A joint investigation conducted by NASA and the US Department of Justice (DOJ) found an aluminum manufacturing company guilty of altering test results and providing false certifications for 19 years, resulting in two failed Taurus XL launches as part of the 2009 Orbiting Carbon Observatory (OC) and 2011 Glory missions.
The Oregon-based company has agreed to pay over $46 million to customers, including the United States government, in connection with the falsification scheme in order to resolve criminal charges and civil claims relating to nearly two decades of fraud.
“For nearly 20 years, Sapa Profiles and Sapa Extrusions falsified critical tests on the aluminum they sold – tests that their customers, including the U.S. government, depended on to ensure the reliability of the aluminum they purchased,” said Assistant Attorney General Benczkowski of the Department of Justice’s Criminal Division in a statement. “Corporate and personal greed perpetuated this fraud against the government and other private customers, and this resolution holds these companies accountable for the harm caused by their scheme.”
The multiyear technical investigation revealed that the company “covered up substandard manufacturing processes by brazenly falsifying test results” and providing such results to hundreds of customers across the country. Court documents indicate that the company admitted to the allegations and altered the results of tests used to “ensure the consistency and reliability of aluminum” shaped at its facilities.
“NASA relies on the integrity of our industry throughout the supply chain. While we do perform our own testing, NASA is not able to retest every single component. That is why we require and pay for certain components to be tested and certified by the supplier,” said Jim Norman, NASA’s director for Launch Services, in a statement. “When testing results are altered and certifications are provided falsely, missions fail. In our case, the Taurus XLs that failed for the OCO and Glory missions resulted in the loss of more than $700 million, and years of people’s scientific work. It is critical that we are able to trust our industry to produce, test and certify materials in accordance with the standards we require. In this case, our trust was severely violated.”
The fraud occurred in two ways. First, between 1996 and 2006, an SPI plant manager led a scheme to make thousands of handwritten alterations to test results by changing failing numbers to passing and then typing them onto a certification that was later provided to customers. Afterward, between 2002 and 2015, a testing lab supervisor similarly admitted to altering computerized systems and providing false certifications. He also instructed employees to violate other testing standards, such as increasing the speed of testing machines or cutting samples that didn’t match specifications.
SPI plead guilty to one count of mail fraud and agreed to pay $34.1 million in combined restitution to NASA, the Department of Defense’s Missile Defense Agency, and commercial customers to replace a faulty product in the supply chain and recover associated costs.
The plea agreement is scheduled to go to court on May 13, when the court will decide whether or not to accept it.