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 September 3, 2015

News Carter To China: US ‘Will Fly, Sail, Operate Wherever Law Allows’ Defense Secretary Ash Carter, in a speech billed as all about a new personnel approach for the Pentagon, laid out a clear line in the sand of the temporary islands the Chinese have been building. http://breakingdefense.com/2015/09/carter-to-china-us-will-fly-sail-operate-wherever-law-allows/ LRS-B details emerge: Major t...
 
 

News Briefs September 3, 2015

Soldier injured after parachute failed to deploy A soldier was injured during a U.S. Army Special Operations parachute training exercise in western Montana. Army officials at Fort Bragg, N.C., say 16 soldiers were conducting a free-fall parachute jump from two Blackhawk helicopters near Hamilton Aug. 31 when one soldier had an equipment malfunction and was...
 
 

Boeing, Jet2.com finalize order for 27 Next Generation 737-800s

Boeing and UK Leisure Airline Jet2.com have finalized an order for 27 Next Generation 737-800s, valued at approximately $2.6 billion at current list prices. Jet2.com currently operates an all-Boeing fleet of nearly 60 aircraft; however, this is the organization’s first direct Boeing order.† The aircraft will be used to take the company’s package holiday and...
 

 
boeing-emirates

Boeing, Emirates celebrate airline’s 150th 777 delivery

Boeing and Emirates Airline Sept. 3 celebrated the simultaneous delivery of three 777s — two 777-300ERs and one 777 Freighter — marking the entry of the 150th 777 into Emirates’ fleet. The delivery marks the first tim...
 
 

U.S. Air Force selects Chromalloy for F108 gas turbine engine module repairs

Chromalloy announced Sept. 2 that it has been selected by the U.S. Air Force to provide repairs on low pressure turbine modules for the F108 aircraft engine fleet, in a contract valued at up to $74 million. The one-year agreement was contracted by the Tinker Air Force Base in Oklahoma and includes four one-year options...
 
 
raytheon-colorado

Raytheon expanding in Colorado Springs

Raytheon will speed up growth of its Colorado Springs presence after signing a $700 million multi-year indefinite-delivery/indefinite-quantity contract to support operations at NORAD’s Cheyenne Mountain Complex. Under the...
 




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=""> <s> <strike> <strong>