Northrop Satellite Case Settled

A long and complicated case over satellite parts came to an end for Northrop Grumman.

The company, one of the Washington region's largest employers, agreed to pay $325 million to resolve allegations it provided and billed the National Reconnaissance Office for defective military satellite parts, according to the Justice Department. It is the largest settlement ever by a defense company in a case brought under a federal whistle-blower law.

Northrop and TRW, which Northrop bought in 2002, failed to properly test certain parts made by TRW between 1992 and 2002, according to the Justice Department investigation. As a result the companies placed certain defective parts into U.S. military satellite equipment. The companies, the government said, also misrepresented and hid certain facts about the parts' reliability, according to the Associated Press.

The settlement also ended a whistleblower lawsuit filed by an employee of research firm Aerospace Corp. and a former tester of TRW parts. Robert Ferro will receive $48.75 million as his share of the settlement.

"TRW deliberately suppressed Robert Ferro's findings and sold the components to the government, knowing that those parts were likely to fail," said Ferro's lawyer, Eric R. Havian, a lawyer at Phillips & Cohen in San Francisco told the New York Times.

"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," Havian said.

Prosecutors said they also settled a contract dispute brought by Northrop concerning its contract with the Air Force to develop and produce a low-cost tactical cruise missile. Northrop, which filed the suit in 1996, sought $1 billion in damages. The suit was settled for $325 million.

Northrop said in a statement that the two settlements offset each other.

---Dana Hedgpeth

By Dan Beyers |  April 3, 2009; 11:35 AM ET
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