Northrop Grumman is a company that specializes in the global aerospace, defense, and security industries. It works with some of the most top-secret and highly confidential divisions of the government. The enterprise contracts mostly with the US government through its Intelligence and Department of Defense communities. The business also provides solutions for commercial and global customers. One would think that a company that provides such services would maintain high ethical standards of performance, however, Northrop Grumman has had its share of legal problems. The company has been sued on numerous occasions and has paid hundreds of millions in penalties and settlements for compensation. Northrop Grumman has been the defendant in cases involving its subsidiaries and predecessors. As the parent company, it has agreed to multiple settlements to resolve issues that could become more costly after years of litigation. In most cases, Northrop assumed responsibility, but for some, it denied any wrongdoing but settled to resolve the issues. Here are the ten biggest Northrop Grumman lawsuits in company history for your consideration.
10. Northrop Grumman Corporation faces civil and criminal fraud charges Settlement amount: $31.65 million
The Northrop Grumman Systems Corporation faced two accusations with civil and criminal investigations ensuing from the claims. The company was accused of the primary offense related to its contract with the United States government’s Battlefield Airborn Communications Node contract and its Dynamic Re-tasking Capability contract with the US Air Force. The plaintiffs claimed that Northrop overstated the number of hours worked on the contracts by its employees. Additionally, allegations of fraudulent billing on the BACN contract comprised the secondary offense. Northrup agreed to a separate agreement of foregoing a $4.2 million agreement to resolve the billing criminal investigation. it admitted to the misconduct of its employees and made full restitution. Further, Northrop agreed to fully cooperate with the criminal investigation of the contract. Criminal charges against Northrop were not pursued as a result of the agreement. The Southern District Court of California approved the non-prosecution agreement with a settlement of $31.64 million to resolve the case. The case was settled on November 2, 2018.
9. Northrop Grumman settles on Bethpage Site lawsuit Settlement amount: $35 million
Northrop Grumman owned a plant in Bethpage. A complaint filed against the organization accused the plant of causing contamination to the area and the former Naval WEapon Industrial Reserve Plant. The manufacturing and disposal practices activities cause the soil and groundwater to become contaminated with hazardous substances such as metals, PCBs, and VOCs. Investigators confirmed that the area was contaminated by Northrop Grumman’s manufacturing and hazardous waste disposal practices. Members of the public were asked their opinions and allowed input before judgment in the case. The property was used for research and industrial purposes from the 1930s through 1996. The United States Government brought a lawsuit against Northrup Grumman to recover $35 million in environmental cleanup cost compensation in a process that is still ongoing. The government is undertaking remediation efforts at the site to restore natural resources on behalf of the public and their health and safety. Northrop Grumman agreed to pay $35 million to resolve the lawsuit.
8. ATK Launch Systems Inc penalized for False Claims Act violations Settlement amount: $36,968,160
ATK Launch Systems Inc is a subsidiary of Northrup Grumman, its parent company. The Justice Department Civil Division filed a lawsuit against the company in a civil legal action in federal court, accusing the company of violations of the False Claims Act and other government-contracting related offenses. ATK Launch Systems Inc allegedly sold defective and dangerous illumination flares to the United States Air Force and the United States Army. ATK Launch Systems Inc agreed to settle the case for $36,967,160 to resolve the matter.
7. TRW Inc. Penalized for employment-related offenses Settlement amount: $48.5 million
TRW Inc is a subsidiary of its parent company Northrop Grumman. In 2001, a civil lawsuit was filed as private litigation in the Northern District Court of Ohio. Rybarczyk v. TRW, Inc et al alleged that the company violated benefit plans ERISA laws to the detriment of its workers. The company agreed to pay a settlement amount of $48.5 million to compensate workers for their financial losses and oat associated penalties. This was one of several ERISA violations, but one of the most expensive for the aerospace company.
6. Northrop Grumman settles 16-year old False Claims lawsuit Settlement amount: $62 million
Northrop Grumman News reports that the company agreed to a settlement amount of $62 million to resolve claims made by four employees of Northrop and the USDOJ. The suit was classified under the US ex rel. Rex Robinson v. Northrop Grumman Corporation alleging violations of the False Claims Act. the company was accused of inappropriate accounting for scrap parts at the Rolling Meadows III facility in the 1980s. Northrup Grumman denied committing the violations but agreed to settle the matter by paying attorneys fees, personal claims, and government reimbursement for billed legal costs.
5. Northrop Grumman was accused of overcharging the government and selling defective military equipment Settlement amount: $80 million
The United States Attorney’s Office of the Eastern District of Virginia, Defense Criminal Investigative Service Agents, Naval Criminal Investigative Services, and the Defense Contract Audit Agency investigated government claims that Northrop Grummon sold the United States Navy military equipment that was defective, and overcharged the government. Both charges asserted violations under the False Claims Act. The incidences were claimed to occur between 1994 and 1999, alleging that Newport News Shipbuilding, a subsidiary of Northrop Grumman overcharged the Navy for Independent Research and Development costs for designing and developing double-hulled tankers it secured contracts to build. Newport News agreed to pay $60 million to settle the allegations. It is a wholly-owned subsidiary of Northrop Grumman. Further penalties of $20 million were levied upon Northrop Grumman for selling the Navy defective parts in drones that failed reliability requirements stipulated in its contract with NG. The drones were defective and failed quality assurance protocols. Northrop Grumman was accused of knowingly selling the defective drones to the Navy. It resulted in a total settlement of $80 million for both legal actions. The case was settled on August 20, 2003.
