CORPORATE CRIME REPORTER
Lockheed
Martin Unit to Pay $10.5 Million to Settle False Claims Act Case
22 Corporate Crime Reporter 20, May 12, 2008
Lockheed Martin Space Systems, a Denver-based unit of Lockheed Martin Corporation,
will pay $10.5 million to settle allegations that it submitted invoices for
payment it was not entitled to receive on a multi-billion dollar contract connected
to the Titan IV space launch vehicle program.
After an October 2004 audit by the Defense Contract Audit Agency into the contract to provide launch vehicles and services for the Titan IV program, Lockheed conducted an internal audit and discovered that it should not have requested certain interim payments – known as progress payments – from the federal government.
After Lockheed disclosed its findings to the government, an investigation determined that Lockheed was not entitled to millions of dollars of progress payments it received prematurely on the contract.
The settlement figure represents approximately double the amount of interest Lockheed would have received by holding the premature payments.
Lockheed obtained the excessive progress payments by manipulating its billings on the complicated contract in two ways.
First, Lockheed changed its methodology for calculating its cost of items delivered on progress payment requests without notifying the government. Consequently, from October 1998 to December 2001, Lockheed received more progress payments than it was entitled to receive.
Second, in August 2000, Lockheed presented an invoice to the government that improperly claimed the government owed it millions of dollars in extra progress payments due to the lowering of the contract's liquidation rate, which determined how much money the government would not have to pay to Lockheed upon delivery of an item in order to repay the previously paid progress payments.
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