In Wisconsin a judge combined False Claims Act suits alleging Lockheed Martin of artificially inflating the cost of parts causing the government to pay millions in overpayments. In the defense contractor world overbilling the federal government is a notorious issue that often goes unchecked costing the taxpayers billions of dollars a year. Whistleblowers initiate False Claims Act (FCA) lawsuits through their qui tam attorneys in an effort to hold the companies accountable and recoup the government’s losses. The whistleblowers stand to gain up to 30% of the amount recovered for the government if it does not intervene, 25% if it does and generally around 20% is a common whistleblower award.
Two Lockheed Martin subsidiaries Sikorsky Support Services Inc. and Derco Aeropsace were sufficiently similar to warrant a consolidated docket for purposes of the qui tam litigation. False Claims Act litigation is critical to policing private entities in its interaction with the government since whistleblowers often can provide insight that the government could not obtain otherwise and often the government is stretched thin and relies on whistleblower counsel and the relator to assist. The two cases were filed under seal which is the proper mechanism for commencing a qui tam action. They were unsealed in 2014 and then in 2017. The allegations are that pursuant to the government contract the United States was supposed to pay a fixed price for certain parts, but since many parts weren’t articulated, the defendants allegedly hiked the prices by over 30%.
Lockheed Martin indicated it intended to vigorously defend the allegations and that it did not overbill the government, but did not comment on the procedural consolidation of cases. Whistleblower cases have grown more prominently over the last decade with the False Claims Act statute coming under attack by defendants who claims it is overused. The mounting awards given to relators have caused many whistleblowers to come forward to try and hold companies accountable for government fraud where the relator award sometimes could be in the hundreds of millions.