Former Contractor Overbilled L-M, Which Then Overbilled The Gov't

"Sounds like fraud to me." That's how one former employee of a contractor to Lockheed Martin describes overbilling practices on work performed for the aerospace and defense conglomerate... and the Department of Justice agrees.

On Monday, DOJ officials filed suit against Lockheed Martin, saying the company should have known one of its former suppliers regularly inflated the price of tools used to manufacture aircraft. The DOJ says the amount of overcharges amounts to $20 million, reports The Dallas Morning News.

The suit asserts former supplier Tools & Metals Inc. overcharged Lockheed, and doctored invoices to hide the evidence. That has already been proven -- former Tools & Metals CEO Todd Brian Loftis admitted as much, when he pleaded guilty in December 2005 to conspiring against the US government.

In that case, investigators ruled Tools & Metals bought lower-priced tools, but quoted higher prices to Lockheed Martin -- which then billed the government. The tools were used on aircraft such as the F-16 and F-22.

The DOJ says the fraud occurred from January 1998 to February 2006, and Tools & Metals workers tried to hide evidence by wiping computer records and shredding documents. The DOJ also says Lockheed should have realized what was happening.

"Government contractors are expected to take necessary steps to ensure that their claims for payment are accurate," said North Texas US District attorney Richard Roper. "Anything short of that is unacceptable."

If Lockheed is found to be at fault, the government could recoup as much as three times the amount of its losses, plus civil penalties.

Lockheed Martin asserts it was the victim of fraud. "We regret that the department has now opted to join this lawsuit, which we believe is without merit and which we will vigorously defend," the company said in a statement.

Former Tools & Metals employee John Becker -- along with Robert B. Spencer, who co-owns a competitor of Tools & Metals -- filed a whistleblower suit in 2005 against Lockheed, Tools & Metals and other defendants in 2005. Becker says he told Lockheed Martin official Harriet Stroh about the overcharges in May 2000.

"Sounds like fraud to me," Becker wrote in the email shortly after he left his position as general manager at the Tools & Metals facility in Grand Prairie, TX. Tools & Metals later filed for bankruptcy, and closed up shop.

Stroh, now retired, asserts "due diligence was done" in following up on Becker's claims, and says the claims were determined to be inaccurate. She wouldn't comment further.

FMI: www.lockheedmartin.com, www.doj.gov