Lockheed Martin, a long-time defense contractor, was accused by the federal government of misrepresenting the cost of tools used to build the F-22 and F-35 fighter jets. Allegedly, Lockheed subcontracted out some of the work and that subcontractor inflated the price of tools, a number that Lockheed passed on to the government despite knowing of its inaccuracy. Last Friday, Lockheed agreed to pay the government $16 million to settle the suit. The company denies any wrongdoing, claiming that they settled the suit “in an effort to close the matter in a timely manner.”
Is this case a simple mistake in accounting? Or was Lockheed Martin caught trying to fleece the government? I guess now we’ll never know. But, important to keep in mind is that this is the infamously-expensive F-22 we’re talking about here, a veritable poster child for government graft. Defense contracts are also often swollen with overpriced items as a way to ensure that a critical $200 screwdriver doesn’t fail. The reasoning being that, if it does fail, they can go in and say “hey, we paid $200 for this $5 screwdriver so that it would be perfect, what happened?” Maybe Lockheed just went a little overboard this time. Maybe Al Gore needs to step in and start smashing some F-22 tools on Letterman before someone takes notice.
Read more in the original story by the Silicon Valley Bizblog.