United States v. Lockheed Martin Corp. (14 F. Supp. 3d 982, 2014)

Order (1) Granting in Part and Denying in Part Relators’ Motion for Partial Summary Judgment and (2) Granting in Part and Denying in Part Defendant’s Motion for Summary Judgment

SUSAN J. DLOTT, Chief Judge.

This matter is before the Court on Plaintiffs’ and Relators’ Motion for Partial Summary Judgment (Doc. 249) and Defendant’s Motion for Summary Judgment (Doc. 256). This False Claims Act lawsuit concerns the development and production of the United States Air Force’s F-22 aircraft by Defendant Lockheed Martin Corporation. Relators Donald E. Howard, Larry W. Wilson, Charles Harrison, and Morris Moss are current or former employees of Lockheed. Relators allege generally in this lawsuit that the vendor-supplied tooling program for the F-22 aircraft program was deficient, leading to the submission of false claims for payment by Lockheed to the United States.

I. INTRODUCTION AND FACTUAL OVERVIEW

In April 1991, Defendant Lockheed, the lead contractor on a team with other contractors, won an Air Force competition for the opportunity to build the Air Force’s new Advanced Technical Fighter, which eventually became the F-22. (SOF-R ¶ 16-17.) The Air Force described the F-22, sometimes referred to as the F-22 Raptor, on a public factsheet dated September 6, 2005 as follows:

The F-22 Raptor is the Air Force’s newest fighter aircraft. Its combination of stealth, supercruise, maneuverability, and integrated avionics, coupled with improved supportability, represents an exponential leap in warfighting capabilities. The Raptor performs both air-to-air and air-to-ground missions allowing full realization of operational concepts vital to the 21st century Air Force.

(U.S. Air Force, http://www.af.mil/About Us/FactSheets/Display/tabid/224/Article/ 104506/f-22-raptor.aspx (Feb. 26, 2014).) Franklin Carey, the contracting officer on the F-22 program for the Government’s Defense Contract Management Agency (“DCMA”), described the project as “exceeding the envelope of known technology” in the areas of “[r]adar evading, fuel efficiency, and some electronic and engine.” (Doc. 309-1, Carey Dep. 11.)

The F-22 program began as an “engineering/manufacturing/development” (“EMD”) program. (SOF-R ¶ 19.) The EMD portion of the F-22 program was contracted on a “cost plus award fee” basis. (SOF-R ¶20.) Federal Acquisition Regulations (“FARs”) permit the use of cost-reimbursement contracts when the government agency cannot “define its requirements sufficiently” or estimate its costs “with sufficient accuracy” to allow use of a fixed-price contract. 48 C.F.R. § 16.301-2(a). Pursuant to the EMD Contract, the Air Force paid Lockheed for allowable costs incurred in the development of the F-22 plus a fixed fee of approximately 4% of the costs incurred. (CSOF-R ¶ 86; CSOF Ex. 24, Burbage Dep. 58.) At the discretion of the Government, Lockheed could earn an additional fee of approximately 9% of the cost. (CSOF-R ¶ 87; CSOF Ex. 24, Burbage Dep. 58.) One explicit factor in the award fee consideration was “[o] ver all [c]ost [cjontrol.” (CSOF-R Ex. 43 HIV.B.1.) Kendra Riney, Lockheed’s contracting director, stated in a written declaration that “increased costs impacted the Program’s budget and could result in a smaller fee award to Lockheed Martin.” (SOF Ex. 2, Riney Dec. ¶ 7.) Vouchers for payment which Lockheed submitted to the Government contained a certification that the costs were applicable, allocable, and reasonable, a standard consistent with FAR 31. (CSOF Ex. 37, Haase Dep. 123-24, 181-87.)

Carey, the DCMA contracting officer, stated that the F-22 program was a “concurrent design/build program” which meant that “as [Lockheed] was designing and building one aircraft, the engineering on the following aircraft would continue to evolve and change.” (SOF-R ¶ 28; SOF Ex. 15, Carey Dec. ¶ 10.) Lockheed delivered the first F-22 aircraft to the Government on August 8, 1997 pursuant to the EMD Contract. (SOF-R 11149.)

In 1998, Lockheed and the Government entered into a Production Representative Test Vehicle (“PRVT”) Contract, a firm fixed price contract for a total of eight aircraft. (SOF Ex. 2, Riney Dec. ¶ 8.)

The parties executed the first fixed-price production contract, the Lot 1 Production Contract, in December 1999, but the EMD phase of the F-22 program did not end until 2002. (SOF-R ¶ 37; SOF Ex. 15, Carey Dec. ¶¶ 17, 20.) Lockheed and the Government entered into eight Production Contracts between December 1999 and November 2008. (SOF Ex. 2, Riney Dec. ¶ 10.) The Air Force procured 178 F-22 aircraft pursuant to the Production Contracts. (Id.)

Pursuant to the EMD and the Production Contracts, the Government accepted delivery of the F-22 aircrafts pursuant to the DD-250 process. (SOF Ex. 2, Riney Dec. ¶¶ 13-14; SOF Ex. 15, Carey Dec. ¶ 16.) Lockheed’s contract director testified that “[t]he DD-250 process established] the Government’s acceptance of the aircraft and determines that the aircraft complies with contract requirements.” (SOF Ex. 2, Riney Dec. ¶ 14.) The DD-250 forms contained notations indicating any variances, corrective actions, and money withholdings. (Docs. 266-2, 266-3.)

On April 18, 2007, Lockheed and the Air Force entered in Contract Modification No. P00671 to the F-22 EMD contract. (SOF Ex. 2, Riney Dec. ¶ 21.) The Contract Modification stated that the “performance of the [EMD Contract] is deemed completed.” (Id., Riney Dec. Ex. B.)

II. PROCEDURAL HISTORY

On April 21, 1999, Relators Donald E. Howard and Larry W. Wilson filed the original Complaint (Doc. 3) in this case against Defendant Lockheed alleging violations of the False Claim Act (“FCA”), 31 U.S.C. § 3729 et seq. The Complaint was filed under seal. The United States began an investigation into the Relators’ allegations for the purpose of determining whether to intervene in the action pursuant to 31 U.S.C. § 3730(b). On June 11, 2003, Relators filed an Amended Complaint (Doc. 25).

While this case was in its initial proceedings, Relators Charles Harrison and Morris Moss filed a separate suit alleging FCA violations against Lockheed on January 15, 2002 in the Northern District of Georgia. Harrison v. Lockheed Martin Corp., No. 1:02-cv-118, Dkt. 1 (N.D.Ga. Jan. 15, 2002). The Government became aware of both suits and, upon leave of this Court and of the Northern District of Georgia, informed each set of Relators about the existence of the other. Harrison and Moss then moved to dismiss the second-filed suit. The Northern District of Georgia granted the dismissal motion on February 23, 2005. Harrison, No. 1:02-cv-118, Dkt. 36 (N.D.Ga. Feb. 23, 2005).

