Defense contractor settles complaint for $36.9M

[April 24, 2012]  SALT LAKE CITY (AP) -- Defense contractor ATK Launch Systems Inc. has agreed to pay $36.9 million in cash and services to settle a whistleblower's complaint alleging the Utah-based company sold the military dangerous and defective illumination flares, the U.S. Justice Department announced Monday.

ATK's nighttime combat flares were supposed to withstand a 10-foot drop test without exploding or igniting, the agency said. The company must fix 76,000 flares remaining in the government's inventory as part of the settlement.

The flares were made in Utah and sold to the Air Force and Army from 2000 to 2006, officials said.

Phillips & Cohen LLP filed a whistleblower lawsuit in Salt Lake City on behalf of ATK flare program manager Kendall Dye, triggering the federal investigation.

"I am glad that the company, rather than taxpayers, is bearing the cost of fixing the problem with the flares," Dye said in a statement from the law firm. "There were simple, inexpensive tests that would have revealed the defect."

A whistleblower is typically rewarded with 15 percent to 25 percent of the amount recovered as a result of their lawsuits, Dye's lawyers said. The Justice Department couldn't immediately specify the amount he would receive.

The complaint dates back 10 years when the flares were made by a predecessor company, Thiokol Chemical Co., ATK said. Thiokol made the flares at Promontory, an industrial site in northern Utah.

Arlington, Va.-based Alliant Techsystems Inc., known as ATK, purchased Thiokol in 2001.

"We knew this was coming. We agreed to this settlement," ATK spokesman George Torres said Monday. "We decided it would be best to put this behind us."

The government investigation involved a number of agencies, including the Defense Criminal Investigative Service, the Air Force Office of Special Investigation, the Navy Naval Criminal Investigative Service, the Army Criminal Investigative Command and auditors from the Defense Contract Audit Agency and the Defense Contract Management Agency.

"This settlement demonstrates our commitment to aggressively go after contractors who recklessly disregard and deliberately ignore critical safety defects in munitions used by America's uniformed fighting men and women on the front lines of the war on terror," U.S. Attorney for Utah David B. Barlow said in a statement.

Justice Department officials couldn't immediately say how much money ATK and Thiokol received for the flares, or how many were sold or deemed unsafe.

Dye's lawyers said he learned in 2005 that ATK had been aware since 2000 that the flares might ignite accidentally if dropped from less than 10 feet, but the company decided not to test the flares. It wasn't until later that tests for the Navy resulted in a flare igniting at 10 feet and one igniting at 5 feet.

ATK shut down production and the military discontinued using the flares, But ATK didn't disclose that it had been aware of the potential problem for years. Dye's lawyers said he advocated for full disclosure but his supervisors told him to keep quiet.

[Associated Press; By PAUL FOY]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.