A Lockheed Martin affiliate awarded a $232 million Department of Energy (DOE) subcontract to another Lockheed Martin subsidiary without allowing other firms to bid, then allowed its corporate cousin to overcharge the government, according to a federal watchdog.
Officials at DOE awarded a $3 billion contract to Mission Support Alliance LLC (MSA), which then subcontracted its affiliate Lockheed Martin Service Inc. (LMS) for information technology work at the Hanford Site in Washington state, according to a Wednesday DOE inspector general report.
Hanford is highly polluted with radioactive waste from years of plutonium production during the Manhattan Project and Cold War.
“We determined that several MSA executives also held senior executive positions within Lockheed Martin Corporation,” which “resulted in the appearance of a conflict of interest. Our review found that contracts may have been awarded that were not in the best interest of the government and that the department may have paid higher costs than were necessary and allowable,” the IG said.
“Our review largely substantiated that there were a number of problems related to the management and oversight of the IT contracts at Hanford,” the IG continued.
LMS also got additional subcontracts and was paid more to perform the same work that was required in its original subcontract with MSA.
LMS “was awarded a $232 million subcontract to provide IT support services,” the IG said. “It was then awarded almost $115 million in additional subcontracts to perform work that was within the scope of the original subcontract.”
At least some of those subcontracts were awarded by contractors, including MSA, without permission from DOE, which blocked “visibility into the additional cost of providing IT support services at the Hanford Site,” according to the IG.
Additionally, MSA allowed LMS to charge the government without oversight.
DOE officials told investigators they “had not been provided access to the data and records that would be needed to conduct effective monitoring activities,” which allowed costs to increase significantly for expenses such as time and materials.
Time and material costs exceeded $120 million, though they were estimated to cost only $46 million.
Similarly, MSA didn’t monitor LMS’s expenses and didn’t perform required audits, despite multiple requests from DOE.
LMS “refused to provide access to its records, preventing [MSA] from performing required subcontract audits,” the watchdog said.
A Lockheed Martin spokesman told The Daily Caller News Foundation that “while we disagree with some of the findings in the report, we are committed to working closely with MSA and DOE to resolve any concerns as we continue providing IT support to Richland Operations under the new contract.” Richland is the DOE office managing the contracts involved.
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