Lockheed Martin Fraud Settlement Under False Claims Act

Lockheed Martin Corporation (“LMC”) has recently faced allegations by a whistleblower on behalf of the Department of Justice (“DOJ”) over defense contractor fraud under the False Claims Act (“FCA”). The company was accused of not disclosing its knowledge of cost or pricing data in its possession to the Joint Program Office (“JPO”). On February 6, 2025, the DOJ announced that LMC had reached a settlement of $29.74 million to resolve the allegations.

Overview of Lockheed Martin

LMC is an American defense and aerospace manufacturer. In the case at issue, they served as a defense contractor providing the Department of Defense (“DoD”), and various other clients, with military aircraft known as the F-35 Lightning II (“F-35”) fighter jet.

Lockheed Martin’s Alleged Pricing Inflations and Overcharges on F-35 Contracts

LMC has faced multiple civil claims for inflating pricing proposals when bidding for defense contracts. The U.S. government alleged that LMC knowingly submitted inflated cost estimates to the DoD’s F-35 JPO in order to secure contracts for the F-35 fighter jet program. The Government alleged that LMC’s proposals failed to provide accurate, complete, and current cost or pricing data, which violated the Truth in Negotiations Act and lead to the submission of a false claim to the Government in violation of the FCA. The United States added that as a result of the violations, LMC overcharged JPO on the Low-Rate Initial Production Contracts and that they should have been awarded Contracts in lower amounts.

Breaking Down the Lockheed Martin Fraud Settlement

The Lockheed Martin settlement agreement was signed on January 17, 2025.

Settlement Terms and Conditions

• Under the terms and conditions of the settlement, LMC agreed to pay the United States a settlement amount of $29.74 million for defense contractor fraud, which includes $11.5 million in restitution, plus 4% annual interest from July 23, 2024.
• LMC was required to complete the payment within seven business days of the Effective Date of the Agreement (January 17, 2025) or receipt of written payment instructions.
• Upon the receipt of the settlement amount, the United States and the relator release LMC from any civil monetary claim for the covered conduct defined in the settlement agreement under the False Claims Act, 31 U.S.C. §§ 3729-37.

Exclusions and Remaining Liabilities

• LMC is not released from liability under the Internal Revenue Code, criminal liability, or any administrative enforcement rights. The settlement agreement does not address liability for conduct outside the terms of the settlement, obligations created by the agreement, individual liability, warranty claims, defective products or services, failure to deliver goods or services, or liability for personal injury, property damage, or other consequential damages.
• The relator reserved the right to seek a portion of the settlement (a “relator’s share”) and their attorney fees.
• LMC fully released the United States and the relator from any claims that it asserted, could have asserted, or may assert against them related to the covered conduct defined in the settlement agreement, investigation, and prosecution.
• LMC cannot charge unallowable costs to the United States contracts and must repay any previous unallowable costs they sought.
• Each party bore its own legal and other costs in this matter except for the claims by the relator.

The Role of Whistleblowers in Defense Contractor Fraud

The FCA grants private citizens, who come to be known as relators or whistleblowers, the ability to bring qui tam lawsuits on behalf of the government against entities that commit fraud. In this case, relator Patrick Girard filed this suit on behalf of the United States against a contractor who engaged in fraudulent activities through overcharging or inflating prices on government contracts. The offenders in such cases are liable for three times the amount of damages incurred by the Government. The FCA empowers private citizens to file these suits and potentially obtain a share in the recovery. Whistleblowers play an essential role in defense contractor fraud by ensuring companies are held accountable for their actions and that transparency and integrity are maintained.

Steps You Can Take If You Suspect Defense Contractor Fraud

Document the evidence

Make sure to keep detailed records of any evidence related to activities or actions that support your suspicion of fraud.

Report this misconduct

You can report the defense contractor fraud to the Department of Defense.

File a whistleblower lawsuit

Under the FCA’s qui tam provision, private citizens (whistleblowers) can file lawsuits on behalf of the government and receive a portion of the recovery.

Seek legal counsel

Consult with an attorney who specializes in whistleblower cases so that they can guide you through the process.