On May 13, 2005, Relators Howard and Wilson moved for leave to file a Second Amended Complaint in this first-filed suit to join in Relators Harrison and Moss. (Doc. 38.) The Government did not oppose the addition of Harrison and Moss to this suit. (Id.) The Court granted leave to amend, and Relators filed the Second Amended Complaint against Lockheed on that same day. (Docs. 39, 40.)

On October 5, 2006, the Government formally declined to intervene in this case. (Doc. 61.) The Second Amended and Consolidated Complaint was unsealed and served on Lockheed in early 2007. (Docs. 62, 63.)

On March 13, 2007, Lockheed moved to dismiss the Second Amended Complaint. (Doc. 65.) The Court dismissed the Second Amended Complaint in part to the extent that Counts I and II were based on 31 U.S.C. § 3729(a)(1) because Relators had failed to plead the element of presentment with particularity. (Doc. 88.) However, the Court granted Relators leave to move to amend if warranted after discovery. (Id.) Following discovery, Relators moved for leave to amend, and the Court granted Relators leave to amend. (Docs. 227, 241.) On January 31, 2012 Relators Sled the Third Amended Complaint reinstating the 31 U.S.C. § 3729(a)(1) claims. (Doc. 244.) The Third Amended Complaint incorporated by reference the allegations and causes of action stated in the Second Amended and Consolidated Complaint. (Id.)

Relators pleaded the following causes of action in the Third Amended Complaint:

Count I: False Claims Act violations under 31 U.S.C. § 3729(a)(1) and (a)(2); Count II: False Claims Act conspiracy in violation of 31 U.S.C. § 3729(a)(3); Count III: Retaliation against Relator Donald Howard in violation of 31 U.S.C. § 3730(h); and

Count IV: Retaliation against Relator Larry Wilson in violation of 31 U.S.C. § 3730(h).

(Doc. 40-4 at PagelD 410-14.) Relators have not pursued the conspiracy claim and the Court considers it to have been withdrawn. (Doc. 267 at PagelD 11638.)

Relators and Lockheed both have moved for summary judgment. Lockheed has moved for summary judgment on Relators’ claims for FCA substantive violations and for FCA retaliation. Relators have moved for summary judgment on Lockheed’s affirmative defenses of waiver, estoppel, and accord and satisfaction. Briefing on the motions is complete. On July 3, 2013, after the completion of the briefing, the United States filed a Statement of Interest pertinent to the pending motions. (Doc. 312.) The parties’ summary judgment briefs totaled more than 300 pages. In addition, the parties submitted over 900 paragraphs of proposed undisputed facts and thousands of pages of exhibits.

The Court scheduled oral arguments on the summary judgment motions for August 29, 2013. The parties estimated that the hearing would take less than one day to complete. However, the hearing spanned three non-consecutive days on August 29, August 30, and September 20, 2013. Relators presented new arguments and revised theories of liability at the hearing. Lockheed responded in kind. The parties together introduced hundreds of pages of new exhibits in conjunction with the summary judgment hearing. (Docs. 345, 346, 351, 352.) While the hearing brought some factual disputes and legal issues into sharper focus, it expanded the breadth of summary judgment matters to be adjudicated. The judicial trope that “the matter is ripe for adjudication” is accurate, but seems inadequate to describe the work expended on the pending Motions.

III. LEGAL STANDARDS

A. Elements of an FCA Fraud Claim

The False Claims Act statutory language in effect when this case was initiated provided in relevant part as follows:

(a) Liability for certain acts. — Any person who—

(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; [or]

(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; ‡ ‡ ‡ $

... is liable to the United States Government for a civil penalty....

31 U.S.C. § 3729(a) (pre-2009 amendments).

The FCA was amended by the Fraud Enforcement and Recovery Act (“FERA”) on May 20, 2009. Section 3729(a) was amended in relevant part as follows:

(a) Liability for certain acts.—

(1) In general_ [A]ny person who—

(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; [or]

(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

... is liable to the United States Government for a civil penalty....

31 U.S.C. § 3729 (as amended in 2009).

FERA explicitly states that amended § 3729(a)(1)(B) applies retroactively to claims pending on or before June 7, 2008. The other relevant amendments to § 3729(a) are not retroactive. See 2009 Acts. Pub.L. 111-21, § 4(f), May 20, 2009, 123 Stat. 1625. On November 2, 2012, the Sixth Circuit held that the term “claim” in the retroactivity provision “refers to a civil action or case.” U.S. ex rel. Sanders v. Allison Eng. Co. Inc., 703 F.3d 930, 942 (6th Cir.2012). The Court also held that “the retroactive application of the FCA does not violate the Ex Post Facto Clause’s prohibition on retroactive punishments.” Id. at 948. Accordingly, the relevant statutory provisions which Relators have alleged were breached by Lockheed are 31 U.S.C. § 3729(a)(1) (pre-2009 amendments) and 31 U.S.C. § 3729(a)(1)(B) (post-2009 amendments).

“Section 3729(a)(1) imposes liability not for defrauding the government generally; it instead only prohibits a narrow species of fraudulent activity: ‘present[ing], or causing] to be presented, ... a false or fraudulent claim for payment or approval.’ ” U.S. ex rel. Bledsoe v. Community Health Syss., Inc., 501 F.3d 493, 504 (6th Cir.2007) (citation omitted). Liability does not arise under § 3729(a)(1) “merely because a false statement is included within a claim, but rather the claim itself must be false or fraudulent.” U.S. ex rel. A+ Homecare, Inc. v. Medshares Mgmt. Group, Inc., 400 F.3d 428, 443 (6th Cir.2005). Therefore, “a false statement within a claim can only serve to make the entire claim itself fraudulent if that statement is material to the request or demand for money or property.” Id.; see also U.S. v. United Techs. Corp., 626 F.3d 313, 321 (6th Cir.2010) (citing A+ Homecare). “[A] false statement is material if it has a natural tendency to influence, or [is] capable of influencing, the decision of the deci-sionmaking body to which it was addressed.” A + Homecare, 400 F.3d at 445 (citation omitted). A cause of action under § 3729(a)(1) also requires proof that the false statement or claim was presented to the Government. U.S. ex rel. Marlar v. BWXT Y-12, L.L.C., 525 F.3d 439, 445 (6th Cir.2008).

“To establish a post-FERA claim for relief under § 3729(a)(1)(B), the relator must allege that the defendants knowingly made or used, or caused to be made or used, a false record or statement material to a false or fraudulent claim.” U.S. ex rel. Dennis v. Health Mgmt. Assocs., Inc., No. 3:09-cv-00484, 2013 WL 146048, at *17 (M.D.Tenn. Jan. 14, 2013). The term “material” is defined in the FERA amendments to the FCA to mean “having a tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4).

