Lockheed Martin, the world's largest defense contractor, agreed on Aug. 21 to pay the U.S. government $4.79 million to settle Justice Department allegations that it illegally used taxpayer money to lobby top federal officials to extend a multi-billion dollar per year management contract without allowing other companies to also bid.
From 2008 to 2012, Lockheed executives used funds taken from its existing federal contract to run an aggressive campaign to lobby members of Congress and senior Obama administration officials for a seven-year extension of a contract to operate one of the country's top nuclear weapons laps - Sandia National Laboratories, a Lockheed subsidiary based in Albuquerque, reported The Washington Post.
The Justice Department alleged that the lobbying effort wasn't restricted to simply asking people with influence to renew the $2.4 billion a year contract.
Rather, Lockheed executives used taxpayer money to actively urge officials and lawmakers to close bidding to competition, a violation of two laws.
The problems were first highlighted in a report by Energy Department Inspector General Gregory Friedman, who described the company's tactics as "highly problematic" and "inexplicable and unjustified," reported Time. Friedman recommended the Energy Department seek reimbursement of the funds.
The report detailed the extensive lobbying plan, which specifically targeted then-Energy Secretary Steven Chu and his family, friends and former colleagues at another nuclear lab, as well as key members of Congress. The end-goal of the lobbing effort was to block other companies from competing for the contract.
Benjamin C. Mizer, chief of the Justice Department's Civil Division, wrote in a six-paragraph news release on Friday announcing the settlement, "The money allocated by Congress for the Sandia National Laboratories is designed to fund the important mission carried out by our national laboratories, not to lobby Congress for more funding."
The Justice Department said the settlement leaves the door open for additional criminal charges to be filed. Sandia will not be allowed to pay its settlement and associated legal costs from its direct federal contract revenues.
While Lockheed admitted no wrongdoing, Heather Clark, a spokeswoman for Sandia, did express regret in a statement.
"At the time of the activities, Sandia believed our actions for a contract extension fell within allowable cost guidelines," Clark said, reported Time. "However, in looking back at the activities, Sandia acted too early and too independently in planning for a possible contract extension."
Lockheed is the world's leading defense contractor, receiving $25.31 billion in prime contracts from the U.S. government in 2014, or 8.8 percent of total contract funds awarded by the Department of Defense, according to Aeroweb. Boeing was the runner-up, receiving $18.22 billion in 2014, followed by General Dynamic, which received $13.62 billion.
