FOR IMMEDIATE RELEASE                                                        CIV
THURSDAY, SEPTEMBER 15, 1994                         202 616-2007


     WASHINGTON, D.C. -- The Department of Justice said Parker Hannifin
Corporation, a major defense industry contractor, paid the United States
$7.8 million today to settle claims the firm's Parker Bertea Aerospace
Group in Irvine, California, mischarged the government for overhead on
about 70 defense contracts. 
    Assistant Attorney General Frank W. Hunger, in charge of the Civil
Division, said the government's investigation stemmed from disclosures
Parker Hannifin made to the Department of Defense in May 1988 that the
Control Systems Division of its Aerospace Group mischarged overhead
accounts.  The disclosures were made pursuant to the DOD's Voluntary
Disclosure Program.  The charges were allocated as a shared cost to all of
Parker Hannifin's government contracts for work that should have been
charged directly to specific contracts.  
     According to the company's disclosure, the total cost impact to the
government was $2,515,200.  An investigation by the Defense Criminal
Investigative Service, however, revealed that the disclosure was not
correct in several respects.
    Hunger said the government's investigation showed that because Parker
Hannifin inflated its indirect costs the cost and pricing data it provided
to the government in subsequent contract negotiations also were inflated
and incorrect.  As a consequence, the company used inflated cost and
pricing data in negotiating approximately 70 subsequent contracts with DOD,
resulting in the company receiving higher contractual payments than it was
     "Just because defense expenditures have begun to lessen," Hunger
noted, "that does not mean the Department of Justice will be any less
relentless in its pursuit of those who would defraud the Department of
Defense for their own benefit." 
     Parker Hannifin manufactures equipment for many of the largest DOD
aerospace prime contractors, as well as for the government itself.
     The voluntary disclosure program encourages defense contractors to
inform the government of potential civil or criminal fraud matters in their
contractual relationships with DOD.  The disclosures are made with no
promises regarding potential civil or criminal action by the Department of
Justice.  As part of the disclosure process, a company can conduct an
internal investigation, which is subject to the government's review,
verification and investigation.         
     Hunger said, "It is critical that when a contractor participates in
the voluntary disclosure program it fully and accurately discloses the
extent of any violations."  
     Today's settlement resolves claims the government could have brought
against Parker Hannifin under the False Claims Act, which permits the
government to recover three times the amount of its actual loss plus civil
penalties of $5,000 to $10,000 for each false claim.