An FCA violation requires scienter, but not proof of intent to defraud. U.S. ex rel. Wall v. Circle C Constr., L.L.C, 697 F.3d 345, 356 (6th Cir.2012). A showing of an aggravated form of gross negligence or reckless disregard will satisfy the scienter requirement. Id. However, “[s]imple negligence and innocent mistakes do not meet the level of scienter required by the FCA.” U.S. v. Estate of Rogers, No. 1:97CV461, 2001 WL 818160, at *3 (E.D.Tenn. June 28, 2001). An FCA false claim must “betray or suggest intentional deceit.” U.S. ex rel. Roby v. Boeing Co., 100 F.Supp.2d 619, 626 (S.D.Ohio 2000) (citations omitted). “[E]rrors based upon flawed reasoning and differences in interpretation of disputed legal questions are not false under the FCA.” U.S. ex rel. Augustine v. Century Health Servs., Inc., 136 F.Supp.2d 876, 890 (M.D.Tenn.2000). Likewise, an FCA violation requires “proof of an objective falsehood.” Roby, 100 F.Supp.2d at 625. “Expressions of opinion [or] scientific judgments” will not suffice. Id.

The so-called “square corners” rule applies in the FCA context. U.S. ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296, 302 (6th Cir.1998). “[Parties that contract with the government are held to the letter of the contract — irrespective of whether the contract terms appear onerous from an ex post perspective, or whether the contract’s purpose could be effectuated in some other way — under the maxim that men must turn square corners when they deal with the Government.” Id. Moreover, “the mere fact that the item supplied under contract is as good as the one contracted for does not relieve defendants of liability if the item does not in fact conform to the express contract terms.” Id. at 302 n. 4 (citations omitted). Accordingly, “the failure to comply with government contract specifications can result in an FCA ‘injury’ to the government, even if the supplied product is as good as the specified product.” Varljen v. Cleveland Gear Co., 250 F.3d 426, 430 (6th Cir.2001) (finding that relators had stated an FCA claim when they alleged that defendant changed the manufacturing process in violation of an express “quality assurance requirement” that manufacturing processes stay consistent with the process that achieved the first approved product).

“The False Claims Act does not require an expressed false statement to establish liability, but rather, liability may be premised on claims for payment if such claims incorrectly represent that the contracted-for services conform to the terms and specifications of the contract.” U.S. ex rel. Tetsuwari v. Fluor Fernald, Inc., No. 1:06-CV-00235, 2010 WL 1849324, at *2 (S.D.Ohio May 5, 2010). “A false statement can be shown to have been made by an express false certification, or through the so-called implied certification theory, which holds a defendant liable for violating the continuing duty to comply with the regulations on which payment is conditioned.” Wall, 697 F.3d at 356 (internal quotations and citation omitted). The Sixth Circuit has held that a defendant is liable for violating the FCA, even if the claim for payment was not false or fraudulent when made, if the defendant violates a continuing duty to comply with the regulations upon whieh a payment is conditioned. See A + Homecare, 400 F.3d at 454 n. 20. Permitting claims based on implied certification does not vitiate the FCA’s scienter requirement because in such cases the relator still must prove that “the contractor knew, or recklessly disregarded a risk, that its implied certification of compliance was false.” Augustine v. Century Health Services, Inc., 289 F.3d 409, 416 (6th Cir.2002).

Regarding the duty to comply with regulatory provisions, the Sixth Circuit explained that “[t]he False Claims Act is not a vehicle to police technical compliance with complex federal regulations.” U.S. ex rel. Williams v. Renal Care Grp., Inc., 696 F.3d 518, 532 (6th Cir.2012). In Williams, the Sixth Circuit cited with approval cases which held that a false certification of compliance with regulations is only an FCA violation if the certification of compliance was a prerequisite or condition of payment. Id. (citing U.S. ex rel. Gross v. AIDS Research Alliance-Chicago, 415 F.3d 601, 604 (7th Cir.2005) and U.S. ex rel. Landers v. Baptist Mem’l Health Care Corp., 525 F.Supp.2d 972, 978-79 (W.D.Tenn.2007)). The Sixth Circuit reaffirmed that FCA liability only attaches for false certifications of compliance with conditions of payment in U.S. ex rel. Hobbs v. MedQuest Assocs., Inc., 711 F.3d 707, 714 (6th Cir.2013).

Damages do not need to be proved to establish FCA liability. U.S. ex rel. Hagood v. Sonoma Cty. Water Agency, 929 F.2d 1416, 1421 (9th Cir.1991); United States v. Killough, 848 F.2d 1523, 1533-34 (11th Cir.1988).

B. Applicable Contract Provisions and Regulations

Lockheed’s relationship with the Government for the F-22 Program was governed by a variety of contractual documents, including the EMD Contract, Attachments to the EMD Contract, the EMD Contract Statement of Work, Quality Assurance Plans (“QA Plans”), industry standards governing quality assurance (“QA Standards”) incorporated into the contractual documents, and Federal Acquisition Regulations. Relevant provisions from the contract documents, QA Standards, and FARs are set forth in the analysis below where appropriate. A few points about the governing documents are addressed here to provide context for the FCA claims analysis that follows.

The EMD Contract Statement of Work in § 3.4.2.5 called for the implementation of QA Standard MIL-Q-9858 and MIL-STD-1535A. (CSOF-R ¶76; SOF Ex. 38.) It required Lockheed to “take corrective action for nonconformances and deficiencies in accordance with tailored MIL-STD-1520C.” (Id.) It also required Lockheed to “implement a system [to] continually reduce nonconformances and their associated costs and take corrective action to prevent recurrences.” (Id.) Finally, it required Lockheed to “provide for the appropriate flowdown of requirements to subcontractors.” (Id.)

The QA Plans governing the F-22 program also identified industry quality standards as the foundation of Lockheed’s contractually required quality program. (CSOF-R Ex. 36.) The initial QA Plan enacted in April 1992, the QA Plan Revision effective in July 1992, and the QA Plan Revision C effective on May 18, 1995, included among their foundational documents the following QA Standards: QA Standards MIL-Q-9858A, MIL-STD-1520-C, and MIL-STD-1535A. (Id. at LMC-Howard-1562394, LMC-Howard-1562416, LMC-Howard-1562443.) These QA Plans were signed and approved by representatives of both Lockheed and the Government. (Id.) On the other hand, beginning with QA Plan Revision D effective in October 1996, the QA Plans were based on ISO-9001. (Id. at LMC-Howard-1562474.)

QA Standard MIL-Q-9858A applied to F-22 program’s quality assurance system, including quality assurance for tooling, at least through October 1996. (CSOF-R 11.) MIL-Q-9858A was cancelled without replacement in October 1996. MIL-Q-9858A did “not list particular specifications or requirements, but rather conferred] discretion upon a contractor to determine how to implement a system of quality control measures that complies with the poli-eies embodied in the MIL standard.” US. ex rel. Roby v. Boeing Co., 189 F.R.D. 512, 512-18 (S.D.Ohio 1999).