4. TRW settles with the United States in the False Claims Act case Settlement amount: $111 million
TRW is a predecessor of Northrop Grumman. The company was accused of overcharging the United States on government contracts between 1990 and 1997. Its successor answered the allegations of overcharging on US government contracts in five distinct schemes to increase costs paid to the contractor. From 1991 through 1992 the government was mischarged for IR&D, and for attempts to enter the space launch vehicle business by incorrectly accounting for the costs. t was accused of discharging for fabricating and prototype satellite testing costs, engaging in practices that misclassified charges to escape government ceilings on its budget. TRW engaged in multiple acts of violations that resulted in violations of the False Claims Act. Northrup Grumman Corporation acquired TRW, renaming it NGSMS in December 2002, and it assumed responsibility for the charges, settling the claims for $111 million.
3. Northrop Grumman settles government contractor fraud case Settlement amount: $134 million
The Behn & Wytzner Law Firm reports that Northrop Grumman was accused of violations of the False Claims Act regarding a B-2 Stealth Radar Jamming Device. The company is alleged to have overcharged the government by accounting for materials they used in several defense contracts, fraudulent accounts, and inflating costs while giving a false representation of the progress of the manufacture of the device under contract with the Air Force. A lawsuit was filed in the Northern District of Illinois regarding the events that occurred in the early part of the 1990s. The civil suit dragged on for fifteen years before it settled in 2001. Qui tam Relators working at Northrop’s Defense Division built the jammers and other electronic devices for the bombers. He and another worker conducted internal audits of the accounting system and discovered evidence of systemic fraud, and reported the incidents. Robinson, a whistleblower also worked on technical projects including top-secret military programs and Apollo lunar mission equipment. He worked on the project along with the other whistleblower, confirming that Northrop was lying to the government regarding the fabrication of test results on government projects. When he discussed his findings with superiors, Robinson was fired and blacklisted on the spot. Both whistleblowers were fired from Northrup Grumman. This was one of many such cases where whistleblowers reported about illegal activities, discrepancies in accounting for materials, defective equipment, overcharging on government contracts, and lying about progress on projects.
2. Northrop Grumman sued for selling defective parts to the government Settlement amount: $375 million
The Department of Justice reports that Northrop Grumman Corporation’s subsidiary Northrop Grumman Space and Mission Systems Corporation, along with its predecessor TRW Inc are collectively known as Northrup. Northrup is accused of providing the national Reconnaissance Office with defective Heterojunction Bipolar Transistors, and billing them for the defective items. The government conducted an investigation and discovered that TRW and Northrop did not adequately test, nor qualify the parts. They misrepresented facts about the reliability of the HBTs to the government and concealed information. Northrup faced a civil suit in the Central District of California Court where whistleblower Dr. Robert Ferro, a worker at the company confirmed through the testimony of wrongdoing on the part of Northrup, for which Northrop promptly fired him. Ferro’s portion of the settlement is $48.75 million under the False Claims Act. Northrop Grumman agreed to the $325 million settlement. The settlement agreement was completed on April 2, 2009.
1. Northrop Grumman and Navy pay for New York Pollution Settlement amount: $406 million
Northrop Grumman and the US Navy faced accusations of causing contamination of the drinking water used by people who live on Long Island, New York. UPI reports that a plume of underground contamination caused by the Northrop manufacturing facility on Long Island. A legal action names Northrop Grumman and the US Navy for contaminating the groundwater near the former manufacturing site under its control for several years. Northrop Grumman denied issues with the groundwater, and they fought back against requests made by water providers and municipalities for compensation to help with the cleanup efforts. The state launched a suit that would become the largest of its class in the history of New York to seek damages and compensation for the damage caused. The total amount of the lawsuit was $406 million, stipulating that Northrop paid $104 million for damages to the environment and the Navy assuming its share of the responsibility. The two agreed to a settlement of $406 million. The settlement was far less than the $585 million costs for the 30-year cleanup project.
Northrup Grumman has experienced its share of ups and downs and legal battles since its launch. The lion’s share of legal issues arises from deviances in the contracts with the United States government. Some acts of wrongdoing landed the corporation in civil and criminal litigation processes. Most of the lawsuits were settled without criminal prosecution. Northrop Grumman faced claims of numerous deceptive acts resulting in violations of the False Claims Act, resulting in severe penalties of hundreds of millions of dollars. It’s been charged with fraudulent billing practices, misrepresenting testing and safety of parts and technologies supplied to the government, and discharging them on multiple contracts. Northrop Grumman settles the lawsuits to return its focus on its research and development and manufacturing products and technologies to fulfill its numerous contracts with the US government and other commercial customers. Although it’s had its share of missteps, Northrop Grumman is still in business and the government is still willing to engage in contracts for technology and equipment. It’s not the only aerospace corporation caught fudging the books.