Lockheed Martin Pays More Than $40M to Settle DOJ and Whistleblower Charges of Overcharging for Military Aircraft
Yesterday (February 6), the Department of Justice (DOJ) announced that Maryland-based defense contractor Lockheed Martin agreed to pay roughly $30 million to settle DOJ and whistleblower charges of violating the False Claims Act by overcharging the government on several F-35 military aircraft contracts. This is on top of the $11.3 million the company previously paid the Department of Defense (DOD) for similar pricing misconduct on the same contracts.
According to the government, in negotiating these contracts, Lockheed Martin failed to provide DOD with accurate and complete cost and pricing data from Lockheed’s suppliers. This failure violated the Truth in Negotiations Act, which requires government contractors to provide full cost and pricing information when negotiating sole source contracts where there is no price competition from competing bidders. The government claimed withholding this key pricing information allowed Lockheed to secure significantly inflated pricing terms on these DOD contracts.
In remarking on the settlement, Constantine Cannon whistleblower partner Gordon Schnell noted that “government procurement fraud, especially on military contracts, has always been a DOJ enforcement priority under the False Claims Act.” He added that this government focus “harkens back to the origins of the statute, which President Lincoln enacted in 1863 to go after war profiteers trying to defraud the Union Army with lame mules and sawdust munitions.”
Unsurprisingly, DOJ pointed to military procurement fraud as a primary enforcement area in its most recent annual roundup of False Claims Act activity, stressing how “fraud in these programs not only squanders government funds, but also can deprive servicemembers of critical resources and potentially put them at risk.” In addition, as shown in our recent Top-10 listing of Non-Healthcare False Claims Act Recoveries for 2024, military procurement fraud cases took two of the top three spots — Raytheon ($428M) and Sikorsky/Derco ($70M).
In announcing yesterday’s Lockheed settlement, the government reinforced its zero-tolerance for contractor fraud, highlighting that “those who do business with the government must do so fairly and honestly,” and how much the “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.”
Like the majority of False Claims Act cases, this one was originated by a whistleblower who filed a lawsuit under the qui tam provisions of the statute, which allows private parties to bring lawsuits on behalf of the government against those that defraud the government. In return, successful whistleblowers can recover up to 30% of the government’s recovery. The whistleblower here was former Lockheed auditor Patrick Girard, who will receive a whistleblower award of roughly $8 million from the proceeds of the government’s recovery.
If you have information of government procurement fraud or want to learn more about what it means to be a whistleblower under the False Claims Act, please do not hesitate to contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.
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