MIL-Q-9858A (SOF Ex. 39) was supplemented by MIL-STD-1520C (CSOF-R Ex. 8; SOF Ex. 45) and MIL-STD-1535A (Doc. 313-3). MIL-STD-1520C had provisions regulating the disposition of nonconforming materials including regulations pertaining to repair, rework, and scrapping of materials and the required documentation of nonconformances and corrective actions. ' (CSOF-R Ex. 8). It was cancelled without replacement in February 1995.

MIL-STD-1535A provided quality requirements for vendors or subcontractors supplying goods or services to prime contractors under government contracts. It was cancelled without replacement in May 1995.

IV. LOCKHEED’S MOTION FOR SUMMARY JUDGMENT ON RE-LATORS’ FALSE OR FRAUDULENT STATEMENT ALLEGATIONS

Lockheed moves for summary judgment on Relators’ claims for false or fraudulent violations of the FCA. Relators respond that summary judgment is inappropriate because questions of material fact exist as to whether Lockheed violated the FCA. Relators assert that there were three categories of violations committed by Lockheed: (1) failure to meet quality assurance standards, (2) purchasing and billing violations, and (3) maintenance of Government property violations.

A. Failure to Meet Quality Assurance Requirements

1. Claims Based on Failure to Follow Quality Assurance Requirements

Relators allege that Lockheed failed to comply with quality assurance requirements in the contracts. The Court will examine different categories of quality standards which Relators allege were violated in the subsections that follow. However, the Court begins with a quick overview of the elements of an FCA claim as applied to allegations that Lockheed failed to fohow quality assurance standards.

The failure to comply with contractual quality assurance requirements can result in a violation of the FCA. See Varljen, 250 F.3d at 430; Midwest Specialties, Inc., 142 F.3d at 302 n. 4. Counsel for Lockheed conceded at the oral argument that violations of contract terms and government regulations which are material to claims for payment can be the foundation for FCA claims. (Doc. 329 at PageID 28510; Doc. 348 at PageID 29566.) The Sixth Circuit stated in relevant part as follows in Varljen:

The Relators’ complaint alleged that Cleveland Gear did not comply with the “Quality Assurance Requirements,” the purpose of which was “to assure the existence of ‘critical safety characteristics.’” The contract provision dictated manufacturing processes consistent with the first article products submitted by Cleveland Gear in order to preclude “an unsafe condition including loss or serious damage to the end item or major components, loss of control, or serious injury to personnel.” The allegation that Cleveland Gear did not comply with this provision amounts to an allegation that, through fraud, it knowingly produced products that did not meet the contract’s quality and corresponding safety requirements. It is undisputed that Cleveland Gear caused to be submitted a “claim” to the government. It is immaterial whether the alleged contractual noncompliance resulted in products with the “same basic performance characteristics” as those that would have been produced in compliance with the terms of the contract.

In light of the fact that it is not essential for an FCA plaintiff to allege damages, and because of the irrelevance of government inspection and the relative quality of conforming and nonconforming products in an FCA case, the Rela-tors’ complaint should have survived a motion under Rule 12(b)(6), as it clearly alleges an FCA “injury.”

250 F.3d at 431 (citation omitted).

As to the materiality requirement, Relators assert that quality assurance was a line item of payment on Lockheed’s claims to the Government. (Doc. 267 at 11610). This assertion was not supported by the evidence. (Doc. 345-24; Doc. 346 at PagelD 29522.) However, quality assurance was a line item on the monthly cost reports used to track costs. (Doc. 336 at 29121.) Also, the EMD Contract explicitly incorporated quality assurance standards. Finally, Charles Brown, the DCMA quality assurance specialist assigned to the F-22 program, testified that any deviations from contract requirements, including quality provisions, had to be authorized in writing by the Air Force’s F-22 system program office. (CSOF-R 67.) A reasonable jury could find that the quality provisions were material based on this evidence.

Regarding scienter and the submission of a false claim, or a false statement material to a claim, the Lockheed director of accounting testified that he certified in each claim for payment submitted to the Government that costs therein were reasonable, allocable, and allowable. (CSOF Ex. 37, Haase Dep. 123-24,181-87.) Rela-tors can argue to a jury that costs related to tooling were not reasonable or allowable if the contractual quality provisions related to tooling had been violated. See Tetsuwari, 2010 WL 1849324, at *2 (stating that liability can be based on incorrect representations that services conform to contract terms). Also, in each of the subsections below, there is evidence in the form of internal reports or Government communications that suggest that Lockheed knew that it was violating quality provisions or recklessly disregarding a risk that it was violating contract provisions. See Wall, 697 F.3d at 356 (stating that reckless disregard satisfied the scienter requirement).

It also is important to note that Relators allege that Lockheed’s quality system was generally deficient from the inception of the program. For example, Relators point out that A1 Caudell, the F-22 tooling manager, mistakenly believed that MIL-STD-9858A did not apply to tooling. (CSOF Ex. 17, Caudell Dep. 23, 26.) Caudell testified that Lockheed did not flow the applicable quality standards down to tooling or to tooling vendors for the F-22. (Id.)

Relators further allege that the deficiencies in the quality system resulted in Lockheed accepting nonconforming tooling from tooling vendors. For example, Howard Abercrombie was a Lockheed tooling liaison inspector for F-22 tooling. (CSOF Ex. 7, Abercrombie Dec. ¶¶5-6.) Aber-crombie stated that Lockheed “perform[ed] a 100% inspection of the first five (5) tools delivered by each vendor” at the start of the tooling program. (Id., Aber-crombie Dec. ¶ 10.) He stated that these inspections demonstrated that “none of the tooling vendors could produce a conforming product” and that “[s]ome tools were returned to the vendor four (4) or five (5) times before they were finally accepted at LMAS.” (Id.) Relators also cite a September 1995 memorandum indicating that there were 58 nonconformances on the first floor assembly jig delivered. (CSOF Ex. 117.) Finally, in a March 1996 power-point presentation, a Lockheed tool inspection manager stated that that Lockheed had found a 50% rejection rate for tools during an inspection of vendor-made tooling. (CSOF Ex. 263.)

a. Maintenance of Quality Data

Lockheed was contractually required to maintain certain quality-related documents including information about nonconfor-mances and vendor quality. The 1995 EMD QA Plan ¶ 2.7 required a “proactive system for early detection of nonconfor-mances” and “[djocumentation of noncon-formances.” (CSOF Ex. 266.) The 1996 and 1998 QA Plans also required Lockheed to “provide a system for early detection, control, and proper disposition of nonconforming material” and the “[djocumentation of nonconformances ... to drive improvement.” (CSOF-R Ex. 36 at LMC-Howard-1562476, LMC-Howard-1562486.) Relatedly, MIL-STD-1535A § 4.3 required Lockheed to devise a “supplier rating system” to evaluate each supplier’s “quality of performance.” (Doc. 313-3.) Specifically, § 4.3.1 required that the supplier rating system “yield the necessary basic data to provide visibility of supplier quality performance and trends.” (Id.)

