Kevin O'Toole/LONDON
LUCAS INDUSTRIES is preparing to fight attempts by the US Navy to bar it from competing for any future US military contracts. The UK group is also fighting on a second front to defend itself from an action for civil damages being brought against its Lucas Western and AUL defence operations.
The disputes stem from mid-1993 when evidence emerged that the two US subsidiaries had falsified inspection records on US defence contracts. The main contract was for Air Mounted Accessory Drive (AMAD) gearbox units supplied by Lucas Western for US Navy McDonnell Douglas F-18s.
The complaints led to a criminal action, which was eventually settled in January, with Lucas agreeing to pay a $18.5 million fine. The US Navy is still claiming damages for non-performance of the gearbox units.
Lucas believes that the latest threats to bar the group from further military work are "designed to bring maximum pressure to bear" on negotiations to settle the claims.
Lucas questions the legality of barring the whole group from bidding for defence contracts and the likely severity of the penalties given its rapid actions to correct the faults once they were uncovered. The group inherited many of the quality problems when it purchased the Lucas Western and AUL operations in the late 1980s.
Lucas also plays down the impact of any bar, pointing out that US defence contracts make up only around 3% of the group's overall $4 billion turnover.
Lucas is also planning to fight the civil compensation claim now being brought through the US courts by a former Lucas Western employee, who was one of those dismissed, when it emerged that quality procedures were not being followed.
The lawsuit is being filed under US "whistle blower" legislation, which allows an individual to bring an action in the name of the US Government against a company accused of wrongdoing. Lucas says that it plans to fight the action, claiming there is no evidence that the AMAD gearboxes have failed to perform adequately.
Source: Flight International