Air Force lifts L-3 unit suspension

The Air Force has lifted its suspension of an L-3 Communications unit with the July 27 signing of an agreement between the company and the service's deputy general counsel.

"The company can be trusted to deal fairly and the honestly with the government," the agreement states.

The Air Force stopped the company's Special Support Programs Division from receiving new federal contracts on June 3 after it found evidence that contractor employees automatically copied and surveilled emails exchanged on the Defense Department's Special Operations Command unclassified network.

According to the agreement that revokes the suspension, L-3 acknowledged that it monitored the email of at least one of its own employees and did automatically copy emails exchanged on the military network, including those from government users.

But, "evidence in the record to date suggests that government emails were not internationally journaled, and were not reviewed, opened, or used," the agreement states. L-3 still faces an ongoing federal investigation, said L-3 Chief Executive Officer Michael Strianese during a July 27 quarterly earning call, but added that since no L-3 employee read any government emails, "we expect this to be closed in time as the agencies do their jobs."

As part of the agreement, the L-3 unit will give Special Operations Command a $273,000 credit and reimburse the Air Force $60,000 to cover investigation costs. The Special Support Programs Division also cannot perform government IT work for a three year period.

The L-3 division began the email monitoring effort over suspicions that competitors were accessing propriety data. L-3 had protested a March 2009 decision to supplant L-3 with Lockheed Martin as the command's support activity contractor. During the period of the L-3 unit's suspension, the Defense Department reinstated Lockheed Martin as the support activity contractor, awarding it a $5 billion indefinite-delivery, indefinite-quantity contract through 2018.

Loss of the contract caused a 4-cent reduction in earnings per share, said Ralph D'Ambrosio, L-3 chief financial officer, during the earnings call.

For more:
- read the agreement (.pdf) between L-3 and the Air Force
- listen to the July 27 L-3 earnings call and download the accompanying press release

Related Article:
L-3 unit still suspended from gaining new federal contracts