Also, Lockheed’s 1995 QA Plan at § 11. 14.2 required “[a] system for collection of costs related to scrap, rework and repair [of non-conforming products] shall be established.” (CSOF Ex. 266.) That QA Plan was based on MIL-Q-9858A. MIL-Q-9858A § 3.5 required Lockheed to track data associated with corrective actions taken to tooling such as “products scrapped or reworked to examine extent and causes.” (SOF Ex. 39.) Section 3.6 required Lockheed to “maintain and use quality cost data as a management element of the quality program[,J” but gave Lockheed discretion to determine “the specific quality cost data to be maintained.” (Id.) Finally, FAR 45.505-8 called for Lockheed to keep “records of all scrap or salvage generated.”

Lockheed knew by July 1995 that it was not maintaining certain quality-related documents about nonconformances called General Purpose Records (“GPRs”), documents issued against nonconforming tools. (Rel. Supp. Ex. 399, Doc. 336 at PagelD 29113-14.) Lockheed determined in the July 1995 Self Governance Program Review that it should include the GPRs results as part of its compliance with the requirement to maintain a supplier rating system.

Relators contend that the failure to track quality data continued after 1995. In January 1998, Lockheed determined in an internal audit referred to as the MR97-28 Audit that the company failed to track information on tool quality. (CSOF Ex. 194.) Specifically, Lockheed found that its management did not receive data on “the extent, type, and cause of tool nonconformances” nor “on the number of tool nonconformances by supplier.” (Id.) Lockheed also determined in the MR97-28 Audit that “[c]ontrols have not been provided to ensure that the costs of rework are recorded to that [sic ], when appropriate, suppliers can be billed for additional costs.” (Id.)

There was no formal process in place for notifying an at-fault vendor about the existence of a nonconforming tool. (CSOF Ex. 33, Sawyer Dep. 155-56.) Instead, Lockheed made the decision how to proceed on a tool-by-tool basis. (Id.) Mel Trott, the tool inspection supervisor, testified that tool inspectors who generated a tool inspection statement of condition report (“TISOC”) after determining there was a nonconformance based on vendor error did not provide a copy of the TISOC to the appropriate tool purchasing group. (CSOF Ex. 56, Trott Dep. 198-99.) Finally, Paul Jeffcoat stated in June 2003 that Lockheed was not tracking GPRs in its quality system for supplier performance at the Fort Worth facility. (Rel. Ex. 371, Doc. 335-1 at PagelD 28901.)

Additionally, Relators contend that Lockheed destroyed tooling quality documents. Felecia Link, a tool department office employee, testified in her deposition that in or around the late 1990s she was instructed by Mel Trott, the tool inspection supervisor, to destroy hundreds of TISOCs reflecting nonconforming tools produced by vendors. (CSOF Ex. 5, Link Dec. ¶¶ 5-8.) The destruction of the documents was then approved by Eric Sawyer, a tool inspection manager. (CSOF Ex. 3, Cash Dec. ¶¶ 4-10.) The destruction of the TI-SOCs was witnessed by Coy Cash, a tool inspection employee. (CSOF Ex. 3, Cash Dec. ¶¶ 4-10.)

Lockheed disputes that it was not documenting quality data. As an example of how it documented quality data, Lockheed points to a series of documents from 1995 called “Quality Performance of the F-22 Vendor Tools Received.” These documents tracked the number of dimensional and non-dimensional errors for each primary vendor. (Doc. 345-25.) Lockheed further responds that it also tracked quality via a system called the supplier control network and procurement quality network inspections. (Doc. 345-26 to Doc. 345-29.) Additionally, Lockheed contends that it shared the results of the MR97-28 Audit with the Government. (CSOF Ex. 17, Caudell Dep. 258.) Lockheed contends that Relators cannot prove scienter as necessary to establish an FCA claim based on the MR97-28 Audit findings when Lockheed disclosed the known problems to the Government and suggested remedies.

As to the testimony that Mel Trott ordered the destruction of TISOCs, Trott testified that he believed that the documents in the filing cabinets contained documents related to different aircraft programs, not to the F-22 program. (CSOF-R Ex. 9, Trott Dep. 250, 255.) Trott also testified that four copies of each TISOC existed. (CSOF Ex. 56, Trott Dep. 199.) Lockheed argues that because there were multiple copies of each TISOC and because Relators have not identified any missing TISOCs, the Court should not conclude that TISOC information was destroyed.

The Court concludes that genuine issues of material fact preclude summary judgment on this subclaim.

b. Design Review Processes

Relators also assert that Lockheed failed to implement a contractually required design review process. EMD Contract Attachment 18 at Appendix A-2 § 8.2.2.1 required the use of a three-stage design review process, including a preliminary design review, a critical design review, and a production readiness design review. (CSOF Ex. 305.) This contractual requirement was consistent with ISO-9001 § 4.4.6 which called for “formal documented reviews of design results” and for “[d]esign validation ... to ensure that product conforms to defined user needs and/or requirements.” (SOF Ex. 40.) Also, FAR 46.105 stated that a contractor’s duty to control quality could include controlling quality related to drawings and specifications “to ensure that manufacturing and operations meet the contract’s technical requirements.” 48 C.F.R. § 46.105(c). Relators cite Lockheed documents from 1995, 1997, and 1998 to support their argument that tool designs were not reviewed as required. (CSOF Exs. 194, 334; Doc. 335-1 at 28880.) For example, the 1998 document stated that “Suppliers are not required by the purchase order to provide their tool designs to [Lockheed] IPT [“integrated product team”] tooling engineers for approval prior to making the tools” and this “could result in an improper tool being made.” (CSOF Ex. 194 at LMC-Howard-0000064.)

Lockheed disputes Relators’ assertion. Primarily, Lockheed asserts that the provisions of EMD Contract Attachment 18 upon which Relators rely, including § 8.2.2, are not applicable to the tooling contractors. The contract specified that Appendix A-2 of EMD Contract Attachment 18 applies only to “F-22/NATF team major/critical subcontractors” as listed in Attachment A2-1 to Appendix A-2 of the EMD Contract Attachment 18. (Lockheed Reply Ex. U.) The tooling subcontractors were not listed as “major/critical subcontractors” in Attachment A2-1. (Id.) However, Lockheed does not refute the applicability of ISO-9001 or FAR 46.105. Relators have identified evidence that creates at least a genuine dispute of fact regarding whether Lockheed followed adequate design review processes. The Court will not grant summary judgment as to this quality assurance subclaim.

c. Receiving Inspections, Tool Proofing, and Periodic Inspections

Relators also contend that Lockheed violated mandatory provisions related to tooling inspections, including receiving inspections, tool proofing, and periodic inspections. FAR 52.246-3 required Lockheed to provide “an inspection system acceptable to the Government covering ... special tooling under this contract.” 48 U.S.C. 52.246-3(b). The 1995 QA Plan at § 8.1 stated that “[effective integrated Quality Inspection systems will be provided for the verification of tooling.” (CSOF Ex. 266.) However, it also stated that the “ultimate goal is to be able to certify processes and thereby eliminate traditional inspection activities.” (Id.) The 1995 QA Plan at § 3.4 stated that “production tooling used as a media of inspection” had to be “verified for accuracy at intervals formally established in a manner to cause their timely adjustment or replacement/repair prior to becoming inaccurate.” (CSOF Ex. 266.) MIL-Q-9858A at § 5.1 required Lockheed to “assur[e] that all supplies and services procured from his suppliers (subcontractors and vendors) conform to the contract requirements.” (SOF Ex. 39 at LMC-HOWARD 1562503.) It further required that “[i]nspection of products upon delivery to the contractor shall be used for assessment and review to the extent necessary for adequate assurance of quality.” (SOF Ex. 39 at LMC-HOWARD 1562504.)

