In 1992 Lockheed Martin formed a wholly-owned subsidiary, Lockheed Information Technology Company (LITC) to provide centralized mainframe and supercomputer services to various business segments. The predominant users of two Cray supercomputers were two business units – LMSC that worked exclusively on government contracts and LASC that worked exclusively on both government contracts and independent research in support of government contracts.

For 1994 and 1995, the subsidiaries working using the Cray computers were charged under a method where LITC allocated its costs applying a fixed cost based on each companies annual forecasted hours for CRAY computer resources (called the "resource commitment" method of allocation. The DCAA reviewed LITC’s compliance with the Cost Accounting Standards and concluded Lockheed’s resource commitment method violated CAS 418 asserting use of a forecasted usage commitment resulted in significant differences of cost allocations rather than using an actual usage method (called "resource consumption") recommended by CAS 418.50(e)(1). The CO issued a final decision in 1999 saying the allocation of Cray computer costs violated CAS 418, seeking $2.7 million of increased costs it asserted the government incurred due to the CAS violation.

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