Northrop Grumman and US DoD settle lawsuits for $325 million

03 April 2009

Washington: US aerospace giant Northrop Grumman and the US defence department have agreed to mutually settle two disputes for a sum of $325 million. While Northrop settled a suit filed against it for supply of defective parts for spy satellites, the government, in turn, has agreed to pay Northrop Grumman the same amount for a lawsuit the company brought in 1996 over the termination of an US Air Force contract to develop a stealthy tactical cruise missile, the Justice Department said.

The government will still have to fork out a hefty $48.75 million to pay whistleblower Robert Ferro as his share in the recovery of the $325 million in the satellite case.

"Today's settlement demonstrates that defense contractors will be held accountable and that the government will aggressively pursue all allegations of misconduct in the procurement process," said Michael Hertz, an acting assistance attorney general.

In the spy satellite case, government investigations revealed that TRW Inc, which Northrop Grumman acquired in 2002, failed to test, or qualify, micro-electronic parts for spy satellites it was supplying under contract to the National Reconnaissance Office.

"The investigation further concluded that Northrop and TRW made misrepresentations about, and concealed certain material facts regarding the reliability" of the parts, the Justice Department said.

The other settlement involved a dispute running since the mid-1990s over cost and schedule overruns that led to the government terminating a contract that Northrop Grumman had with the USAF in the mid-1990s to develop the Tri-Service Standoff Attack Missile (TSSAM).