MIL-STD-1535A and MIL-Q-9858 were replaced by ISO-9001 as the applicable standards with the adoption of the 1996 QA Plan. ISO-9001 § 4.10.2 required Lockheed as the supplier to “ensure that incoming product is not used or processed ... until it has been inspected or otherwise verified as conforming to specified requirements.” (SOF Ex. 40 at 6.) Section 4.12 stated that that “[t]he inspection and test status of product shall be identified by suitable means, which indicate the conformance or nonconformance of product with regard to inspection and tests performed.” (SOF Ex. 40 at 7.)

Finally, the EMD Statement of Work at § 3.4.2.6 required Lockheed to “proof production tooling.” (SOF Ex. 38; SOF-R 137.) The Statement of Work did not specify the manner by which tool proofing was to be accomplished.

Relators argue that Lockheed violated quality assurance requirements when it discontinued receiving inspections and eliminated the tool try process. On April 8, 1997, Lockheed eliminated the practice of in-house receiving inspection of vendor tools, except “special case by case” situations, in favor of vendor source inspections. (CSOF-R 210; CSOF Ex. 294.) On June 13, 1997, Lockheed eliminated in-house inspection of F-22 Block II tools, except where requested by “tooling engineers or tool inspection supervision or management[,]” in favor of source inspection by the suppliers. (CSOF-R 211; Relators COSF Ex. 123.) Relators assert that Lockheed’s vendors did not have sufficiently robust quality systems for Lockheed to justify relying on them in place of receiving inspections. Relators also contend that Lockheed should have determined on a vendor-by-vendor basis whether each vendor had sufficient objective evidence of quality that receiving inspections could be eliminated. (CSOF Ex. 79, Shermon Roberts’s Report at 4.1.1.)

The evidence regarding the efficacy of Lockheed’s inspection programs is mixed. Lockheed determined that there was a 50% rejection rate for tooling in a power-point presentation from March 1996 called “Inspection of Vendor Supplied Tools.” (CSOF Ex. 263.) Lockheed found both dimensional and non-dimensional problems with the tooling. Eric Sawyer, a Lockheed tool inspection manager, stated in the presentation that the original Lockheed plan called for no source inspections, only sample receiving inspections, and audit visits to vendors. However, Lockheed then implemented a corrective plan of source inspections (ie., inspections at the vendors) and Sawyer concluded that the source inspections led to both an increased acceptance rate and a reduced inspection time. (Id.) Lockheed asserts that this is an example which demonstrates that its quality assurance program identified and remedied a problem.

Lockheed also states that the elimination of in-house inspections cannot be the basis of an FCA claim because the Government encouraged and consented to the elimination. “If both the contractor and the government interpret the contract one way throughout the contract’s history, it is unthinkable that the contractor’s billings which follow this common interpretation could constitute a false claim.” U.S. ex rel. McCoy v. Seaward Marine Servs., Inc., No. 91-1642, 1992 WL 182816, at *3 (4th Cir. Aug. 3, 1992). The elimination of receiving inspections was a goal as early as in the 1995 QA Plan. Terry Freeman, the Air Force’s QA Manager for the F-22 Program, testified that receiving inspections were “the least efficient way to determine product quality” and he agreed that reduction of inspections is the “objective of any good quality program.” (CSOF Ex. 74, Freeman Dep. 92.) Freeman testified further that “hands-on inspection” was disfavored and that the Air Force expected that during the EMD process Lockheed would develop an automated manufacturing program which would identify problems. (Id., Freeman Dep. 93.) Freeman concluded his remarks by noting that receiving inspections were an indication that a contractor did not trust the quality systems of its subcontractors. (Id., Freeman Dep. 94.)

However, Relators point to the deposition testimony of Hal Sanders, a Lockheed internal audit supervisor. He conducted an audit in 1997 in which he examined the processes of source inspections at vendors and receiving inspections at Lockheed. (CSOF Ex. 77, Sanders Dep. 155-57.) He determined that receiving inspections were needed still. (Id.) Lockheed nonetheless eliminated inspections in 1997.

Turning to tool proofing, Relators contend that Lockheed used a process called tool try to satisfy the tool proofing contractual requirement. Eric Ouellette, an F-22 quality manager, issued a quality alert on May 5, 1998 documenting a concern that tools being used in the assembly area had stickers indicating that a tool try had not been completed. (Id.) In some cases, tools were used with only verbal okays or with undocumented fixes. “Non-conformances have been noted as a direct result of use of tools that are on tool try or as result of a work around that was not provided by tool inspection.” (Id.) Further, Ouellette stated that “[a]s a direct result of these actions, tools have not been corrected and are directly responsible for nonconformances that are being noted during the assembly build process.” (Id.) Ouellette did not provide a copy of the quality alert to the Government. (CSOF-R Ex. 2, Ouellette Dep. 188-95.) However, he said discrepancies and nonconfor-mances would have been reported on nonconforming material document reports which were available to the Government. (Id.)

Lockheed eliminated the tool try process in Marietta in March 1999 following a tool try review by an internal “Six Sigma” team. (CSOF Ex. 59, Mason Dep. 117; CSOF Ex. 192.) The Six Sigma team recommended ehminating tool try because tools were staying at the tool try stage for “inordinate amount of time.” (CSOF Ex. 59, Mason Dep. 117-18.) The Six Sigma team assumed “that outside F-22 suppliers were performing proper inspections on those tools.” (Id. at 131.) The Air Force knew by 2001 that tool try had been eliminated. (SOF-R 142.) Tool try was reinstated at Marietta in November 2005. (CSOF Ex. 168.) Relators contend that Lockheed breached the contractual requirement and violated the FCA during the period in which the tool process was eliminated.

Relators also point to evidence that Lockheed did not meet its periodic inspection requirements. On April 2, 2002, DCMA issued a Level I Corrective Action Request (“CAR”) regarding production tooling in LM-Aero Fort Worth. (CSOF Ex. 254.) DCMA alleged that Lockheed had not met contractually required quality provisions contained in Aerospace Standard AS9000. (Id.) Specifically, the CAR alleged that Lockheed had inadequate control of production tooling, the periodic inspection system, and the tool maintenance system. (Id.) One problem involved interchangeable and replaceable tools which had been omitted from the periodic inspection schedule or annotated incorrectly on the schedule. (Id.) DCMA referred to the problems as systemic. (Id.)

