The Government awarded to Lockheed a contract the objective of which was to ?automate, standardize, and modernize software and hardware used? ?to? ?support? ?our?? nation?s? ?space?? launch operations . . . at Vandenberg Air Force Base (Western Range) and Cape Kennedy (Eastern Range), while also providing continued support for and transition from legacy systems.??At the original contract competition, the Air Force issued to potential bidders a Request for Proposal?(?RFP?).? ?The Air Force concluded that the contract would be a cost-reimbursement contract because ?uncertainties inherent in the requirements render attempts to establish a fixed- price unrealistic.? One of the significant factors to be considered by the Government was cost. The Air Force ?informed the offerors that it may select an offer that is not the lowest priced technically acceptable offer, but may instead select a higher priced offer that represented the??Best Value? to the Government.? ?Lockheed was awarded ?the? contract ?even ?though ?it ?did ?not submit ?the ?lowest ?bid.? One ?of ?the ?individuals who worked on the bid estimate testified that the inputs used to compute the final bid were based on ?bad, bad guesses? but were not false.
The relator in this case was employed as a Senior Research Operations engineer.?? He alleges that Lockheed violated the False Claims Act (?FCA?) by: (1) knowingly underbidding the contract; (2) including undisclosed freeware in software deliverables that did not convey all intellectual property rights; and (3) failing to perform all required tests or improperly conducting those tests.? ?He also alleged wrongful termination. Hooper filed his qui tam suit in the District Court for the District of Maryland, which transferred the suit at Lockheed?s request to the Central District of California on forum non conveniens grounds.? ?The California district court? granted summary judgment in favor of Lockheed on all grounds.??? The relator ?appealed,? and? the Ninth Circuit affirmed in part and reversed in part.
The district court had dismissed the wrongful termination claim because it applied the two year?statute of limitations in California – the jurisdiction to which the case was transferred.? ?The Ninth Circuit? ?ruled? ?that? ?the? ?three? ?year?? statute? ?of limitations ?applicable? in ?Maryland ?should ?have been used: ?a transferee district court must apply the state statute of limitations that the transferor district court would have applied had the case not been transferred on forum non conveniens grounds pursuant to 28 U.S.C. ? 1404(a).?
The Ninth Circuit also concluded that false estimates, defined to include fraudulent underbidding in which the bid is not what the defendant ?actually? intends ?to ?charge, ?can ?be ?a source of liability under the FCA, assuming that the other elements of an FCA claim are met. Viewing the evidence in a light most favorable to Hooper, the Ninth Circuit ruled that there existed a question of fact about whether there existed sufficient? evidence ?of ?fraudulent ?underbidding. The district court erred when it required an ?intent to deceive.?
The Ninth Circuit affirmed the dismissal of the relator?s claim concerning the fraudulent use of freeware and defective testing procedures because the government knew of the testing procedures and that ?the ?freeware ?was ?being? used.?? ?The ?Ninth Circuit ?acknowledged? that ??government knowledge is no longer an automatic bar to suit, [and as a result,] courts have had to decide case by case whether a FCA claim based on information in the government?s possession can succeed.? ?In this case, however, Lockheed submitted overwhelming evidence that it shared with the Air Force in its Disclosure Letters the use of freeware and also disclosed to the Air Force its testing procedures. Accordingly, Hooper failed to demonstrate the existence? of? a ?genuine? issue? of ?material ?fact whether Lockheed ?knowingly? submitted a false claim.
Hooper ?v. ?Lockheed ?Martin ?Corporation, ?688?F.3d 1037 (9th Cir. 8/2/2012) (Pregerson, Graber, Berzon)