Suit may block Alliant from U.S. contracts

Alliant Techsystems Inc., the largest supplier of M-16 rifle bullets to the U.S. Army, may be temporarily blocked from winning new government contracts for its launch-system group because of an Air Force lawsuit over illumination flares that the service called defective.

The Air Force put Alliant on a list of "excluded companies" to be kept from new orders, spokesman Bryce Hallowell said in an interview Wednesday. Alliant plans to challenge the decision, and the Edina, Minn.-based company is "very confident" it will resolve the matter, he said.

Existing contracts aren't affected by the action, which is limited to the Launch Systems Group, which makes first-stage and launch-abort systems for NASA's new Ares I rocket. The unit, also the sole supplier of reusable solid rocket motors for space shuttles, provided $1.08 billion, or 30 percent, of the company's $3.56 billion in sales for the year ended March 2007.

Alliant has 4,585 employees in Utah at seven sites.

The company reaffirmed the forecasts for sales and profit it gave Jan. 31. The company forecast sales of more than $4.1 billion.

Alliant fell $4.09, or 3.8 percent, to close at $103.37 on Wednesday. The shares have gained 18 percent in the past 12 months.

The company was accused by the government of selling the Air Force and Army more than $100 million of defective illumination flares used in search-and-rescue and combat operations, including those in Iraq and Afghanistan. In June, the U.S. Justice Department joined a whistle-blower lawsuit filed in federal court in Salt Lake City by a former Alliant employee.

The lawsuit claims that beginning in May 2000, Alliant ignored information that a newly designed igniter for the flares was flawed. Alliant also failed to perform proper safety tests on the flares, the government said.

In a statement Wednesday, Alliant said that the original lawsuit and its allegations are "without merit."

More than 40,000 of the illumination flares have been used in combat and all information available indicates "there has never been a reported incident of a malfunction," Alliant's statement said. The company has filed a motion to dismiss the lawsuit in federal court and said it believes the court will rule in its favor.