Pentagon takes back job outsourced to Lockheed

By Jim Wolf

WASHINGTON, April 20 (Reuters) - The U.S. Defense Department is taking back responsibility for billions of dollars in pay and benefits for veterans, a task handled since 2002 by Lockheed Martin Corp (LMT.N), the Pentagon's No. 1 contractor by sales.

A switch to using government workers, prompted by Congress, will save $22 million to $25 million over the next 10 years, Tom LaRock, a spokesman for the Defense Finance and Accounting Service (DFAS), said on Monday.

Rep. Dennis Kucinich, an Ohio Democrat who led an investigation and held hearings into the matter, said Lockheed's performance under its contract had been marked by "mishandling, delay, poor quality and exorbitant charges."

"This is a great day for veterans and a victory for government oversight," Kucinich said in a statement.

But Bethesda, Maryland-based Lockheed said it was very proud of its performance under the contract, which had an estimated aggregate value of $346 million in 2007.

The company delivered more than $400 billion in benefits "accurately and on time under this contract," said Joseph Wagovich, a spokesman for Lockheed Martin's Information Systems and Global Services business unit in Rockville, Maryland.

Kucinich's investigation found delays of as much as 5-1/2 years in delivering retroactive pay awards to eligible disabled veterans under legislation enacted by Congress in 2003 and 2004. He blamed government mismanagement and Lockheed Martin.

Lockheed's Wagovich said the company's program had received the highest customer satisfaction ratings of any DFAS function for six straight years, as measured by a survey conducted by the Office of Personnel Management, the federal human-resource agency.