Lockheed Martin Subsidiaries Settle $70M Overcharging Claim

Two Lockheed Martin subsidiaries, Sikorsky Support Services and Derco Aerospace, have agreed to pay the federal government $70 million for overcharging the Navy for aircraft parts. The case involves improper subcontract arrangements, and the settlement highlights the DOJ's commitment to preventing inflated charges at taxpayers' expense.

Two Lockheed Martin subsidiaries have agreed to a $70 million settlement with the federal government for overcharging the Navy on aircraft parts, the U.S. Department of Justice announced on Friday.

The DOJ revealed that Sikorsky Support Services, based in Stratford, Connecticut, and Derco Aerospace, headquartered in Milwaukee, Wisconsin, knowingly entered into improper subcontracts for spare parts and materials. These parts were for aircraft used in Navy pilot training. The arrangement allowed Sikorsky to purchase parts from Derco at cost plus a 32% markup, subsequently billing the Navy at an inflated rate, violating federal regulations and inflating government costs.

"Today's settlement demonstrates that the Justice Department will ensure government contractors do not skirt the law and engage in self-dealing that may artificially inflate their charges at the expense of the American taxpayers,'' stated Brian Boynton, head of the DOJ's civil division. The Lockheed Martin subsidiaries' spokespersons did not respond to requests for comment.

The settlement resolves a whistleblower lawsuit filed by a former Derco employee under the federal False Claims Act. Darrin Jones of the U.S. Department of Defense's Office of Inspector General stated that the settlement should serve as a warning against exploiting the procurement process. Greg Gross from the NCIS's Economic Crimes Field Office stressed that such overinflation of costs harms naval air training and misuses taxpayer money.

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