The 9th Circuit reinstated part of a false claims lawsuit against Lockheed Martin Corp. over allegations that the company fraudulently underbid a U.S. Air Force contract to support space launch operations.

Former Lockheed employee Nyle Hooper filed the suit, claiming that the company entered a bid of $432.7 million to the Range Standardization and Automation IIA program, even though it knew the budget was not feasible. In addition, Hooper alleged, Lockheed used free open-source software and used defective testing procedures without informing the Air Force. Hooper was fired in 2002, allegedly after threatening to expose the underbidding.

A federal judge initially dismissed Hooper's claims for lack of evidence, but a three-judge appeals court panel found that there was a “genuine issue of material fact whether Lockheed acted either knowingly, in deliberate ignorance of the truth, or in reckless disregard of the truth when it submitted its bid.” The court also reinstated Hooper's wrongful discharge claim. However, it affirmed the lower court's decision to dismiss Hooper's allegations that Lockheed used improper freeware and testing procedures, ruling that the company had disclosed its methods to the Air Force.