Lockheed Pays $4.4 Million to Settle False Claims Charges

The Federal Government just announced a $4.4 million settlement with Lockheed Martin regarding defective communication systems the company installed in six new Cutters for the U.S. Coast Guard. The settlement resolves a whistleblower lawsuit filed in the U.S. District Court for the Northern District of California. An engineer who at one time worked for Lockheed Martin filed the case pursuant to the qui tam provisions of the False Claims Act. Under those provisions, private citizens, known as "relators", may file lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment. In this case, the relator, the former Lockheed Martin employee, will be receiving almost $1 million as his share of the Government's recovery.

Lockheed Martin was under contract to manufacture and install communication systems on new Coast Guard Cutters. These systems are known as Radio Frequency Distribution Systems (RFDSs). The systems that Lockheed provided and installed on Cutters however, did not meet specifications. They were unable to transmit and receive several different radio signals at the same time without undue interference (i.e. simultaneous operations), an essential requirement of the contract. To settle the allegations, Lockheed agreed to pay $2.2 million as a penalty and to spend another $2.2 million to repair the RFDSs already installed on Coast Guard Cutters.

The Justice Department tends to herald the successes of the whistleblower program and these stories makes pretty good press - especially when, like here, the whistleblower walks away with a big payday. However, the real work of protecting the taxpayers is performed quietly every day by contract administrators and contract auditors who work tirelessly, quietly, and usually behind the scenes to ensure that contractors' business systems (accounting, billing, EVMS, purchasing, timekeeping, etc) are up to standards and that codes of conduct and ethics are present and adhered to, and the products meet contractual and technical standards. Without these individuals, Government purchases would undoubtedly cost a lot more than they do already.