US Sues DOE Cleanup Site Firms, Execs in Kickback Scheme
The U.S. Justice Dept. on Feb. 8 filed a civil suit against Lockheed Martin Corp. and two units—alleging kickbacks, false claims and breach of contract on a large cost-plus-award-fee nuclear waste cleanup contract with the U.S. Energy Dept. at the Hanford site in Washington state.
Also named are Lockheed Martin Services and Mission Support Alliance (MSA), which at the time of the alleged misconduct were owned jointly by Lockheed Martin Integrated Technology, Jacobs Engineering Group and Centerra Group. Jorge Armijo, vice president of Lockheed Martin and former MSA president, also was sued.
Now owned by Leidos and Centerra Group, MSA has a 10-year, $3.2-billion contract to provide safety, security, environmental, infrastructure and utilities services at the 586-sq-mile former nuclear weapons production complex.
The suit claims MSA illegally received a multimillion-dollar profit from a subcontract with an affiliate in addition to profit on its prime contract, barred under federal acquisition rules. MSA awarded without competition in 2010 a $232-million IT management subcontract to Lockheed Martin’s wholly owned affiliate Lockheed Martin Services Inc. (LMSI).
The suit claims the defendants knowingly made false statements and omitted critical subcontract profit details that caused DOE to pay the firms millions of dollars in inflated claims and unallowed profit. It also says Lockheed Martin Corp. and LMSI paid several employees “millions” in added incentives or kickbacks from 2009 to 2015,“obtained through ... corrupt conduct, false statements, misrepresentations, omissions, half-truths and outright lies.”
Armijo, who earned about $2.09 million in extra compensation, set LMSI pricing as a Lockheed Martin executive and then evaluated and accepted it in his MSA role. Later, he falsely represented to DOE that the pricing was independently evaluated as fair and reasonable, according to the lawsuit.DOJ seeks treble damages for false claims, with the amount to be determined at trial, and double the amount of kickbacks, plus other damages and penalties.
Richard A. Olsen, MSA finance vice president, who was a Lockheed Martin employee on loan to the unit, agreed last August to pay $124,400 for his involvement in the alleged fraud. He received more than $500,000 in kickbacks, says the suit. The settlement required Olsen to cooperate with the ongoing investigation of the scheme, according to DOJ.
Lockheed has denied the allegations and said it will defend itself vigorously