The United States alleged that changes to a pay raise list conflicted with Lockheed Martin’s certifications on federal contracts. Lockheed denies the allegations, and the two agreements provide about $7.5 million for more than 1,000 employees and $22 million for the United States.
Lockheed Martin, the F-35 defense contractor with a $193.6 billion backlog at the end of 2025, agreed to pay about $29.5 million in a settlement with federal agencies. The United States alleged that a Lockheed diversity director informed HR personnel that at least 11 additional people of color would be identified for a raise list and that a race flag would clear if everything else stayed the same, in a remark that included “Let’s goooooooooo” and a smiling emoji. On November 4, the Justice Department and Equal Employment Opportunity Commission announced the deal to resolve allegations about employment decisions and false certifications on federal contracts. The signed Justice Department agreement requires $22 million for the United States; the EEOC says its separate agreement provides about $7.5 million for more than 1,000 employees. For any company that certifies antidiscrimination compliance on federal contracts, the government’s theory links internal pay decisions to False Claims Act exposure. This case moves toward dismissal only after the United States receives its payment.
Lockheed denies the conduct described by the United States and the allegations in the civil case, the signed agreement says. The agreement is not an admission of liability, and the EEOC says no liability was determined. Former Lockheed vice president Tim Booher filed the whistleblower case in 2025. On October 28, the United States intervened in part, joining some of the claims, in the federal court case in the Northern District of Texas.
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The pay program was called Compensation Adder, or Comp Adder. Under the United States’ account in the settlement agreement, managers nominated employees for an additional annual increase using performance criteria. Each business area could select up to 20% of its employees at each job level. Higher leaders reviewed the nominations against that limit.
The United States alleged that Lockheed then analyzed the proposed list for statistical outliers by race and sex. A flag was supposed to prompt another look at the performance basis for selections, without asking leaders to consider protected characteristics. The United States alleged that some human resources personnel instead pressed business leaders to resolve race flags by removing certain employees and adding others based on race. Under the United States’ account, the diversity director’s remark quoted above concerned a level 2 race flag on the Comp Adder list.
The alleged federal claim depended on a second step. The United States alleged that Lockheed certified compliance with antidiscrimination requirements in its government contracts while maintaining the practices it described. The signed agreement names the federal contract equal opportunity clause, FAR 52.222-26, as one of those requirements. The United States also alleged that Lockheed allocated costs associated with the practices to government contracts and sought payment or reimbursement for them. That is how the government connected its account of pay decisions to claims under the False Claims Act.
The government’s allegations extended beyond raises. The United States alleged that Lockheed took race or sex into account in hiring and promotion, used demographic goals in a management incentive plan, and offered some development opportunities on the basis of race or sex. Lockheed’s denial covers the conduct set out in the agreement. The settlement resolves the government’s specified claims without a finding that those allegations were proved.
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The Justice Department agreement calls for $22 million, including $10 million identified as restitution, plus interest at a 4% annual rate from October 5 until payment. Booher is to receive $4.4 million plus a proportionate share of interest after the United States receives the settlement amount. His share comes from the federal recovery; it is not another $4.4 million added to the announced total.
The EEOC says its agreement provides about $7.5 million for more than 1,000 employees. It calls this the largest class of workers to publicly recover under an EEOC settlement involving alleged employment discrimination arising from a diversity program. The payment resolves a 2025 charge filed by EEOC Chair Andrea Lucas concerning alleged race discrimination in performance assessments, bonuses and other compensation decisions, including Comp Adder.
Lockheed’s 2025 annual report says 72% of its $75.0 billion in sales that year came from the U.S. government, directly or as a subcontractor. **P&L translation:** The cash is $22 million plus interest to the United States and about $7.5 million to employees, and under the Justice Department agreement the settlement and the costs of the investigation and defense cannot be charged to government contracts. For a GC at a federal contractor, the decision this week is whether a race or sex flag in the company’s own pay reviews sends managers back to performance, the step Lockheed’s program called for, or to the swaps the United States alleged.
The $22 million federal payment is due within 14 days after the agreement’s effective date, defined as the date of the last signature. The agreement also bars Lockheed from charging specified settlement, investigation and defense costs to government contracts. It requires the company to identify and repay any such costs previously included in payments sought from the United States within 90 days after the effective date.
Once the United States receives the settlement amount and interest, the parties must file a dismissal in Booher’s Texas case. Under the signed terms, the covered claims will be dismissed with prejudice to the United States, meaning it cannot bring them again, while its remaining claims will be dismissed without prejudice. Separately, according to the EEOC’s announcement, its agreement requires Lockheed to maintain a workplace in which race and sex are not considered in hiring, pay, bonuses or promotions, and permits EEOC review during the agreement’s term.
The “Let’s goooooooooo” remark the United States cited now sits inside a settlement of about $29.5 million in which Lockheed denies the allegations and the signed agreement is no admission of liability. The record to watch is the dismissal filing the parties must make in Booher’s Texas case after the United States receives its $22 million plus interest.
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