Lawsuit alleges Northrop defrauded U.S. over anti-missile contract

Reuters News
Posted: Jan 30, 2014 9:00 PM

WASHINGTON (Reuters) - A lawsuit by a former Northrop Grumman employee alleges that the defense contractor defrauded the U.S. government over a contract to provide commercial airliners with a missile defense system.

The suit, which was originally filed in 2009 by Leo Danilides, was unsealed in federal district court in Chicago on Thursday. The U.S. Justice Department said in a separate filing it was not joining in the action.

The suit was filed under the False Claims Act, which lets people collect rewards for blowing the whistle on fraud against the government.

Northrop spokesman Randy Belote said the company typically did not comment on litigation matters.

The U.S. Department of Homeland Security contract involved an effort called the Counter-MANPADS program, designed to protect civilian airliners after an unsuccessful shoulder-fired missile attack against an Israeli airplane taking off from Mombasa, Kenya, in 2002.

Northrop received a contract in 2006 to provide improvements for work it had done in two earlier phases of the project "and "create a commercially feasible system," according to the lawsuit. It said the plaintiff, Danilides, had worked on the program "for many years."

The suit alleged that during the Phase III part of the project, for which it said the company was paid $62 million, "Northrop pretended to be exerting its best efforts when it was doing virtually nothing to improve the design and reliability of the Counter-MANPADS system."

"Northrop failed to perform critical tasks, and then profited by keeping the money that was supposed to have been spent doing that work," according to the allegations.

"Far from providing its 'best efforts' as required, Northrop was providing no efforts," the suit alleged.

The contract ended in 2008 and government funding for the project was later canceled.

(Reporting by Peter Cooney; Editing by Mohammad Zargham)