Colorado contractor settles federal corporate-espionage allegations

 by Greg Avery, Reporter Denver Business Journal

Paragon Dynamics Inc., an Aurora defense contractor, is paying $1.15 million to settle allegations it stole bid information from Raytheon Corp. about spy agency projects over which the companies competed in 2009.

John Walsh, U.S. attorney for the District of Colorado, announced the out-of-court settlement between Paragon and the federal National Reconnaissance Office on Tuesday. The NRO commissions spy satellites and other technology for U.S. intelligence agencies.

Paragon did not admit legal liability in the settlement agreement but acknowledged that an unidentified Paragon employee obtained Raytheon information.

Around July 31, 2009, an unidentified senior software director for Paragon used computer access to Raytheon’s systems in Aurora to obtain Raytheon’s bids for two NRO projects — code named Antietam and Savannah — plus other information, the settlement agreement says.

Security cameras caught the employee faxing some of the information to the president of Paragon Dynamics, who forwarded it to someone at a company Paragon partnered with to compete against Raytheon for the NRO’s Antietam contract, the government said.

“Corporate espionage erodes the trust we have in our public procurement system, and the Department of Justice will hold cheaters accountable for their actions,” said Walsh in a written statement.

Walsh’s office represented the NRO in settlement discussions.

The Raytheon competitor that was sent the bid material has not been publicly identified. It did not make use of the Raytheon bid information, and the incident didn’t influence the outcome of contract awards, said Jeffrey Dorschner, spokesman for Walsh’s office.

The settlement agreement suggests the software director no longer works for Paragon.

The company’s $1.15 million penalty will go into a general government settlement fund.

Paragon also reached a “corporate integrity agreement” with the NRO. The agreement sets rules under which Paragon will have to operate.

A civil investigation into the incident remains open.