AT&T Corp. will pay a $13.9 million settlement of allegations it overcharged the government on a lease for electronic switches vital to the nation's air traffic control system, the Justice Department said Friday.
The switches, used at 21 of the nation's largest air traffic control centers, enable controllers to speak with each other and with pilots while a plane is en route to its destination.The settlement provides that AT&T will give the government $5.5 million cash and reduce its charges by $8.4 million over the remaining life of the lease.
The lease, which originally totaled $23 million with interest, expires Feb. 29, 1996, if the government exercises the last of its option years.
The government alleged that AT&T knowingly failed to provide government negotiators with the net book value of the equipment, WECO 300 switches, while negotiating the lease price. The net book value was the depreciated value of the equipment on AT&T's books in 1987 and 1988, when the lease was negotiated.
AT&T issued a statement denying liability or wrongdoing of any kind.
"In our view, this entire matter simply involved a lingering disagreement among reasonable people over the depreciation costs and book value of the 300 Switch System equipment. We have agreed to settle only because we want to get this matter behind us," the company said.