Lockheed concluded in a 2004 Project Tooling Sweep that “[procedures defining periodic inspection requirements specific to project tools are lacking or non-existent” and that more than 200 tools were overdue for inspection. (CSOF Ex. 120.) Also in 2004, DCMA issued a Level III CAR stating “grave concerns about your failure to maintain an acceptable inspection system.” (CSOF Ex. 209.) Colonel Lopez concluded that periodic inspection requirements had not been implemented as of May 25, 2005. (CSOF Ex. 298.) Lopez stated as follows in an email:

As of today, Special Tooling Periodic Inspection requirements have not been completely implemented. All Special Tooling, regardless of program, that is utilized as a media of product acceptance must be subjected to Periodic Inspection (PI) to establish and ensure continuing accuracy. This is a requirement of the LM Aero Quality Management System which is designed to comply with the overarching contractual quality requirement for compliance to AS 9100 Aerospace Standard, rev b, dated 2004-01.

(CSOF Ex. 298.)

In 2006, Harry Gardner, the DCMA Industrial Specialist, stated that a 2006 audit revealed that “Special Tooling used as a media of acceptance continued to have numerous deficiencies associated with Special Tooling management.” (CSOF Ex. 279.) Gardner stated that “[t]he PARS2 PER property record reflected Periodic Inspection requirements that were incorrect, numerous data entry errors and fifty one tools were found delinquent for Periodic Inspection as much as three years (LM-Aero Marietta).” (Id.)

in the next subsection, the Court discusses evidence suggesting that Lockheed had concerns about quality performance of some of its tooling vendors when it selected those vendors. In later sections, the Court discusses multiple exhibits identified by Relators which create questions of fact regarding the existence of nonconforming tools caused by vendor error and nonconforming parts made by nonconforming tools. This evidence, along with the internal reviews and reports discussed above in this subsection, are additional circumstantial evidence that the inspection processes implemented by Lockheed to fulfill its quality assurance obligations were deficient. Relators have established a material factual dispute whether Lockheed met its quality assurance inspection requirements. The Court will deny summary judgment to Lockheed on this quality assurance sub-claim.

d. Selection of Vendors

Relators assert that Lockheed awarded tooling work to unqualified vendors. Quality standard MIL-STD-1535A at § 4.2.1 required Lockheed to rate subcontractors by quality, including by evaluating prospective vendors’ quality systems with pre-awards surveys. (Doc. 313-3 at PagelD 27797.) It further required Lockheed to have “procedures for the determination, prior to issuance of the purchase document, of the capability of the prospective suppliers, whether existing or new, to produce the components, equipment or systems, or to supply the service in accordance with contractual requirements.” (Id.) Section 4.3.1 required Lockheed to have a “supplier rating system” which measured each supplier’s “quality of performance.” (Doc. 313-3 at PagelD 27798.) Section 4.3.2 required Lockheed to give each vendor’s quality rating “consideration comparable to other performance indicators when selecting suppliers.” (Id.)

Relatedly, FAR 52.244-5 required a contractor to select subcontractors “on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract.” 48 C.F.R. § 52.244-5. Lockheed admitted that it was “responsible for assuring the quality of its tooling vendors.” (CSOF-R 558.)

Lockheed purported to use a competitive bidding process for tooling work outsourced to vendors. Vendors were scored on a rating system using a scale that was 40% competitive, 40% technical, and 20% quality. (CSOF-R Ex. 51, Lewis Dep. 26.) Relators suggest that this alone is evidence that Lockheed did not rate quality comparable to other performance indicators as required by MIL-STD-1535A. Work that was awarded to the vendor who was not the lowest bidder had to be justified with documentation. (Id.)

Relators argue that bids were regularly awarded without concern for vendor quality. As one example, Lockheed awarded Tucker Tools the bid for “tooling package # 7” in or around July 1994 despite having the lowest quality score among its group of competitors. (CSOF-R Ex. 197.) The Lockheed employees who reviewed the quality results of the bidding vendors had recommended the selection of VT or Votaw Precision to be the vendor for tooling package # 7. (CSOF-R Ex. 208.) In response, Lockheed explained that Tucker had the highest technical score and that the quality score was not ignored. (CSOF-R Ex. 197 at LMC-HOWARD-0340906.) Mel Trott testified that Tucker had received a low quality score because they failed to submit their quality plan for review. (CSOF-R Ex. 9, Trott Dep. 165.) Dan Lewis, a senior material representative, recommended that Tucker be awarded the bid, but only after Lockheed reviewed Tucker’s quality systems. (CSOF-R Ex. 197 at LMC-Howard-0340882.) Lockheed later determined that Tucker met all quality assurance specifications. (Doc. 345, LM SJ Arg. Ex. 08.)

Relators also point to other items of anecdotal evidence to support their allegation that Lockheed used unqualified vendors. For one example, a 1995 memorandum authored by Bryan Ferris states Ferris’s “concern with respect to [vendor] Aerobotics capability to machine F-22 tools within the required tolerances” and states that “very few tools form Aerobot-ics have passed through inspection without being rejected.” (CSOF Ex. 219.) In a second example, the vendor Hyde was criticized in an IPT team memorandum in 1996 based on the “assessment [ ] that the majority of their designs are late to our need and their tool design quality is substandard.” (CSOF Ex. 118.) Lockheed responds that Relators over-generalize based on criticisms and that the memos did not establish that the vendors were unqualified. For example, Lockheed contends that Hyde was understaffed, not unqualified, and that Hyde brought in additional workers in response to Lockheed’s concerns. (CSOF-R Ex. 66, Martineau Dep. 124.)

A Lockheed memo dated November 14, 2002 set forth new controls for procurement addressing the problem of sole-sourcing and the need to have competitive bidding:

-FAR states that we must compete as much as possible. This means that single source procurements will be held to a rare exception basis only. I will need to approve all single source procurements. Competition will be the normal course of business. If the IPT flags a package as hot, procurement will shorten the bid time as much as possible in order to support.

-AH bids will go through the bid room. Pricing data is proprietary and will be protected within procurement.

(CSOF Ex. 240 (emphasis in the original).) However, by January 2003, Pam Campbell, a procurement manager, stated in an email that she believed that the new procedures were “being thrown out” in a return to “business as usual.” (CSOF Ex. 309.)

Relators also cite concerns raised in a document dated July 21, 2003 entitled Process Integrity Special Review of Marietta Tooling Procurement. (CSOF Ex. 258.) The Special Review identified “concerns regarding procurement” that had been raised in emails from October 2002 through January 2003. Those concerns included “[l]arge amounts of single source work awarded based on tight schedule/urgent requirement without competition^]” and “[c]ertain vendors receive a major portion of awards[.]” (CSOF Ex. 258.) Specific vendors identified were Tucker Technology, West Cobb Engineering & Tool Co., Inc., and Summit Design and Manufacturing. (Id.)

