PHILADELPHIA, JULY 26 -- A federal judge fined General Electric Co. $10 million today and sentenced two employees to prison for cheating the government on a contract for a battlefield computer system.
General Electric, which pleaded guilty to another defense fraud five years ago, also announced it had agreed to pay the government $8.3 million to settle a civil suit stemming from the scheme and $11.7 million to settle unrelated civil charges involving different defense contracts.
The $10 million was the second-largest criminal fine in a defense contracting case, the government said. Northrop Corp. agreed to pay $17 million in February for falsifying records on parts for the cruise missile and Harrier jet.
''This is a sad commentary on the corporate character of General Electric'' at the time of the fraud, 1982 to 1984, said U.S. District Judge Lowell Reed Jr.
Assistant U.S. Attorney Nicholas Harbist said GE had developed self-policing and disclosure safeguards to prevent similar fraud in the future.
''Their decade of deceit as government contractors has ended,'' Harbist said.
GE is the nation's second-largest defense contractor, doing about $6 billion a year in business with the government.
In May 1985, GE pleaded guilty to illegally claiming cost overruns on Minuteman missiles and paid a $1.04 million fine.
The company was barred from defense contracting after the 1985 case, but the ban lasted only three weeks overall and just six months at the division where the violations occurred.
An Army spokesman, Maj. Pete Keating, said today a decision had not been made on whether the company would be banned again.
Two employees of the GE subsidiary involved in the fraud, Management & Technical Services Co., received prison sentences but remained free on appeals.
The case arose from a $246 million contract to make a computer system to monitor supplies in the field. GE was convicted of not telling the Defense Department when it found subcontractors to make parts at significant savings.
Estimates from both sides of how much money the government lost ranged from $2.5 million to $8 million.
The government and GE submitted a joint memorandum to the judge recommending the $10 million fine. The judge said he ''independently concluded'' that a $10 million fine was ''adequate, fair, and in the best interest of the public.''