3rd UPDATE: DOJ Joins Lawsuit Against SAIC Over $3.2 Billion Contract

The U.S. Department of Justice has joined a whistle-blower lawsuit in Mississippi alleging that Science Applications International Corp. (SAI) and others improperly colluded with government officials to obtain a technology contract worth up to $3.2 billion.

The department said SAIC was paid $116 million under the contract before it was canceled.

Government lawyers said in an unsealed federal-court filing the department is seeking to recover a monetary award that is three times the actual damages the government suffered, plus civil penalties under the False Claims Act.

The department said SAIC and an outside partner conspired with two government officials involved in the contracting process to tilt the proceedings in SAIC's favor.

The contract, awarded in 2004, was related to a computer center at the Naval Oceanographic Office, located at the Stennis Space Center in Hancock County, Miss.

The department said the government officials shared non-public advance information with SAIC that wasn't given to other bidders and placed language in the contract solicitation to bias the selection process in favor of SAIC.

SAIC said in a statement that it fully cooperated with the government's review of the contract process and believes the allegations to be without merit.

"The government has been reviewing this matter for three years and has failed to identify any information provided to SAIC that was not available to other bidders or that could have provided SAIC with an unfair competitive advantage in the procurement process," the company said. "SAIC intends to pursue a vigorous defense against these allegations."

The original whistle-blower complaint was filed by David Magee, a former computer scientist at the Naval Oceanographic Office. Magee's lawsuit, and the Justice Department's decision to join the case, was ordered unsealed Wednesday by U.S. District Court Judge Sul Ozerden in Gulfport, Miss.

In addition to making allegations against SAIC, Magee alleged that a subsidiary of Lockheed Martin Corp. (LMT) was involved in the allegedly tainted bidding process.

The Justice Department said Lockheed Martin Space Operations teamed with SAIC to perform the contract. However, the department chose to not join the portion of Magee's lawsuit that alleged wrongdoing by Lockheed.

A Lockheed spokesman said Magee's allegations were without merit and said the company was gratified that the department didn't join that part of the lawsuit.

The head of the Justice Department's civil division, Assistant Attorney General Tony West, said, "As this case illustrates, the Department of Justice will actively pursue legal action against both contractors and federal employees who seek to gain an unfair advantage in the procurement process."

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; [e-mail]