FOR IMMEDIATE RELEASE                                         CIV
FRIDAY, SEPTEMBER 8, 1995                          (202) 616-2765
                                               TDD (202) 514-1888

                                 
 DEPARTMENT OF JUSTICE SUES MCDONNELL DOUGLAS FOR CONTRACT FRAUD


     WASHINGTON, D.C. -- The Department of Justice announced
today it has taken over a qui tam case alleging that McDonnell
Douglas Corporation defrauded the United States by routinely
mischarging labor costs on a number of Department of Defense
airplane contracts, including the contracts for the A-12 and C-17
aircraft, from at least 1989 through 1995.  
     The Department filed a notice of intervention under seal on
August 21, 1995, in U.S. District Court in St. Louis, Missouri. 
The court unsealed the case, United States of America, ex rel.
Daniel O'Keefe v. McDonnell Douglas, Thursday.  The Department
said it would file an amended complaint later.  
     The Department said there is a separate suit in the Court of
Federal Claims in Washington, D.C., in which the A-12
contractors, McDonnell and General Dynamics, are challenging the
Navy's termination of the A-12 contract for default.
     O'Keefe, a sheet metal worker, is a former McDonnell
employee.
     The Department intervened following an investigation by the
Defense Criminal Investigative Service, Federal Bureau of
Investigation and Naval Criminal Investigative Service. 
     A qui tam suit is an action filed by a private party under
the False Claims Act on behalf of the United States, alleging the
submission of false claims for payment to the government.  The
Department decides whether to intervene and prosecute such a suit
on behalf of the United States.  A proper relator is entitled to
receive a portion of the proceeds of the suit if the prosecution
is successful.
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95-473