FOR IMMEDIATE RELEASE CIV MONDAY, APRIL 17, 1995 (202) 616-2765 TDD (202) 514-1888 UNIVERSAL PROPULSION SETTLES CONTRACT DISPUTE FOR $1 MILLION WASHINGTON, D.C. -- A Phoenix, Arizona, military contractor will pay the United States $1 million to settle allegations it overcharged the government for labor in manufacturing rocket catapults used to eject Air Force pilots from aircraft, the Department of Justice said today. Assistant Attorney General Frank Hunger, in charge of the Civil Division, said the settlement resolves a complaint filed in December 1993 and two amended complaints filed later against Universal Propulsion Company, a division of Talley Industries. "The investigation of this case uncovered a deliberate attempt by the contractor to withhold information from the government to boost the cost of the contracts, a practice neither the Department of Defense nor the Department of Justice will tolerate," said Hunger. "This settlement demonstrates the resolve of both agencies to root out such fraud to make sure the information requirements of the Truth in Negotiations Act are fulfilled as required by law." According to the third amended complaint filed in U.S. District Court in Phoenix, Universal Propulsion failed to disclosure its known incurred labor on two contracts to produce the CKU-5/A/A rocket catapults while negotiating with the Navy Ships Parts Control Center of Mechanicsburg, Pa., in 1987 and 1988, then failed to disclose its known labor history to Department of Defense analysts on a third contract. Universal Propulsion's failure to give the government the information, which it was required to do under the Truth in Negotiations Act, inflated the contract prices. The company manufactured approximately 1,800 of the devices valued at about $4 million under these contracts. Hunger said the Defense Contract Audit Agency in Tempe, Arizona, conducted audits before the case was filed and provided audit assistance, while the Defense Criminal Investigative Service in Phoenix investigated the matter before the Department initiated its investigation, then provided investigation assistance. Both are Department of Defense agencies. #### 95-212