FOR IMMEDIATE RELEASE TUESDAY, DECEMBER 20, 1994

CIV (202) 616-2765 TDD (202) 514-1888

TWO MILITARY CONTRACTORS PAY U.S. $8.1 MILLION TO SETTLE DISPUTE WASHINGTON, D.C. -- Two military contractors will pay the United States a total of $8.1 million to settle allegations they mischarged the government on several contracts and failed to provide the Air Force with information on equipment malfunctions under another contract, the Department of Justice announced today. Assistant Attorney General Frank W. Hunger of the Civil Division said the settlements with Fairchild Industries Inc. and Fairchild Space and Defense Corporation resulted from an investigation by the Office of Inspector General for the National Aeronautics and Space Administration. Fairchild Industries will pay the government $5 million on behalf of its former division, Fairchild Control Systems Company. Fairchild Industries already has repaid the government $2,890.000 through contract adjustments. Fairchild Space will pay the United States $298,640 to settle allegations concerning a malfunctioning device called a "certifier" that tests the capacity of the fuel tank on the A10 airplane before take-off. The government said Fairchild Space, after discovering the part was not working properly, corrected the problem, but did not tell the Air Force about it, then billed the government for the replacement. As part of the settlement, Fairchild Space will give the Air Force replacement parts and warranties. The Department said Fairchild Control, while a division of Fairchild Industries, inflated the amounts charged to NASA contracts from 1982 through 1988. NASA's investigators said Fairchild Control mischarged engineering and manufacturing labor as overhead and research and development; treated capital investments as expenses; included accrued expenses in the current year that were not subsequently paid; and charged unallowable expenses into overhead expense accounts. Fairchild Industries sold Fairchild Controls to AERO Acquisition Corp. on August 25, 1989. Fairchild Controls, located in Manhattan Beach, California, was renamed Fairchild Space & Defense Corporation in 1992. Neil Aliksanian, a former Fairchild employee, filed a qui tam complaint July 13, 1988, in U.S. District Court in Los Angeles against Fairchild Industries and Fairchild Control Systems. Under the qui tam provisions of the False Claims Act, a private citizen can file a suit on behalf of the government and, if the government takes over the case and the prosecution is successful, receive a portion of the civil claims. The government intervened in the case June 30, 1989. Aliksanian will receive a total of about $600,000. ##### 94-718