On February 6, the U.S. Department of Justice (DOJ) announced that Lockheed Martin Corporation agreed to pay $29 million to settle allegations that it violated the False Claims Act through defective pricing on contracts for F-35 military aircraft. The settlement resolves allegations brought forward by a whistleblower in a qui tam lawsuit.
According to the government, Lockheed Martin “inflated pricing proposals it submitted to obtain contracts for the F-35 by failing to provide to (the Department of Defense’s) DOD’s F-35 Joint Program Office (JPO) accurate, complete, and current cost and pricing data during the negotiations leading to the award of five contracts for the production or sustainment of the F-35.”
The DOJ alleges that Lockheed Martin violated the Truth in Negotiations Act (TINA) which mandates that when negotiating sole source contracts, the government has access to the cost or pricing data that the offeror used when developing its proposal.
“Had LMC provided accurate, complete, and current cost and pricing data, JPO would have awarded the contracts in lower amounts,” the government states.
“Those who do business with the government must do so fairly and honestly,” said Acting Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “We will pursue contractors that knowingly misuse taxpayer funds.”
“The United States relies on contractors such as Lockheed Martin to provide accurate, complete, and current information, including pricing data, when negotiating contracts with the government,” said Acting U.S. Attorney Abe McGlothin, Jr, for the Eastern District of Texas. “If a contractor fails to do so, and that failure affects the value of its contract with the government, the Eastern District of Texas will take steps to ensure that the contractor is held accountable.”
The False Claims Act’s qui tam provisions enable private citizens and private parties to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery. In this case, the whistleblower’s share of the settlement has not been determined.
During FY 2024, settlements and judgments under the False Claims Act exceeded $2.9 billion and over $2.4 billion of the recoveries stemmed from qui tam whistleblower lawsuits. Furthermore, according to the government, a record 979 qui tam lawsuits were filed in FY 2024.
However, in September 2024, a district judge in Florida ruled that the False Claims Act’s qui tam provisions were unconstitutional. The U.S. federal government is urging the U.S. Court of Appeals for the Eleventh Circuit to reverse that decision, stating in a brief that “other than the district court here, every court to have addressed the constitutionality of the False Claims Act’s qui tam provisions has upheld them.”
Whistleblower advocates have warned of dire consequences should the district court ruling stand and have also outlined why it is inconsistent with prior case precedent and misinterprets the qui tam provisions.
The claims asserted in this case are allegations only, and there has been no determination of liability.
Further Reading:
Lockheed Martin Corporation Agrees to Settle False Claims Act Allegations of Defective Pricing
