Lockheed Martin Subsidiaries Reach $70 Million Settlement

The settlement was for claims that they overcharged the Navy for parts.

Associated Press
Lockheed Martin Canada Mission Systems and Training in Ottawa.
Lockheed Martin Canada Mission Systems and Training in Ottawa.
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STRATFORD, Conn. (AP) β€” Two Lockheed Martin subsidiaries have agreed to pay the federal government $70 million for overcharging the Navy for aircraft parts, the U.S. Department of Justice announced Friday.

The federal agency says Sikorsky Support Services, based in Stratford, Connecticut, and Derco Aerospace, headquartered in Milwaukee, Wisconsin, knowingly entered into an improper subcontract for spare parts and materials for aircrafts used to train Navy pilots.

Under the contract, Sikorsky purchased the parts from Derco at the cost Derco paid other suppliers, plus a 32% markup.

Sikorsky then billed the Navy for the price it paid Derco, in violation of federal regulations barring such arrangements, which prosecutors said drive up government costs.

Lockheed Martin, based in Maryland, said in a statement Friday that it is β€œpleased that the settlement will bring this case to a conclusion,” noting that there also was no finding of wrongdoing by Sikorsky or Derco Aerospace.

Prosecutors said the settlement resolves a lawsuit filed by a former employee of Derco under the whistleblower provision of the federal False Claims Act. The case goes back to 2011, or several years before Lockheed Martin acquired Sikorsky, the maker of the military's Black Hawk helicopters, in 2015.

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