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Lockheeds Admits to Overcharging for F-35

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posted on Aug, 9 2007 @ 09:27 PM
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Lockheed Martin has admitted to overcharging the US Military by $265 Million for the F-35 Lightning II development program. The company is in the process of reimbursing the money, but it's not sure if it will be put back into the F-35 program, or used in other areas. The overcharging dates back to the initial contract award in 2002.


Lockheed Martin overcharged the US government by $265 million on the F-35 Joint Strike Fighter development programme, the company announced on 9 August.

The company is now in the process of reimbursing the funds to the government, although it was not immediately clear if the funds will be returned to the JSF programme office for reinvestment or go elsewhere.

“We are working with the government to determine the appropriate amount of interest” owed, according to a released company dossier.

Source




posted on Aug, 9 2007 @ 09:36 PM
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Ugh, this saddens me that big corporations still do stuff like that. They should know better. Shame on you, Lockheed.



posted on Aug, 9 2007 @ 10:10 PM
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Originally posted by carnival_of_souls2047
Ugh, this saddens me that big corporations still do stuff like that. They should know better. Shame on you, Lockheed.


If the article is to be believed - it was discovered by an internal audit, not by any Federal oversight. I think it's actually pretty admirable that they have acknowledged that they made an error in the first place, and have plans to pay it back or reinvest it into the program. They certainly could have sat on it and never said anything...



posted on Aug, 10 2007 @ 03:41 AM
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Originally posted by crusader97

If the article is to be believed - it was discovered by an internal audit, not by any Federal oversight. I think it's actually pretty admirable that they have acknowledged that they made an error in the first place, and have plans to pay it back or reinvest it into the program. They certainly could have sat on it and never said anything...


Doesn't that sort of beg the question 'Why in hell did the Federal Government not spot that they had paid an extra $265m?! How often does this really happen, and how often does it go undiscovered?'

The best quote from that article however, is this one:



The trouble “had to do with invoices connected with [JSF partners] Northrop Grumman and BAE Systems,” the spokesman said, adding that neither of Lockheed’s partners were not to blame for the error.


neither were not?

So, were the partners to blame or not?



posted on Aug, 10 2007 @ 05:00 AM
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Or maybe the feds did come upon it first and the story we see is an understanding of sorts between the feds and lockheed for the public face of the incident so that the company, an major defense provider, doesn't get a bad name locally and internationally as well.

The trials, convictions and reprimands may still continue in the background.

Just my 2 cents!



posted on Aug, 10 2007 @ 10:15 AM
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Hi Zaph,
What I find really disturbing here is not that LM overcharged the government by $265 million. Given that it happened early on in the program and involved multiple subcontractor arrangements, budgeting for actual costs is difficult and mistakes are possible. Some development processes or infrastructure start up could turn out to be more or less than thought. There is typically a few percent fudge factor in these programs allowed for.

What is NOT encouraging is that it took LM five years to notice the mistake. And no one picked it up. Any large company conducts its own internal audits and as part of good governance guidlines is expected to have an independant professional auditor check the books. This should all happen on a yearly basis as part of end of financial year reporting. The reports are overseen by the US federal government agency the SEC. These are the guys who came down like a ton of bricks on Enron and its auditor, Arthur Anderson(also found to be guilty of faulty auditing of the now infamous WorldCom scandal) , both of which were put out of business. As a result the auditing and reporting rules regarding ANY major business that operates in ANY way in the US were vastly tightened, and must comply with these rules. I know first hand of stories of people working in audit companies in Australia who legally cannot aply for a home loan with an Australian bank they have the audit contract for, if that bank, say owns another in the US. Some have made this mistake and been interviewed by both Australian and US authorities and raked over the coals for it, all for a measley $400 thousand home loan. Even when they have nothing directly to do with auditing themselves and would never have anything to do with a foreign owned entity of a local audit client.

Yet here is a major defence contractor, who despite these tough rules on reporting and accounting is able to breach them intentionally or not, while ironically working on a US government project. So what is this saying about LM's and the DoD's handling of the F-35 project and their collective accounting practices? Are there any other screw ups we should know about? Somebody(s) need their arses kicked back into the stone age over this.

LEE.



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