Lockheed Martin to Pay $15.9 Million for Mischarging U.S.

Lockheed Martin Corp. (LMT), the biggest U.S. defense contractor, will pay $15.9 million to settle allegations it mischarged the federal government for tools used on military aircraft.

The settlement arose from a pricing fraud by a Lockheed subcontractor that began 14 years ago, according to the Justice Department. Lockheed Martin passed the excessive costs on to the government in violation of the False Claims Act, the U.S. said in a statement.

“It is troubling that a large defense contractor with long-established contractual ties with the United States failed to undertake appropriate measures to ensure the integrity and validity of the costs it submitted to the United States,” Stuart F. Delery, acting assistant attorney general for the Justice Department’s civil division, said in today’s statement.

The settlement resolves two whistle-blower cases filed in federal court in Dallas. The whistleblowers will receive $2 million of the proceeds, according to the Justice Department.

Joe Stout, a spokesman for Bethesda, Maryland-based Lockheed Martin, said the company cooperated with the government’s investigation into its tool supplier that led to the conviction of the subcontractor’s president.

The case is U.S. ex rel. Becker v. Tools & Metals Inc., 05- 00627, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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