U.S. Government Suspends New Contracts With Some Herley Manufacturing Plants

Suspension comes on heels of fraud indictment earlier this month. Backlog not impacted.

LANCASTER, Pa. (AP) - Electronic components maker Herley Industries Inc. said Tuesday three of its manufacturing plants and one of its subsidiaries were suspended from receiving contracts or contract extensions from the U.S. government without special exceptions.

The suspension is pending the outcome of legal proceedings, the company said.

Earlier in June, a federal grand jury indictment accused Herley and its recently resigned chairman Lee N. Blatt of fraud and other charges. The indictment alleges Herley reaped profits of up to 300 percent on more than $3.9 million in sales of electronic components for which it was the only supplier.

Herley said it cannot immediately determine the impact of the suspensions, because a significant portion of its business comes from contracts for which it is the only qualified supplier on defense programs.

The suspended facilities are in Chicago; Lancaster, Pa; and Woburn, Mass. Also affected is Herley's subsidiary in Farmingdale, N.Y. While under suspension, they cannot win U.S. contracts or extensions without special exceptions.

The company's $142 million backlog is not affected by the suspensions, the company said.

More in Operations