Defense firm sued over design Martin Marietta charges contract was violated.

June 24, 1992|By Norris West | Norris West,Staff Writer

Martin Marietta Corp. says its move into the submarine detection business took on water because it bought a defective product design when it acquired a Glen Burnie company.

The Bethesda-based defense contractor filed a lawsuit in U.S. District Court in Baltimore Monday against Gould Inc., of Eastlake, Ohio, which was the industry leader in "towed array" detection systems for submarines.

Martin Marietta charges that Gould violated a contract for the sale of its Glen Burnie-based Ocean Systems Division in 1988 because a sonar system's design failed to meet government specifications. It says the sales agreement requires Gould to compensate for any problems with the design.

Michael C. Veysey, general counsel for Gould, said yesterday that his company has discussed the claim with Martin Marietta. But he added that he has not seen the suit and could not comment.

Court papers say Gould had a 70 percent market share for towed array systems in 1988, when Martin Marietta bought the Ocean Systems Division for $117 million to enter the business.

The sales contract included Gould's designs for a new sonar system that was up for a Navy contract bid. The Navy awarded the $32.1 million contract to Martin Marietta in January 1989, according to court papers, but later found a number of problems during testing, including the noise reduction system.

After the Navy terminated the contract last January, the suit says, Martin Marietta persuaded it to modify the contract and pay the company $14.1 million. Martin Marietta, however, claims that it already had lost $30.8 million trying to perform the contract.

It alleges that Gould knew, and had failed to tell Martin Marietta, that its design could not meet Navy specifications. The suit seeks $30 million.

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