Ford Aerospace Settles Sgt. York Weapons Dispute

Ford Aerospace Corp. said Friday that it has agreed to pay $200,000 to settle a 5-year-old dispute in which the federal government claimed that the defense contractor used improper accounting practices on the ill-fated Sgt. York weapons program.

The claim dates back to 1984 when the Justice Department alleged that Ford had improperly billed the government for certain labor costs on the Sgt. York anti-aircraft gun. The claims arose from a series of reports by Pentagon auditors. Susan Pearce, a spokeswoman for Newport Beach-based Ford Aerospace, said the settlement “does not constitute an admission of liability” on the company’s part. “It is a compromise that reflects both sides’ desire to avoid expensive and time-consuming litigation,” she said.

After the audit reports, Ford corrected its billings to correspond to the government’s request, Pearce said. “The government did not suffer financially at all,” she said.

Under terms of the agreement, Ford Aerospace must pay the $200,000 within the next 10 days. The company will also be required to absorb any legal and administrative costs it incurred as a result of the government’s claim.

The controversial Sgt. York program, also known as the DIVAD, was canceled by former Defense Secretary Caspar W. Weinberger in August, 1985. The cancellation came after the Pentagon had spent $1.8 billion on the Sgt. York, then determined that the weapon was ineffective for its task: to defend Army tanks and troops from low-flying enemy aircraft.

The cancellation dealt a major blow to Ford Aerospace, a subsidiary of Ford Motor Co., which employed 1,900 people on the program in 1984.