Morning Briefing - February 11, 2019
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February 11, 2019

Hanford Contractor Faces DOJ Fraud Lawsuit

By ExchangeMonitor

The U.S. Department of Justice on Friday filed a civil lawsuit against Hanford Site contractor Mission Support Alliance (MSA), accusing it of fraud through false claims and kickbacks from 2010 to 2015. The lawsuit filed in U.S. District Court for Eastern Washington also names Lockheed Martin Services Inc., Lockheed Martin Corp., and Lockheed executive Jorge “Frank” Armijo.

The lawsuit centers around an award to Lockheed Martin Services Inc. to provide information technology services as a subcontractor to Mission Support Alliance (MSA) while Lockheed Martin Corp. was the primary owner of MSA. Leidos purchased Lockheed’s share of the contractor in 2016. Mission Support Alliance holds a 10-year, $3.2-billion award through May to provide support services across the Hanford Site, including information technology.

The lawsuit alleges the defendants used false statements to obtain the Department of Energy’s consent to the $232 million subcontract for Lockheed Martin Services Inc. (LMSI). The LMSI work was billed to DOE at inflated rates, the Justice Department claimed. Lockheed Martin Corp. earned profits as an owner of MSA and profits also were claimed for LMSI, according to the lawsuit.

The Department of Energy has previously said MSA improperly awarded $63.5 million in profit to LMSI. The federal agency repeatedly made it clear that LMSI could not earn profit on top of what Lockheed Martin Corp. was already earning through MSA for the same work, according to the lawsuit.

Armijo, who at times served as president of MSA in addition to being a Lockheed executive, and other executives together were paid millions of dollars in cash and stock as part of an incentive program that the Department of Justice alleges amounted to kickbacks. It accuses them of improperly using their positions to provide favorable treatment for Lockheed Martin.

In August, Richard A. Olsen, then vice president of finance for MSA, agreed to pay $124,400 to the federal government to settle Justice Department civil allegations that he accepted more than $40,000 in kickbacks from Lockheed Martin Corp. He admitted no wrongdoing and agreed to cooperate with the ongoing investigation.

Mission Support Alliance, Lockheed Martin Corp., and Armijo strongly denied any wrongdoing in statements released Friday evening. “Lockheed Martin will defend this matter vigorously,” Lockheed said. MSA said ethical business conduct is one of its hallmarks.