Suit Accuses Lockheed of Abusing Government Contracts
Jul. 07, 1988
OAKLAND, Calif. (AP) _ A lawsuit accusing a top defense contractor of charging the government for everything from building a private plane to typing the Bible into a computer could open the way for fraud investigations into top-secret projects, a watchdog group says.
''What we have is a little wedge into the 'black' world,'' projects so secret they often don't appear on the defense budget, said Dina Rasor, head of the Washington-based Project on Military Procurement.
''(It shows) you can expose fraud and waste in a black program'' without divulging sensitive information, she said.
Rasor spoke at a news conference Wednesday to unseal the lawsuit alleging fraud and overcharging against Lockheed Missiles & Space Co., the leading defense contractor in California's high-tech Silicon Valley.
The lawsuit, filed in U.S. District Court by a former and a current employee, claims Lockheed workers, while waiting months for security clearances, goofed off, ran profitable businesses, ran a football pool and even built a private plane - all at government expense.
If proved, the charges could result in suspension of defense contracts.
The alleged violations at one California plant cost the government more than $10 million, but that figure could go higher, the plaintiffs' attorney said.
''We expect additional people are going to step forward and describe additional examples of fraud at Lockheed,'' said Oakland lawyer Guy T. Saperstein.
Lockheed, the plaintiffs also charged, told employees to bill various government contracts for 40 hours even if they worked less and to charge their time to contracts on which they had not worked.
Lockheed denied the accusations.
''We very vigorously deny that false claims have been or are made or condoned by the company,'' said company spokesman George Mulhern. ''In fact, we've had a very strong program over the past several years to make sure all employees know any form of mischarging is wrong and can lead to disciplinary action, including dismissal, if warranted.''
Mulhern said the company would wait until it receives a copy of the suit before responding to specific allegations.
''(But) we are also very confident the suit, if it goes to trial, will show the company has not engaged in any improper practices,'' he said.
Lockheed Missiles & Space, with 23,700 employees in Sunnyvale, develops spacecraft, satellite systems and submarine-launched missiles. It is a subsidiary of Lockheed Corp.
The suit was filed under a federal whistle-blower law by Margaret T. Newsham, 45, a former Lockheed analyst, and Martin Overbeek Bloem, 34, an engineer who works for the company. The United States also is a plaintiff.
The law protects whistle-blowers from retaliation and allows them to keep some of the judgments against companies convicted of cheating the government.
The complaint, which seeks damages and a jury trial, is one of the first false claims suits involving a classified ''black'' project for the National Security Agency, a surveillance branch of the Defense Department.
Newsham and Bloem, who both held security clearances from the NSA, worked at Lockheed on the project from 1981 to 1984.
They allege that ''a huge amount'' of time was wasted at Lockheed in the ''ice box,'' a period ranging from a year to 18 months during which employees could not work on sensitive projects until they received security clearance.
''Rather than being given non-classified work, their time was wasted,'' Saperstein said. ''When the end of the week rolled around, they billed the United States government for 40 hours for no work, essentially.''
Employees allegedly found ways to keep busy, including selling real estate, honey and belt buckles or working on their cars or playing computer games.
One senior manager, the suit says, had Lockheed machinists build him an airplane and was allowed to retire and take the plane with him when the project was discovered.
''One Lockheed employee wrote out the entire Bible onto a Lockheed computer, charging government contracts for his time,'' the suit says.
Newsham was fired in 1984. She said the company refused to give a reason.
The Defense Contract Audit Agency substantiated the allegations after Newsham called a Defense Department ''hot line'' in 1984, Saperstein said. Reports from the agency, which has no enforcement power, were filed with the suit.