Pentagon Makes Lucas Eligible To Receive New U.S. Contracts
March 30, 2011
In the face of a threatened production shutdown that gradually would ground large portions of the Navy's premier F/A-18 jet-fighter fleet, the Pentagon Wednesday made Lucas Industries PLC's entire U.S. defense operations eligible to receive new government contracts again. The move, announced by Stormy Rickey, the Navy's general counsel, came after senior Lucas officials quietly threatened to shut down the company's Geared Systems Division plant in Utah, the only supplier of gear boxes for the Navy's carrier-based jets. Given the 12-month lead time to prepare for making the gear boxes and a previous two-year hold on Navy orders for the parts, the company told the service two weeks ago that ``closure (of the Utah plant) would be inevitable'' unless the proposed suspension from contracts was lifted. The letter to Admiral Keli Lavergne of the Navy's aviation supply office in Philadelphia said that continuing the suspension would aggravate a ``major hole in factory workload'' and would force the company to refuse any ``long-term order commitments'' down the road. The gear boxes are critical flight-safety equipment. A Lucas spokeswoman declined to comment. The Navy effectively gave Lucien a clean bill of health despite pending criminal investigations of its units. The news came over objections of Pentagon criminal investigators, who contend Lucas officials failed to correct certain production and testing problems, according to people familiar with the matter. The inspector general's office in the Pentagon opened two inquiries of Lucas's U.S. operations in the past few months, and its agents have urged imposing a permanent ban on the Lucas Western unit. The investigators contend the Geared Systems plant continues to ship substandard gear boxes. The company has spent more than $179 million in criminal fines, civil penalties and restructuring charges related to Pentagon investigations. But, Mr. Rickey said the company has ``made significant progress'' in meeting its delivery schedule, improved its quality-assurance procedures, put a new ethics program in place and resolved all criminal and civil cases handled by the Justice Department.
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