WATCH THIS SPACE: DOJ and DOE Call Out Lockheed Martin for Self-Dealing at Hanford Plutonium Site

The nation’s largest toxic cleanup site has suffered another setback, this time not in the cleanup itself but in alleged self-dealing, corruption, kickbacks, and lies, costing taxpayers over $60M, according to a complaint filed by DOJ against Mission Support Alliance, Lockheed Martin Services (and a subsidiary), and Jorge Francisco Armijo. The Hanford Nuclear Site in central Washington state made plutonium for decades resulting in over 150 underground tanks of radioactive sludge. As part of the costly and long-running cleanup effort, defendants won roles under a multi-billion-dollar contract with the Department of Energy to provide site-wide services to thousands of federal employees and contractors conducting the cleanup.

To understand the latest troubling allegations, picture “Powerful Conglomerate”: a three-member venture that wins that wins the massive prime contract with the government. The contract enriches the three members (including “Member One”) with profits paid by Taxpayers. Member One of Powerful Conglomerate is owned by “Big Corporation.” Powerful Conglomerate then awards a lucrative subcontract, without competition, to “Company X.” Company X, like Member One, is owned by Big Corporation.

Member One and Company X (both owned by Big Corporation) cook the subcontracting books to grossly inflate and squeeze more profits out of Taxpayers. Big Corporation, therefore, is double-dipping in profits paid by taxpayers because it first enjoys profits on the main contract as Member One of Powerful Conglomerate, then enjoys excess profits on the subcontract in its alter ego as Company X. Big Corporation also assigns its own employed officials to high positions at Powerful Conglomerate (President and CFO), and pays them to maintain the favorable treatment, thereby solidifying their divided loyalties.

How do we know about the deceit involved in Big Corporation’s self-dealing? Big Corporation’s employee, detailed as CFO to Powerful Conglomerate, admitted to lying about the extra profits, paid a penalty, and is now cooperating with authorities.

These events and players are the basic scheme underlying DOJ’s complaint. In the starring roles:

• Powerful Conglomerate: defendant Mission Support Alliance (MSA)
  • Awarded multi-billion-dollar prime contract with the Department of Energy
  • President of Powerful Conglomerate: defendant Jorge Francisco Armijo (also VP of Big Corporation)
• Member One (of Powerful Congomerate): Lockheed Martin Integrated Technology (LMIT) (owned by Big Corporation)
• Company X: defendant Lockheed Martin Services Inc. (LMSI) (owned by Big Corporation)
  • Awarded the $232M subcontract in January 2010
  • Allegedly “through a series of false statements, half-truths, material omissions, corrupt kickbacks, and outright lies” inflated billing rates and profits under the subcontract
• Big Corporation: defendant Lockheed Martin Corporation (LMC — owns LMIT and LMSI)
• CFO of Powerful Conglomerate: Richard A. Olsen (also an official of Big Corporation), former defendant and now cooperator
• Taxpayers: all of us

This is not the first time Constantine Cannon has covered unfortunate events in the crucial cleanup efforts at the Hanford Nuclear Reservation. As aptly stated by Eastern District of Washington U.S. Attorney Joseph H. Harrington: “The critical mission of cleaning up the Hanford Site in a safe, timely, environmentally responsible, and cost-effective manner is too important to the public and the residents of this region”; Mr. Hanford further confirms his commitment to working “to hold fraudsters accountable, whether they are individuals, businesses, or the nation’s largest corporations.”

The CC whistleblower team couldn’t have said it better.

The defendants are vigorously fighting the charges and deny any wrongdoing. WATCH THIS SPACE for the outcome of this important case.

Read more:

• Our posts about the troubled Hanford nuclear site cleanup efforts
• Financial fraud
• Environmental fraud

Tagged in: Environmental Fraud, FCA Federal, Financial and Investment Fraud, Government Procurement Fraud,