The Department of Justice (DOJ) announced Friday that the U.S. has filed a lawsuit against Lockheed Martin Corp., Lockheed Martin Services Inc., and Mission Support Alliance LLC for alleged false claims and kickbacks in connection with a multi-billion dollar contract with the Department of Energy (DOE) to support the environmental cleanup at the Hanford Site near Richland, Washington. Jorge Francisco Armijo, a Lockheed Martin vice president who also served as president of Mission Support Alliance (MSA) during the time in question, was also named in the suit.
Along the banks of the Colombia River lie a series of decommissioned nuclear reactors known as the Hanford site. Built during WWII as part of the Manhattan Project, the reactors produced plutonium for nuclear weapons. According to the U.S. Department of Energy (DOE), creating plutonium produced massive amounts of nuclear byproducts that were not properly disposed of and unintentional spills of liquid waste have contaminated the site.
In January 2010, without competition, MSA awarded its affiliate, Lockheed Martin Services Inc. (LMSI), a $232 million subcontract to perform that work from Jan. 1, 2010 through June 2016. The United States’ complaint alleges that the defendants knowingly made or caused false statements to the DOE regarding the amount of profit included in the billing rates for LMSI under the subcontract it was awarded by its affiliate, MSA. The complaint also alleges that the defendants’ claims for these inflated rates violated the False Claims Act.
“Where Congress has allocated money for specific purposes, we will not tolerate unlawful conduct by contractors who seek to enhance their profits at the expense of taxpayers,” stated Assistant Attorney General Jody Hunt of the DOJ’s Civil Division. “This lawsuit demonstrates that the Department of Justice will work tirelessly to ensure that public funds are used for the important purposes for which they are intended.”
In addition, the complaint alleges that Lockheed Martin Corp. (LMC) made payments of more than $1 million to Armijo and other MSA executives in order to obtain improper favorable treatment from MSA with respect to the award of the LMSI subcontract at the inflated rates. The complaint further alleges that these payments violated the Anti-Kickback Act.
“Fraud, corruption, and self-dealing at Hanford will simply not be tolerated,” asserted U.S. Attorney Joseph Harrington for the Eastern District of Washington. “The critical mission of cleaning up the Hanford Site in a safe, timely, environmentally responsible, and cost-effective manner is too important to the public and the residents of this region.” Harrington went on to state, “This enforcement action demonstrates and underscores the United States Attorney’s Office’s commitment to working with our law enforcement partners to hold fraudsters accountable, whether they are individuals, businesses, or the nation’s largest corporations.”
“The Department of Energy Office of Inspector General is committed to ensuring the integrity of Departmental contracts and financial expenditures,” said Teri Donaldson, Department of Energy Inspector General. “We take allegations of false claims, overbilling and kickbacks very seriously and will aggressively investigate these matters to ensure efficiency throughout DOE programs.”
A Lockheed Martin spokeswoman recently told Reuters that the company “rejects the suggestion that the corporation or its executives engaged in any wrongdoing. Lockheed Martin will defend this matter vigorously.”
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