HOUSTON --- With Lockheed Martin in the crosshairs of a whistleblower who claims its fighter-jet program defrauded the United States of more than $50 million, attorneys for the defense giant urged a Fifth Circuit panel Tuesday to affirm a lower court’s dismissal of the case.
The Maryland-based company won the contract in 2001 and the Pentagon promptly put its first order in for 3,000 F-35 Lightning II jets. The aircraft are built with stealth technology for bombing and strafing ground targets and reconnaissance.
Lockheed Martin hired fellow defense contractor Northrop Grumman Systems Corp. to install communication and navigation systems in the jets as part of the government’s F-35 Joint Strike Fighter Air System Program. The Pentagon’s most expensive weapons program, it churns out jets for the U.S. military and to sell to U.S. allies the United Kingdom, Italy, Netherlands, Australia, Canada, Turkey, Israel and Japan.
The would-be-whistleblower Paul Solomon worked for Northrop from 1976 to 2008 and audited its F-35 subcontract from December 2005 to September 2007, according to his November 2012 lawsuit.
Solomon says in the whistleblower complaint that he discovered Lockheed and Northrop were “concealing from the government the true cost overruns of the JSF Project” and reported his findings to the Defense Department’s Defense Contract Management Agency, or DCMA.
His attorney Bruce Howard told the Fifth Circuit on Tuesday that although the DCMA brought in five other federal agencies to help look into Solomon’s claims, they didn’t turn up any evidence of fraud, concluding only that Lockheed Martin was noncompliant with the contract through its use of management reserve funds, strictly designated for unexpected costs, to cover cost overruns.
Howard said that after Northrop removed Solomon from the program in August 2007, Solomon filed an in-house ethics complaint with Northrop because he didn’t feel the noncompliance issues were being adequately addressed, leading to the discovery of a memo he claims proves the defense contractors set out to defraud the government.
Howard said the January 2005 memo documents an agreement between Northrop and Lockheed to purposely understate Northrop’s estimated cost to complete the contract by $233 million.
“That sets up the scheme,” he told the Fifth Circuit panel. “Once they understood the cost of the program, in order to keep the funding flowing, they recognized it’s likely that cost overruns will develop, therefore they say explicitly we’re going to cover Northrop’s cost overruns with management reserves.”
The government declined in October 2014 to intervene in Solomon’s lawsuit, in which he accuses Lockheed and Northrop of violating the False Claims Act.
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