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 U.S. District Judge Manish Shah said the employee, Illinois
resident Leo Danielides, plausibly alleged that Northrop induced the
government in 2006 to award it the third phase of the
"Counter-MANPADS" project through false statements, and lied about
its performance when seeking periodic payments.
The contract ended in 2008, and federal funding for the
Counter-MANPADS project was later canceled. Danielides sued under
the federal False Claims Act, which lets whistleblowers to sue on
the government's behalf and share in recoveries.
Northrop spokesman Randy Belote said the Falls Church,
Virginia-based company does not discuss litigation.
The Counter-MANPADS project overseen by the U.S. Department of
Homeland Security was designed to protect civilian airliners from
shoulder-fired missiles after a failed attack in 2002 against an
Israeli aircraft taking off from Mombasa, Kenya.
 According to the complaint, Northrop's performance in the project's
first two phases was a key factor in its winning the third phase,
where it was expected to use its "best efforts" to test the defense
system and fix problems.
However, according to Danielides, who said he worked on the project
for "many years," despite being paid more than $62 million in the
third phase, Northrop did "virtually nothing" to improve the design
and reliability of the system.
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In letting most of the case go forward, Shah said Danielides alleged
Northrop and the government agreed on a "specific, shared
definition" of what "best efforts" meant: completing a task, or
spending money in a legitimate effort to complete it.
To prevail, Danielides will need to show Northrop knew what "best
efforts" meant, and as a result lied when seeking payments, Shah
said.
The judge dismissed one claim concerning a $3 million addition to
the Counter-MANPADS project, known as Mod 8.
"Our client is very pleased by the decision, and looks forward to
pursuing the case," Danielides' lawyer Michael Behn said in a
telephone interview.
The case is U.S. ex rel. Danielides v. Northrop Grumman Systems
Corp, U.S. District Court, Northern District of Illinois, No.
09-07306.
(Reporting by Jonathan Stempel in New York. Editing by Andre Grenon)
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