US government and defence contractor Northrop Grumman in tit-for-tat settlements

US defence contractor Northrop Grumman Corp. agreed Thursday to pay $325 million to resolve allegations it provided and billed the National Reconnaissance Office for defective military satellite parts.

The payment was agreed on to resolve claims that TRW, which it acquired in 2002, provided defective parts for a spy satellite programme in the 1990s.

But in an unusual twist, the federal government also announced last night that it had settled a separate, long-running dispute with Northrop and agreed to pay the aerospace company $325 million - essentially meaning that no money will change hands.

In an e-mail, a Justice Department official said that because the two settlements with Northrop were of equal amounts, "no money is exchanged."

The Justice Department said its investigation found that the company failed to properly test certain parts, known as heterojunction bipolar transistors, made by TRW between 1992 and 2002. It also found that the companies misrepresented and hid certain facts about the parts' reliability.

Robert Ferro, an electrical engineer for the Aerospace Corp., a federally funded research lab that was evaluating a satellite transistor for the Pentagon, had initiated the lawsuit that alleged TRW sold the government electronic components that the company knew would fail. Ferro had been a tester of TRW parts.