WASHINGTON (AP) – Lockheed Martin has agreed to pay $37.9 million to settle charges that it inflated costs on several Air Force contracts, the Justice Department announced Wednesday.

Lockheed spokeswoman Meghan Mariman said the company did nothing wrong and agreed to the settlement “to avoid the distraction of litigation.”

The government accused Lockheed of overcharging on four contracts and intending to use the extra money to offset cost overruns on other Air Force projects.

“Companies which do business with the United States must deal honestly with the government,” Assistant Attorney General Peter Keisler said.

The charges were initially brought in Orlando, Fla., by a former company employee, Albert Campbell, who will receive $8.8 million under the whistle-blower provision of the False Claims Act. The law requires companies to provide accurate and complete information about a project’s cost to the government official negotiating a contract.

In one example cited by the Justice Department, Lockheed Martin allegedly overcharged the government for low altitude navigation targeting equipment that the United States planned to buy and then sell to Saudi Arabia, Greece and Bahrain.

Mariman, the Lockheed spokeswoman, disputed the allegations.

“This settlement was a dispute over various pricing issues,” she said. “Lockheed Martin denies that it is engaged in any wrongdoing.”

Added Mariman: “Under the settlement agreement, the Department of Justice agreed that the settlement is not an admission of wrongdoing and not an indication that Lockheed Martin overcharged our customers for contract costs.”

Lockheed on Tuesday also announced it had received a $140 million contract from the FBI to develop a security system to protect the agency’s computer network from hackers or terrorists.

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On the Net:

Justice Department: http://www.usdoj.gov

Lockheed Martin: http://www.lockheedmartin.com

AP-ES-08-27-03 1919EDT