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Editor: Mike Bothwell
Profession: Qui Tam Attorney

Category: Settlements and Verdicts

Lockheed Martin Space Systems, a Denver-based division of Lockheed Martin Corporation, has settled a False Claims Act case for $10.5 million resulting from allegations that Lockheed had submitted invoices for payment it was not entitled to receive.

The allegations arose after an October 2004 audit prepared by the Defense Contract Audit Agency concerning the Titan IV program. During Lockheed's internal audit, it discovered that certain interim payments should not have been requested. These type of payments are known as "progress payments" by the federal government.

Lockheed disclosed their findings to the federal government, leading to an investigation and the determination that Lockheed had been paid millions of dollars it was not due as progress payments.

Lockheed was able to obtain the excessive progress payments by first changing the method it used for calculating the cost of items delivered under progress payments, but without notifying the government of the change. This led to increased (and illegitimate) progress payments from October 1998 through December 2001. Then, in August 2000, Lockheed improperly invoiced the government on progress payments allegedly owed due to the lowering of the contract's liquidation rate.

The $10.5 million settlement represents approximately twice the amount of interest Lockheed would have received.