Lockheed Martin Corporation Reaches $15.85 M Settlement to Resolve False Claims Act

WASHINGTON – Lockheed Martin Corporation has agreed to pay $15,850,000 to settle allegations that it mischarged perishable tools used on numerous government contracts, the Department of Justice announced today. Lockheed Martin, headquartered in Bethesda, Md., is one of the world’s largest defense contractors.

Today’s settlement resolves allegations that the government was overcharged as a result
of a seven-year pricing scheme by Tools & Metals Inc. (TMI), a subcontractor that sold perishable tools to Lockheed Martin for use on military aircraft, including the F-22 and the F-35 fighter jets. Specifically, the government alleged that TMI inflated the costs of these tools between 1998 and 2005, and that Lockheed Martin passed these costs on to the United States under its various contracts with the government. On Dec. 8, 2005, Todd B. Loftis, a former president of TMI, pleaded guilty and was sentenced to seven years in prison in connection with his role in TMI’s scheme.

The United States subsequently brought civil claims against Lockheed Martin under the False Claims Act, alleging that Lockheed Martin contributed to the inflated amounts paid by the United States in connection with TMI’s pricing scheme. Specifically, the government alleged that Lockheed Martin acted recklessly by failing to adequately oversee TMI’s charging practices and by mishandling information revealing these practices. These allegations are the subject of today’s settlement between the United States and Lockheed Martin.

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