Court Favors the Facts of Whistleblower to Deepwater Contractors

Yesterday the United States District Court, N.D. Texas, Dallas Division denied a motion to dismiss Deepwater whistleblower Michael DeKort's false claims act suit against Integrated Coast Guard Systems LLC (ICGS) and Lockheed Martin Corporation. The court has not prevented the case from moving forward, finding DeKort's allegations to be true, "well-pleaded factual allegations." More background on the Deepwater program can be found here, but the opinion of the court also provides a good refresher on the history of the problems DeKort witnessed, including:

• ICGS allegedly convincing the Coast Guard to replace "requirements" language with "guidance," which the court found gave ICGS "nearly unlimited latitude"


• The 123-foot patrol boats ICGS delivered to the Coast Guard had numerous flaws that made the eight vessels non-complaint. "Even though Defendants were aware of the flaws, Defendants continued to invoice for the work completed and certified that the delivered assets met all requirements," the court found.
  


• "ICGS, primarily through Lockheed, fraudulently omitted information and data regarding: (1) the environmental survivability of externally mounted equipment; (2) the FLIR video cable defects; (3) the Physical Configuration Audit and mislabeled cables; (4) the video/camera surveillance system defects; (5) the classified communications and SIPRNET/TEMPEST requirement defects; and (6) the low smoke cable defects...When DeKort entered some of this information himself in January 2004, Lockheed's Paul J. Messer removed the entries, stating that DeKort's entries lacked detail. After deleting DeKort's entries, Defendants never re-entered any information regarding the above-listed defects, nor did they disclose the concealed facts." (emphasis POGO's)


• "The total loss of the patrol boats due to Defendants' "shoddy and deceptive work" likely caused a loss of $11.75 million dollars per patrol boat, or $96 million dollars"

The court found that the changes in contract requirements to guidance and omitting information and data was not a "false statement or fraudulent course of conduct" for purposes of the False Claims Act. They did not agree with Lockheed's argument, however, that the government's knowledge of deficiencies precluded liability, though the court did not hold them responsible for the hull problems overseen by Northrop Grumman. Interestingly, the court also rejected that an Inspector General report on the Deepwater program could be used to dismiss DeKort's allegations. 

This ruling means that there continues to be an opportunity to recover some of the money wasted on the Deepwater program. What remains to be decided as the case moves forward is the validity of DeKort's claims concerning Lockheed's alleged false certifications in connection with the Command, Control, Communications, Computers (C4), Intelligence, Surveillance, and Reconnaissance (C4ISR) system (an information systems architecture) and Northrop Grumman's false certifications in connection with the hull, mechanical and electrical (HM&E) work.

-- Mandy Smithberger

UPDATE: As a reader helpfully pointed out, the court did not find that some of DeKort's allegations are true, only that they are "plausible" enough to be allowed to proceed to trial.

Comments

[Innocent bystander]

"The court has not prevented the case from moving forward, finding that DeKort's allegations to be true, "well-pleaded factual allegations."

Not quite. In denying a summary judgment motion the court makes no findings as to the "truth" of the allegations - only the sufficiency of the pleadings. e.g. - do they even make sense and state a cognizable claim? This is not a huge hurdle, and in this case DeKort met it. Congratulations. But whether the allegations are "true" will be determined at trial; not in preliminary law and motion. If you're going to report on legal issues, it may not hurt to have your staff lawyer check your work.

[Observer IV]

Well done to Mr. DeKort. Any recovered money is just icing. The more important thing is to shatter the arrogance that this contractor shows in the allegedly false certification. The contractor would like the customer and taxpayers to take its word is its bond, and believe that the company is unquestionably honorable and aboveboard. Without that trust, certification of anything is bunk. This company needs to be reined in before its USCG deliverables kill people, and, secondarily, the taxpayers get hosed again. BTW, the second chance--and more money--this company is getting in the Commonwealth of Virgina is a stain on the new governor and colossal rip of the citizens.

[Coast Guard Report]

Congrats to Mr. DeKort!

[dryMAILman]

Fool me once shame on me. Fool me over and over and over again? Well I work for the U.S. Postal Service and will soon deliver the output of Northrop Grumman's malfunctioning and ill-concieved $1.5 billion Flats Shuffler Shredder (FSS).