FOR IMMEDIATE RELEASE                                         CIV
MONDAY, JULY 17, 1995                              (202) 616-2765
                                               TDD (202) 514-1888

    ISRAELI FIRM SETTLES DISPUTE, WILL PAY U.S. $8.5 MILLION 
     
     WASHINGTON, D.C. -- Israel Aircraft Industries Ltd. will pay
the United States $8.5 million plus interest computed from the
first of the year to settle allegations the firm knowingly
submitted false cost data in negotiating several contracts to
maintain and provide support for Israeli Kfir aircraft leased to
the U.S. Navy, the Department of Justice announced today.  
     Assistant Attorney General Frank Hunger of the Civil
Division said the settlement agreement resolves IAI's potential
liability under the False Claims Act, the Truth in Negotiations
Act and the common law.  Under the agreement, IAI will make
installment payments of $1 million per month, plus interest
computed from January 1, 1995.  
     Hunger said the United States's claims were based on audits
by the Defense Contract Audit Agency and information uncovered by
the Defense Criminal Investigative Service concerning IAI's costs
under 1984 and 1986 "Aggressor I" contracts and a 1986 "Aggressor
II" contract with the U.S. Navy.  The total value of the
contracts was $155 million.
     DCAA and DCIS uncovered information that, the Department
alleged, indicated that Israel Aircraft Industries knowingly
failed to provide the Navy with current, accurate and complete
data concerning its costs for equipment used to maintain the
aircraft and for its costs for "consumable" aircraft parts such
as bolts and rivets. 
     For example, the United States alleged that IAI held back
from the Navy updated bills of material that revealed its most
current data such as vendor quotes and purchase orders concerning
what it would need to pay for equipment to service the Kfirs. 
The United States also alleged that in negotiating the Aggressor
II contract IAI held back actual records concerning the dollar
value of "consumable" items it had used per flight hour to
service the Kfirs during the first year of the Aggressor I
contract, instead providing the Navy with an inflated consumable
per flight hour figure that IAI falsely stated represented the
company's actual cost.  
     Under the Truth in Negotiations Act, 10 U.S.C.  2306, IAI
was obligated to provide the Navy with the most current, accurate
and complete cost and pricing data prior to final agreement on
the price of the contracts. 
     The United States's claims under the False Claims Act were
based on IAI knowingly submitting the false cost data in
violation of the Truth in Negotiations Act. 
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95-396