The U.S. Department of Justice has filed a lawsuit against federal contractors under the FCA (False Claims Act), alleging kickbacks costing American taxpayers tens of millions of dollars.

Named defendants are aerospace and weapons manufacturer Lockheed Martin and its former subsidiary, Mission Support Alliance (MSA). Defendant Lockheed Martin stands accused of using falsified information in order to overcharge the Department of Energy (DOE) for services connected with the ongoing cleanup at the Hanford Nuclear Reservation near Richland, Wash. from 2010 until 2015.

MSA faces allegations of paying kickbacks and making false statements in order to secure a $232 million DOE contract for its parent company at the time.

Specifics of the Case

According to a Department of Justice press release, estimates provided to the DOE were based on overstatements of the number of employees involved in the work than had been included in Lockheed Martin’s own budget.

The complaint also alleges that Lockheed Martin and its MSA subsidiary engaged in what amounts to a “double dipping” scheme, in which both companies submitted invoices for a single job. The DOE had made it clear to Lockheed Martin that it could not profit from payments already billed to its subsidiary.

The FCA lawsuit claims that two MSA executives used their positions in aiding and abetting the parent company’s billing scheme. In turn, Lockheed Martin allegedly paid the executives millions of dollars in kickbacks for using their positions at the Hanford cleanup site on its behalf.

One of the accused executives, former Chief Financial Officer Richard Olsen, paid $124,000 in August 2018 to settle allegations of accepting kickbacks from Lockheed Martin. He denies any wrongdoing, but has agreed to cooperate with investigators.

The Defendants Respond

In a statement, Lockheed Martin emphatically denied any wrongdoing, and has vowed to “defend this matter vigorously.” Similarly, MSA continues to affirm its commitment to ethical business practices, stating, “We stand behind our team of incredible employees who perform extraordinary work supporting the Hanford mission.”

Information technology company Leidos, which acquired MSA from Lockheed Martin in January 2016 (and thus is exposed to its liability), says it has reviewed the case. Leidos’ senior vice president agreed that “the lawsuit’s allegations are completely without merit” and says they will support MSA in defending the charges.

About the False Claims Act

The False Claims Act was signed into law by President Abraham Lincoln during the American Civil War. The law came in the wake of the “Hall Carbine Affair,” during which financier J.P. Morgan was alleged to have financed the purchase of 5,000 defective surplus rifles, which were then resold to the Union Army at a 600 percent markup. Since then, the FCA has been used to prosecute businesses and individuals who attempt to defraud the federal government.

The law also provides protections and rewards for “whistleblowers” who come forward and file lawsuits on behalf of the government.

In the current lawsuit against Lockheed Martin and MSA, the Department of Justice is seeking triple damages and penalties in addition to fines authorized under the Copeland Anti-Kickback Act.

The FCA Lawsuit is United States v. Mission Support Alliance LLC, et al., in the U.S. District Court for the Eastern District of Washington.