Government Sues Mcdonnell Douglas

The Justice Department is taking the military’s No. 1 contractor to court, accusing McDonnell Douglas Corp. of “routinely mischarging” labor costs to multibillion-dollar airplane contracts.

McDonnell Douglas denied the charges and noted that the original allegations came from someone who was “terminated for cause.”

But that whistleblower alleged in court papers filed Friday that supervisors authorized employees to shift costs from projects that had exceeded their budgets to those that were under budget.

“If a contract was under budget on any given day or during any given period, it was targeted as a recipient of charges for labor performed on other contracts,” said the papers filed in U.S. District Court in St. Louis.

The whistleblower, former McDonnell Douglas sheet metal worker Daniel O’Keefe, filed suit Oct. 12, 1993, under a provision of law that allows private citizens to sue when the U.S. government is defrauded. That suit was filed under seal.

The Justice Department decided last month to intervene, essentially taking over the case, although O’Keefe would share in any monies obtained from McDonnell Douglas as a result of the case.