Software maker Command wins $24.8 mln judgment against Lockheed

Reuters

By Andrea Shalal-Esa

WASHINGTON, Nov 26 (Reuters) - Command Technology Inc, aprivately held firm that developed electronic maintenancemanuals for Lockheed Martin Corp's F-16 fighter jet, haswon a $24.8 million judgment against the Pentagon's biggestsupplier after a jury found Lockheed guilty of unfairlycompeting with the smaller firm.

Command Technology, which is based in Groton, Connecticut,makes similar software for many other U.S. weapons systems, butsued Lockheed after being shut out of the work on the 4,500 F-16fighter jets that have been sold to the U.S. military and twodozen other countries around the world.

A jury in the Circuit Court of Maryland for MontgomeryCounty, where Lockheed is based, concluded after a week longtrial that Lockheed competed unfairly with and injured Command,according to a verdict sheet filed late Monday with the court.

The jury also found Lockheed "torturously interfered" withCommand's economic relationships.

In its complaint, Command said Lockheed unfairly flunked theConnecticut firm's software product during testing it conductedon behalf of the U.S. Air Force, but then worked with anothersoftware maker, InfoTrust Group Inc, to develop its own rivalproduct.

Given declines in orders for new weapons, Lockheed and otherarms makers are competing more intensely than ever for work onupgrading and servicing existing weapons systems. The companiesgenerate about two-thirds of their revenues on big arms programsfrom the maintenance, spare parts, upgrades and sustainment ofweapons systems after they are fielded.

The judgment against Lockheed came just hours after thePentagon on Monday approved work by Britain's BAE Systems on upgrades for 134 F-16 fighters operated by SouthKorea, in a deal that could open the door to future orders fromother countries.

Robert MacGill, a lawyer for Command, said the company waspleased the jury had agreed with its charge that Lockheed used"unfair methods and trickery" in testing the company's softwareproduct.

In its complaint, Command said Lockheed tried to block itsproduct from the lucrative F-16 market because the smallercompany's software threatened to dislodge Lockheed as theprimary provider of maintenance and sustainment for the weaponsit builds, and billions of dollars of associated sales.

It said opening the maintenance system to outside vendorswould have resulted in "dramatic savings" for taxpayers.

Lockheed said it was disappointed by the judgment andsuggested it would appeal the ruling.

"We are disappointed in the jury's decision and believe thatit will not stand after post-trial review by the circuit courtor on appeal," said spokesman Gordon Johndroe.

The case stems from a 2005 decision by the U.S. Air Force toswitch to digital maintenance manuals for the F-16 and otherweapons, and the engines that power them.

Command argued in the case that Lockheed and other "originalequipment manufacturers" have tried to restrict the ability ofmilitary users to view the technical data associated withwarplanes and other weapons systems.

That in turn allowed those companies to charge the U.S. AirForce and other militaries for the data and the ability to viewit electronically, Command said.

Command said it provided one part of Lockheed withproprietary information to allow it to test its C2Web platform,but the company used the data to develop competing products thatwere structured to preserve Lockheed's profits.

For instance, Command said its product allowed mechanics whowere servicing the planes to choose parts made by other vendors,while the Lockheed system forced users to choose parts made bythe company.

It said Lockheed, BAE Systems and other suppliers"interfered with, impaired and delayed the deployment" ofCommand's product by "falsifying testing procedures and records"and encouraging the Air Force to reject use of the C2Webplatform.

Lockheed falsely led other possible users to believe theC2Web system could not be used for the F-16 fighter, Commandsaid.

Command has also sued InfoTrust Group Inc and othercompanies that work with Lockheed. InfoTrust, in turn, has suedLockheed, according to Command's law firm.

Command argued that Lockheed and other companies werepositioning their products to be used on the $392 billion F-35fighter jet program, also run by Lockheed, shutting Command outof work on the estimated 3,000-plus jets to be built under thatprogram.

Air Force Lieutenant General Chris Bogdan, who runs the F-35program for the Pentagon, has tried to inject more competitioninto the maintenance of the F-35 program, given concerns aboutthe high cost and slow progress of Lockheed's work on the jet'scomputer-based maintenance system.

In its lawsuit, Command said Lockheed was also trying toerode its existing business relationships with the militaries ofOman, Israel, Poland and the United Arab Emirates, by arguingthat its software could not publish technical data on the F-16.

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