this month, a move described by one expert as “hugely unusual.”

“It’s just not consistent with my experience with the Justice Department,” said Steven Schooner, an associate professor of law at George Washington University in Washington.

Randall Samborn, a spokesman for the U.S. attorney’s office in Chicago, declined to comment on Schooner’s statement.

He also couldn’t confirm a report in the Chicago Tribune that Northrop was under criminal investigation.

New information in the case indicated that Northrop had a “systematic program of concealing incriminating evidence,” said Michael Behn, a Chicago attorney representing the two former Northrop employees, Rex Robinson and James Holzrichter.

“Documents were destroyed and national security clearances were abused, according to the witnesses,” Behn said in an interview.

Northrop is confident that it will be vindicated when the case comes to trial, said Randy Belote, a company spokesman. He said the claims against Northrop were made by disgruntled former employees.

“This matter was fully investigated by the U.S. attorney’s office from 1989 to 1992,” Belote said. “After 1992, the U.S. attorney declined to criminally prosecute and also declined to intervene civilly in this case.”

Shares of Northrop fell $1.95 to $100.35 on the New York Stock Exchange.