The U.S. Justice Department released the below information:
Lockheed Martin Corporation (LMC) has agreed to pay $29.74
million to resolve False Claims Act allegations of defective pricing on
contracts for F-35 military aircraft. This payment is in addition to $11.3
million that LMC previously paid to the Department of Defense (DOD) for the
same undisclosed cost and pricing data on some of the same contracts. LMC,
headquartered in Bethesda, Maryland, is one of the world’s largest defense
contractors.
According to
court documents, between 2013 and 2015, LMC inflated pricing proposals it
submitted to obtain contracts for the F-35 by failing to provide to DOD’s F-35
Joint Program Office (JPO) accurate, complete, and current cost and pricing
data during the negotiations leading to the award of five contracts for the
production or sustainment of the F-35. The United States alleged that LMC had
knowledge of suppliers’ cost or pricing data that it did not disclose to the
JPO in violation of the Truth in Negotiations Act (TINA). Congress enacted TINA
in 1962 to help level the playing field in sole source contracts — where there
is no price competition — by making sure that government negotiators have
access to the cost or pricing data that the offeror used when developing its
proposal. The United States alleged that had LMC provided accurate, complete,
and current cost and pricing data, JPO would have awarded the contracts in
lower amounts.
“Those who do
business with the government must do so fairly and honestly,” said Acting
Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil
Division. “We will pursue contractors that knowingly misuse taxpayer funds.”
“The United
States relies on contractors such as Lockheed Martin to provide accurate,
complete, and current information, including pricing data, when negotiating
contracts with the government,” said Acting U.S. Attorney Abe McGlothin, Jr,
for the Eastern District of Texas. “If a contractor fails to do so, and that
failure affects the value of its contract with the government, the Eastern
District of Texas will take steps to ensure that the contractor is held
accountable.”
“The F-35
program is at the heart of our nation’s defense,” said Air Force Lt. Gen. Mike
Schmidt, Director and Program Executive Officer, F-35 Joint Program Office.
“The F-35 Joint Program Office will continue to insist on integrity and honesty
in all business transactions. We demand 100% accountability for every dollar
spent on this program on behalf of U.S. taxpayers and international customers
and taxpayers.”
“The Department
of Defense Office of Inspector General’s Defense Criminal Investigative Service
(DCIS) will methodically pursue all alleged violations of the False Claims Act
and Truth in Negotiations Act,” said Principal Deputy Director James R. Ives of
DCIS. “Today’s outcome reflects the unwavering commitment of DCIS and our
investigative partners to hold accountable those who bilk the American taxpayer
by perpetrating fraud against the DOD.”
“Overinflation
of production and sustainment costs for an aircraft critical to our national
defense undermines operational readiness and erodes the trust placed in the
Department of Defense by the American people,” said Special Agent in Charge
Greg Gross of the Naval Criminal Investigative Service (NCIS) Economic Crimes
Field Office. “NCIS and our investigative partners remain steadfast in our
commitment to investigating entities that compromise the integrity of
government contracts.”
The settlement
derives from allegations originally brought in a lawsuit filed in the Eastern
District of Texas by a whistleblower under the qui
tam provisions of the False Claims Act, which allow private parties,
known as relators, to bring suit on behalf of the government and to share in
any recovery. The qui tam case
is captioned U.S. ex rel. Patrick Girard
v. Lockheed Martin Corp., No. 4:17-CV-147 (EDTX). The relator’s share
of the settlement has not yet been determined.
This settlement
was the result of a coordinated effort between the Civil Division, Commercial
Litigation Branch, Fraud Section of the Department of Justice, and the U.S.
Attorney’s Office for the Eastern District of Texas with assistance from JPO,
DCIS, NCIS, and the Defense Contract Audit Agency.
Trial Attorney
Arnold M. Auerhan of the Justice Department’s Civil Division and Assistant U.S.
Attorney James Gillingham for the Eastern District of Texas handled the matter.
The claims resolved by the settlement are allegations only, and there has been no determination of liability
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