Lockheed Martin subsidiaries reach $70 million settlement for claims they overcharged Navy for parts

Two Lockheed Martin subsidiaries have agreed to pay the federal government $70 million for overcharging the Navy for aircraft parts, the U.S. Department of Justice announced Friday.

The federal agency says Sikorsky Support Services, based in Stratford, Connecticut, and Derco Aerospace, headquartered in Milwaukee, Wisconsin, knowingly entered into an improper subcontract for spare parts and materials for aircrafts used to train Navy pilots.

Under the contract, Sikorsky purchased the parts from Derco at the cost Derco paid other suppliers, plus a 32% markup.

Sikorsky then billed the Navy for the price it paid Derco, in violation of federal regulations barring such arrangements, which prosecutors said drive up government costs.