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Lockheed Martin, Mission Support Can’t Stop Nuke Fraud Suit

Jan. 14, 2020, 3:05 PM

Federal prosecutors adequately accused Lockheed Martin Corp. and Mission Support Alliance of violating the False Claims Act by improperly billing the Department of Energy under a multibillion-dollar contract to support the Hanford nuclear complex, the Eastern District of Washington said.

The government sufficiently asserted that the defendants knew statements they made about prices charged to the department were inaccurate, Judge Rosanna Malouf Peterson of the U.S. District Court for the Eastern District of Washington said Monday.

The government also satisfied the materiality requirement for a false claims suit, at least at this stage, by saying defendants’ misstatements and omissions about inflated rates influenced payment decisions, the court said.

The court, however, rejected claims that Lockheed Martin violated the Anti-Kickback Act by making improper payments to Mission Support under incentive compensation plans. The plans are standardized programs to establish performance goals under the Internal Revenue Code, and don’t qualify as a kickback, the court said.

The government’s allegations relate to management and technology solution services Mission Support Alliance agreed to provide at the Hanford nuclear complex in eastern Washington.

Mission Support Alliance awarded Lockheed Martin a $232 million subcontract for services from Jan. 1, 2010 through June 2016.

Lockheed Martin said the government failed to plead fraud with the required particularity.

Mission Support asserted that the defendants couldn’t be liable for false statements about the amount of profit Lockheed Martin earned because the department knew about and approved of the manner in which they performed and billed.

Groff Murphy PLLC, Gibson, Dunn & Crutcher LLP, and Wilmer Cutler Pickering Hale and Dorr represented Mission Support. Lane Powell PC and Dinsmore & Shohl LLP represented Lockheed Martin.

The case is United States v. Mission Support Alliance, E.D. Wash., No. 19-cv-5021, 1/13/20.

To contact the reporter on this story: Daniel Seiden in Washington at dseiden@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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