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Lockheed Accused of $100M Scam

Sen. Tom Harkin is accusing Lockheed Martin Space Systems of using "an apparent accounting trick" in an effort to scam the Pentagon out as much as $100 million, USA Today reported.

Citing a letter Harkin has sent to the Defense Department and an interview with him, the paper says in Monday's editions that the difference involves the sale of some Silicon Valley facilities owned by Lockheed that were developed, in part, with government money.

Harkin cites Pentagon audits saying the company's accounting methods were "flawed, unreasonable, and inequitable to the government." The company calls it an honest disagreement.

"We are in negotiations with (Pentagon auditors) about that disagreement and we are committed to reaching a mutually acceptable agreement on the issue," James Fetig, chief spokesman for Lockheed Martin told the paper.

Harkin says the Pentagon paid for improvements on the buildings, depreciation, repair and maintenance expenses under contracts with Lockheed Martin and should benefit from the sale of the facilities

But Lockheed applied all of the proceeds from the sale to the land and none to the buildings, claiming they were worthless. That meant the Pentagon could not receive any of the proceeds from the sale because regulations prohibit it from sharing in gains on land sales.

Moreover, he says Lockheed now wants to lease back some of the so-called worthless buildings at a cost of several million dollars to the Defense Department.

But Lockheed says various buyers wanted only the land and have torn down the buildings, or plan to do so, and are putting up new office facilities on the sites.

Lockheed Martin Space Systems and Astronautics Operations is based in Littleton, Col.

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