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Wall Street Journal (wsj.com)
May 13, 2008 Space Systems Settles Overcharge Case; Settlement Doesn't Acknowledge Wrongdoing
By Andy Pasztor
LOS ANGELES -- A Lockheed Martin Corp. space unit agreed to pay $10.5 million to settle a long-pending federal civil investigation of overpayments for work on the company's Titan IV rocket.
Without any acknowledgement of wrongdoing by the company, the agreement resolves allegations by the Air Force and Pentagon auditors that Lockheed "manipulated billings on the complicated contract" to request certain interim payments it wasn't entitled to receive, according to the Los Angeles U.S. Attorney's office. The settlement covers so-called progress payments from 1998 to 2001.
After the Defense Contract Audit Agency identified the overpayments in 2004, according to a press release by the U.S. Attorney, Lockheed's internal audit also "discovered that it should not have requested certain" payments.
At one point, federal auditors had concluded that the company was overpaid by roughly $148 million. The dispute was unusual partly because of Lockheed's strong disagreement over the years with the federal findings. In October 2005, the company maintained it relied on "a billing methodology" that had been accepted by the government since the mid-1980s.
On Monday, the Justice Department said Lockheed cooperated with the investigation, adding that the $10.5 million figure "represents approximately double the amount of interest Lockheed would have received by holding the premature payments."
The Titan IV rocket, synonymous with American exploration of the heavens, was retired in 2005 after more than three dozen successful launches.
May 13, 2008 Space Systems Settles Overcharge Case; Settlement Doesn't Acknowledge Wrongdoing
By Andy Pasztor
LOS ANGELES -- A Lockheed Martin Corp. space unit agreed to pay $10.5 million to settle a long-pending federal civil investigation of overpayments for work on the company's Titan IV rocket.
Without any acknowledgement of wrongdoing by the company, the agreement resolves allegations by the Air Force and Pentagon auditors that Lockheed "manipulated billings on the complicated contract" to request certain interim payments it wasn't entitled to receive, according to the Los Angeles U.S. Attorney's office. The settlement covers so-called progress payments from 1998 to 2001.
After the Defense Contract Audit Agency identified the overpayments in 2004, according to a press release by the U.S. Attorney, Lockheed's internal audit also "discovered that it should not have requested certain" payments.
At one point, federal auditors had concluded that the company was overpaid by roughly $148 million. The dispute was unusual partly because of Lockheed's strong disagreement over the years with the federal findings. In October 2005, the company maintained it relied on "a billing methodology" that had been accepted by the government since the mid-1980s.
On Monday, the Justice Department said Lockheed cooperated with the investigation, adding that the $10.5 million figure "represents approximately double the amount of interest Lockheed would have received by holding the premature payments."
The Titan IV rocket, synonymous with American exploration of the heavens, was retired in 2005 after more than three dozen successful launches.