Defense contractor Lucas Western Inc. said Friday it has reached an agreement with the federal government to pay an $18.5 million fine to settle the criminal aspects of an investigation involving two military contracts.
Lucas spokeswoman Renate Myles said that, subject to approval by a federal court in California that is expected Monday, Lucas Western will enter a guilty plea to 37 counts of falsifying statements and will pay the fine - one of the largest criminal defense fraud settlements ever made.Last year, defense contractor Teledyne Inc., paid $20.65 million in fines and restitution in a criminal case also involving Pentagon pro-curement fraud.
Civil costs in the case are still being discussed among attorneys for the company and government prosecutors.
The government investigation involved the Airframe Mounted Accessory Drive (AMAD) gearboxes for the U.S. Navy's F/A-18 fighter plane and the azimuth drive units (ADU) for the U.S. Army's Multiple Launch Rocket System.
The two plants involved in the investigation were its Geared Systems Divisions in Park City and its Applied Technology Division, formerly based at City of Industry, Calif. Applied Technology was consolidated last year at the Park City plant, and both continue to supply the parts in question. Both companies are subsidiaries of Lucas Industries PLC, a British firm based in London.
Some 20 employees in management and supervisory positions who were involved in the falsification of statements "are no longer employed by the company," Myles said.
The guilty plea by Lucas Western acknowledges that between 1990 and 1993, some employees falsified reports to the government stating that certain inspections had been performed on the AMADs and ADUs when they had not.
But Myles said the parts in question were subjected to "rigorous performance tests" before being shipped out of the plants and they performed as required by the contract. She said independent studies, using Navy data, indicate the AMDA has continually met government performance requirements, and the ADU has never had a field failure.
John Berkenkamp, president of Lucas Aerospace U.S. Operations, said in a prepared statement, "This early settlement of this part of the investigation is the result of proactive actions taken by Lucas management to resolve these issues as expeditiously as possible and demonstrates our commitment to quality and integrity."
Myles said the company has established a new management team at Geared Systems, has implemented a company-wide ethics program and now conducts independent quality and compliance audits at all facilities doing business with the government.
"The company has acted responsibly, cooperating fully with the investigation," said Berkenkamp. "As a result of these incidents, we have made a multimillion-dollar quality investment at all U.S. plants to ensure that all employees fully understand and comply with the in-place processes and procedures."