Rockwell International Corp., the nation's second-largest defense contractor, has agreed to pay a $1.5 million fine and to plead guilty to criminal charges that one of its divisions in Texas padded labor bills for 1982 military electronics work, Defense Department and congressional officials said yesterday.
Rockwell spokesman Jim Vallela said the company was under criminal investigation but would not comment further. The company's Washington lawyer, Seymour Glanzer, asked to comment on reports of the agreement, said, "Your facts are all wrong." He refused to elaborate.
Officials said, however, that the Justice Department is expected, as early as today, to file a 20-count criminal information against Rockwell in U.S. District Court in Fort Worth but has agreed not to prosecute in exchange for the plea and fine.
Justice Department spokesman John Russell confirmed that Rockwell will plead guilty as part of a settlement to be unveiled "soon." He refused to give details.
The reported settlement comes almost exactly three years after Rockwell agreed to pay the government $1.5 million in a similar case. The Justice Department filed a civil suit claiming that the company shifted labor costs from a "fixed-price" Air Force contract to a "cost-plus" space shuttle contract, thus ensuring that the government would absorb cost overruns on the fixed-price deal.
A senior Defense official said yesterday that Rockwell was spared prosecution and debarment from Pentagon contracts in that case after pledging not to repeat the offense.
Defense Department regulations threaten debarment for contractors convicted of defrauding the government. Pentagon officials said Rockwell is negotiating with the Air Force to determine whether it should be debarred as a result of the new case.
Rockwell, which received $6.2 billion in defense contracts last year, produces the B1 bomber and Navstar global positioning system satellites. It has joined forces with a British firm to bid for a hotly contested $4.3 billion contract to equip the Army with a new, mobile battlefield-communications system.
A susidiary of GTE Corp., which has joined a French firm to compete for the huge Army contract, pleaded guilty last month to obtaining classified Pentagon budget documents improperly and agreed to pay fines of $590,000.
The current case against Rockwell centers on alleged contract mischarges by its Collins Communications Systems Division near Dallas, officials said. The division ran up cost overruns on a $3.6 million fixed-price contract to provide spare parts and automated data processing systems for the Air Force's EC135 aircraft, they said.
Officials said Collins falsified employe time cards on another contract to help absorb the extra costs of the fixed-price deal. The company padded labor charges on the second contract by $300,000, a Pentagon source said.
No corporate officials will be charged in the criminal information, the source said, but the Justice Department will reserve the right to prosecute executives later.
A tentative agreement reached in June between the department and Rockwell broke down over the issue of individual prosecutions, officials said.
A senior Defense official said the U.S. attorney's office in Fort Worth, which investigated the case, had sought to indict corporate officials but was turned down by the Justice Department for lack of evidence. Assistant Attorney General Stephen S. Trott, head of the department's criminal division, said at an unrelated Senate committee hearing yesterday that a Wall Street Journal report about such a disagreement was "dead, flat wrong."