The Court concludes that Relators have submitted sufficient evidence to go forward to a jury on the issue of whether Lockheed violated quality assurance provisions related to the selection of vendors.

e. Problems with Shop Aids

Relators assert that “shop aids” improperly were used in place of tools at Lockheed. A Lockheed written operations procedure statement dated June 30, 1995 described a shop aid as follows:

A shop aid is neither a special tool nor a standard tool. A shop aid is a simple device or fixture used exclusively within one department, and usually made by that department, to facilitate a manufacturing operation. Shop aids are not to be used as inspection media or to control configuration.

(CSOF-R Ex. 185.) In defining the requirements for use of a shop aid, the written operations procedure statement indicated that a “shop aid is for limited short-time use.” Timothy Benjamin, a tool and plastics builder, testified that shop aids were only to be used as temporary repair tools. (CSOF Ex. 75, Benjamin Dep. 33.) Steven Lacefield also testified that shop aids generally were intended to be temporary-use products. (CSOF Ex. 71, Lace-field Dep. 266-67.) Despite this evidence, Lockheed points to policies dated 2002, but effective beginning in 1999 and 2000, which contemplated the use of shop aids on a repetitive basis and for their reclassification to project tools. (CSOF-R Ex. 186, 187.)

Relators contend that the use of shop aids caused problems. At an unspecified date in or after August 2004, the Marietta F/A-22 Project tooling team issued a tool sweep report on all tools in the assembly and flight line area. (CSOF Exs. 120, 246.) It noted a discrepancy between two written policies about whether a shop aid that is used repeatedly must be turned into a tool. (CSOF Ex. 246 at LMC-Howard 1305908.) The tooling team also stated that 172 shop aids were being used as tools in the assembly and flight line areas. (Id. at LMC-Howard 1305895.) The tooling team noted two specific “problematic” issues with the project tools in the canopy build-up area. (CSOF Ex. 120 at HM002599.) First, “one major fixture [was] designated as a Shop Aid while awaiting closure of the rejection status.” {Id.) Second, a “shop aid [was] in use that affeet[ed] configuration of the aircraft.” {Id.)

In one incident, a 30,000-pound aircraft fell to the ground when the shop aid used to support it failed. (CSOF Ex. 211.) Lockheed does not refute that this occurred, but it states that the incident is not evidence that the use of shops aids is improper. Lockheed states that the shop aid in question supported only 18,000 pounds so it should not have been used to support the 30,000 pound aircraft. (CSOF Ex. 211; CSOF-R Ex. 93, Nolet Dep. 177.)

This quality assurance subclaim fails. Relators have identified only an internal operations procedure alleged to have been violated. They have not established that the Government contractually required the operations procedure to be used nor that it was material to the payment of claims. The Court will grant summary judgment to Lockheed on this sub-claim.

f. Conclusions on Claims Based on Failure to Follow Quality Assurance Requirements

The Court will deny summary judgment to Lockheed on the claims based on failure to follow quality assurance requirements for the reasons stated above, except that the Court will grant summary judgment to Lockheed on the subclaim based on the use of shop aids.

2. Claims Based on Nonconforming Tools and Nonconforming Parts

Along with claims based on violations of quality-related contractual provisions, Relators assert Lockheed separately violated the FCA to the extent that the Government paid for nonconforming tools and nonconforming parts made by the nonconforming tools.

a. Nonconforming Tools Caused by Vendor Error

Relators assert that the evidence is sufficient to establish at least a material dispute of fact concerning whether vendors provided nonconforming tools to Lockheed. Relators identify hundreds of tools as being nonconforming due to vendor error. (CSOF-R 179, 181; CSOF Exs. 100, 105, 270, 282, 351A, 351B, 351C, 351D; CSOF Ex. 2, Harrison Dec.; CSOF Ex. 48, Mize Dep. 202-03; CSOF Ex. 56, Trott Dep. 140.) Lockheed documented tooling non-conformances on TISOCs, “tool inspection statement of condition” reports. Relators contend that the nonconformances on the TISOCs identified by Relators were caused by vendor errors. Lockheed, on the other hand, argues that the TISOC reports did not establish that vendor errors caused the nonconformance. A1 Caudell, the F-22 tooling manager for Lockheed, identified ten potential causes for tooling nonconformances, including damage during shipping, design changes, and issues with tool assembly and installation. (SOF Ex. 35, Caudell Dec. ¶ 6.)

Relators point out that Lockheed could have notated on the face of a TISOC if an intervening design change or shipping damage was the cause of the particular tooling conformance. Such notations were not present on the TISOCs at issue. (CSOF Ex. 2, Harrison Dec. ¶¶ 31-41; CSOF Ex. 13, Moss Dec. ¶35, 41-42.) Lockheed tool inspectors, including Relator Moss, Relator Harrison, and William Howard Abercrombie, testified that the tools at issue were nonconforming based on vendor error. (CSOF Ex. 2, Harrison Dec. ¶¶ 38411; CSOF Ex. 13, Moss Dec. ¶¶ 3943; CSOF Ex. 7, Abercrombie Dec. ¶¶ 24-28, 31, 33-36, 40-47.) Relators argue that the tooling inspectors’ testimony is sufficient to establish at least a jury question on the issue of whether the non-conformances were caused by vendor error. Relators point out that Harrison was a liaison tooling inspector “responsible for interacting with other departments within Lockheed to determine the causes of tooling nonconformances.” (SOF Ex. 30, Harrison Dep. 18; CSOF Ex. 2, Harrison Dec. ¶ 3; CSOF Ex. 13, Moss Dec. ¶4.) Harrison and Moss had years of training and experience in both generating TISOCs and reviewing TISOCs generated by others. (CSOF Ex. 2, Harrison Dec. ¶¶2, 26-30; CSOF Ex. 13, Moss Dec. ¶ 2, 28-30.)

Lockheed responds that the TISOCs were not conclusive evidence that nonconforming tools were caused by vendor error. At his deposition, Relator Harrison testified that he had assumed the noncon-formances were based on vendor error. (Lockheed Reply Ex. X, Harrison Dep. 244; CSOF Ex. 25 Harrison Dep. 277.) Tooling inspector Abercrombie testified that he made his conclusion after determining that the dimensions on the tool were not the same as on the tool drawing provided to him. He did no further investigation. (CSOF-R Ex. 50, Abercrombie Dep. 116-17.) Another Lockheed tool inspector, Tommy Free, testified that he could not know whether a nonconformance on a tool had been caused by shipping, vendor error, or something else. He stated that it was not his job as a tool inspector to determine the cause of a nonconfor-mance. His only task was to document the condition of the tool at that point in time. (CSOF-R Ex. 70, Free Dep. 51-52, 79-80, 182.) The Court finds that a material dispute of fact exists as to whether Relators have established that the tooling nonconformances listed on the TISOCs were caused by vendor error.

Nonetheless, the existence of nonconforming tools caused by vendor error is not sufficient to establish that Lockheed submitted false claims to the Government in violation of the FCA. Lockheed argues that the existence of a nonconforming tool