Lockheed Martin pays $2 million to settle qui tam suit

by Ben Vernia | January 24th, 2011

The Department of Justice announced on January 24 that Lockheed Martin Inc., a partner with SAIC in a bid for a GSA contract for computing services at a NASA facility in southern Mississippi, has agreed to pay $2 million to settle claims brought by a whistleblower that the companies conspired to submit a bid rigged because of its use of inside information. According to DOJ’s press release:

Lockheed Martin Inc. has reached a $2 million settlement with the United States to resolve False Claims Act claims in a whistleblower suit, the Justice Department announced today. The suit, filed in June 2009, in the Southern District of Mississippi, alleges that the defendants knowingly violated the False Claims Act (FCA) when they submitted or caused the submission of false claims and conspired to submit such claims under a contract with the General Services Administration (GSA) in support of the Naval Oceanographic Major Shared Resource Center (NAVO MSRC).

That contract was to provide support services for the National Center for Critical Information Processing and Storage (NCCIPS) at the NAVO MSRC at the John C. Stennis Space Center in Hancock County, Miss. GSA awarded the NCCIPS task order in April 2004 to Science Applications International Corporation (SAIC), which teamed with Lockheed Martin and Applied Enterprise Solutions (AES) to perform under the task order. SAIC was paid a total of $115 million under the contract, of which Lockheed Martin was paid $2 million according to the terms of its subcontract with SAIC.

The suit alleges that prior to the issuance, and once the NCCIPS solicitation had been publicized, that then government employees, Stephen Adamec and Robert Knesel, conspired with Lockheed Martin, Galloway, SAIC and AES to ensure that SAIC and its teaming partners were awarded the task order by (a) sharing non public, advance procurement information with the SAIC team that was not provided to other potential bidders; (b) sharing information about the solicitation with the SAIC team before providing that information to other bidders; and choosing a type of contract and putting language in the solicitation in order to bias the selection process to favor the SAIC team.

The whistleblower will receive $560,000 (a 28% share) of the recovery. (The amount exceeds to typical 25% cap because the government had not intervened against Lockheed Martin, and the relator pursued the company on his own.) The government is continuing to litigate the case against SAIC.

Disclosure: I represent a third-party witness in this case.

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