A lawsuit accusing Xerox Corp. of fraud on a defense contract was filed by Martin E. O'Malley on behalf of the U.S. government, not by the government as reported in an article yesterday. The Justice Department has not decided whether to participate in the lawsuit. (Published 6/5/87)

The federal government yesterday filed a $100 million lawsuit against the Xerox Corp., charging the company with fraud in connection with contracts for Navy helicopter defense systems.

The civil suit, filed in U.S. District Court in Alexandria, also names two Navy procurement officials as "unwitting members of the conspiracy to defraud" the Navy.

In December 1978, Xerox allegedly offered an artificially low bid, with a ceiling of $2.25 million, to build 12 heat-seeking defense systems for CH46 and CH53 helicopters, according to the lawsuit.

The contract, which Xerox was awarded, included an option to build 181 additional systems. In addition, the contract contained a provision that the infrared helicopter systems would have to be redesigned if a Navy study found installation problems with the proposed systems.

After the study concluded a need for a redesign, Xerox defaulted on the contract, according to the suit. Prior to the default, officials at Xerox Electro Optical Systems in Pasadena, Calif., allegedly "duped" the two procurement officers into trying to modify the contract.

The result, according to the lawsuit, was that "after eight years of effort, and the expenditure of approximately $20 million, the U.S. Navy does not have operational infrared countermeasure systems" for certain helicopters.

Attorneys representing Xerox could not be reached last night, and their spokesman declined to comment.