LOS ANGELES — Northrop Grumman Corp. has agreed to pay $111 million to settle a whistleblower lawsuit claiming that TRW Inc. improperly billed the government on several projects from 1990 to 1997.
The suit was filed under the federal False Claims Act by a former employee of TRW, which was acquired by Northrop Grumman in 2002. The Department of Justice later joined the suit as a plaintiff.
The suit was filed by Richard Bagley, a former financial executive with TRW's space division, in 1994. According to lawyers representing Bagley, the lawsuit alleged that TRW charged the federal government for virtually all of the $11 million it spent to develop a commercial satellite-based telephone system called "Odyssey."
The suit also said TRW inflated overhead costs to recoup nonreimbursable costs under another program and allocated some research and development costs from its center for automotive technology to unrelated contracts the federal government had with TRW's Space and Technology Group, according to Bagley's lawyers.
Under the terms of the settlement, Northrop Grumman denied any wrongdoing.
The lawsuit sought damages from TRW of $56 million, which were subject to trebling, according to documents filed by Northrop Grumman with the Securities and Exchange Commission.
The federal government has agreed to pay Bagley $27.2 million, or 24.5 percent of the settlement under the terms of the False Claims Act, according to Bagley's lawyers.
Northrop said the settlement was contemplated when it acquired TRW. Although the settlement will affect the company's cash position, Northrop reiterated its previous guidance for earnings in the range of $3.80 to $4.20 per share for 2003.
Northrop Grumman still faces three other federal suits involving allegations of accounting rule violations and fraud. Those suits could cost the company an additional $1 billion in damages.
Two of those suits involve companies that Northrop acquired in recent years.
Northrop shares fell $1.90, or 2.2 percent, to close at $83.50 each on the New York Stock Exchange.