Business

August 8, 2012

Court rules that Lockheed Martin can be sued

Submitting a low bid to secure a federal contract knowing that the contract will cost the government more when fulfilled is a violation of federal law confirmed the U.S. Court of Appeals for the Ninth Circuit in an Aug. 2, 2012, decision.

The court’s ruling permits The Cullen Law Firm, PLLC, to proceed to trial in a case brought under the False Claims Act alleging that the Lockheed Martin Corporation submitted false underbids to secure contracts related to the Range Standardization and Automation IIA program administered by the Air Force.

The case was filed on behalf of Nyle Hooper, who worked for Lockheed for six years before being involuntarily terminated after investigating Lockheed’s fraud and threatening to report the fraud to the government.

The Ninth Circuit is the first appellate court to hold that an underbid can be a false claim under the FCA. Most other decisions regarding false bidding have involved collusive overbids for fixed-price contracts. The RSA contract was a cost-plus contract in which payment from the government was made not on the contract price but instead on the actual cost of producing the product. Many military contracts are cost-plus contracts and many of them are underbid. Underbidding and cost overruns are common in defense contracting, because contractors like Lockheed know they can go back to the government and ask for more money to cover their actual costs.

The harm caused by this practice is that the military and Congress have no way of knowing what the actual cost of a proposed program will be. The budget committees of Congress are lured into approving a program without knowing the true costs and then several years later are stuck with the “cost-overruns.”

This decision should encourage more whistle-blowers to come forward who know and have documentation to prove that the bids for cost-plus contracts were knowingly underbid. If more whistle-blowers come forward, taxpayers could save hundreds of millions of dollars by changing the industry practice of systematically underbidding cost-plus contracts.

The Court of Appeals also reinstated Hooper’s wrongful discharge claim that had been dismissed by the district court.




All of this week's top headlines to your email every Friday.


 
 

 

Headlines July 28, 2014

News: U.S. has lost track of weapons given to Afghanistan - The United States supplied almost three quarter of a million weapons to Afghanistan’s army and police since 2004, but the military cannot track where many of those arms have gone, a new report found. Bill to improve VA has $17 billion price tag - A bipartisan...
 
 

News Briefs July 28, 2014

Marines seek authorization for dolphin deaths The Marine Corps is asking for a five-year authorization from the National Marine Fisheries Service for incidental deaths of bottlenose dolphins during training exercises at a bombing and target range. The Sun Journal of New Bern, N.C., reports that Connie Barclay of the National Oceanic and Atmospheric Administration says...
 
 
Army photograph by David Vergun

Senior leaders explain Army’s drawdown plan

Army photograph by David Vergun No commander is happy when notified that a soldier from his or her command has been identified for early separation. But commanders personally notify those Soldiers and ensure participation in th...
 

 

Northrop Grumman awarded mission support services contract

The U.S. Army awarded Northrop Grumman a cost-plus-fixed-fee contract, with a potential value of $205 million, to continue providing mission logistics services in support of combat brigades training at the National Training Center in Fort Irwin, Calif. The contract covers one base year and two one-year options. Support will include the full range of mission...
 
 
Lockheed Martin photograph by Beth Groom

F-35 Rollout Marks U.S.-Australia Partnership Milestone

Lockheed Martin photograph by Beth Groom Royal Australian Air Force Air Marshal Geoff Brown delivers his remarks at the roll out ceremony for Australia’s first F-35. The official rollout of the first two F-35 Lightning II...
 
 
NASA/JPL-Caltech image

NASA’s Mars spacecraft maneuvers to prepare for close comet flyby

NASA/JPL-Caltech image This graphic depicts the orbit of comet C/2013 A1 Siding Spring as it swings around the sun in 2014. On Oct. 19, the comet will have a very close pass at Mars. Its nucleus will miss Mars by about 82,000 m...
 




0 Comments


Be the first to comment!


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>