Rocket-Maker Unclear on Subject of Probe
By Bill Brubaker
Washington Post Staff Writer
Saturday, May 28, 2005
Rocket-maker Orbital Sciences Corp. said yesterday that federal government agents executed search warrants Thursday at its Dulles headquarters and at a design and manufacturing facility near Phoenix.
Orbital said an investigation led by the U.S. attorney's office in Phoenix appears to be focusing on "contracting procedures" related to "certain U.S. government launch vehicle programs."
The company's products -- sold to government and commercial customers -- include launch vehicles that send satellites into orbit, rockets used to test missile defense systems and interceptor booster vehicles designed to protect against missile attacks.
Despite some failed launches in recent months, Orbital Sciences has been involved in dozens of successful launches over the past decade, and it has attracted some high-profile talent: NASA Administrator Michael D. Griffin is a former employee and on Wednesday the company named former Air Force secretary James G. Roche to its board of directors. Orbital has about 2,100 employees at its Dulles and Chandler, Ariz., facilities.
"We're not aware that we've done anything wrong or that we have any violations," said Barron Beneski, Orbital's spokesman. "We're going to be fully cooperative with the authorities . . . and we're working with the authorities to learn more about the nature of the investigation."
Sandy Raynor, spokeswoman for the U.S. attorney in Phoenix, confirmed that Orbital is the subject of an "ongoing investigation" but she declined further comment. "Nothing about this is public," she said.
Orbital, a major Washington area defense contractor, reported $200 million in profit on $676 million in revenue last year. The company said 54 percent of that revenue came from work it did for the Defense Department and government intelligence agencies.
The raid surprised top officials at the Pentagon's Missile Defense Agency, a principal Orbital customer, according to a senior military officer at the agency. "That's nothing we initiated," said the officer, who spoke on condition of anonymity because he is not an official spokesman for the agency. "We're still waiting to learn the details of what triggered the raids and what it's about."
Founded in 1982 by three friends not long out of Harvard business school, Orbital in its first 20 years found a niche in the aerospace industry, supplying target missiles to the Pentagon but also making small rockets and lightweight satellites for NASA and other government agencies. Its business was concentrated on research and development programs, not major weapons systems.
That began to change in 2001 when Orbital was selected to supply some of the booster rockets for the Bush administration's ambitious new system for defending the United States against ballistic missile attack. As the government's other booster supplier -- Lockheed Martin Corp. -- floundered with its version, Orbital emerged as the lead producer.
Under a contract with Boeing Co., Orbital produces the booster rocket for the interceptor, which is designed to carry a "kill vehicle" into space that then separates from the booster and homes in on enemy warheads. Since last summer, eight such interceptors have been installed at launch sites in Alaska and California. Another six are scheduled to be installed by the end of this year.
The Pentagon has had difficulty carrying out recent tests to demonstrate that the program can work. Two attempts to launch interceptors at mock warheads have been aborted at the last minute for what defense officials blamed on minor glitches -- flawed software code in December and a faulty silo retracting arm in February.
Orbital has assured the agency that the raids will not interfere with production of additional interceptors for the government's missile defense system, the military officer said.
The simultaneous raids in Dulles and Chandler, a Phoenix suburb, began Thursday morning while some of the company's top officials, including chairman, chief executive and co-founder David W. Thompson, were in Boston at the Banc of America Securities 2005 Aerospace and Defense Suppliers Conference.
Two Arizona newspapers reported that some agents raiding the Chandler facility worked for the Defense Criminal Investigative Service, an arm of the Defense Department's inspector general's office. A spokesman for the service did not return a call yesterday.
The Defense Criminal Investigative Service's duties include investigating terrorism, companies that use defective parts in weapons systems and equipment used by the military, and suspected cases of fraud, bribery and corruption, according to the agency's Web site.
Loudoun County sheriff's deputies assisted in the raid of the Dulles headquarters, said Kraig Troxell, a sheriff's department spokesman.
Thompson learned of the raids shortly after 7 a.m. Thursday, said Orbital spokesman Beneski, who was also in Boston at the time. Thompson later met privately with investors, then participated in a panel discussion called "Outlook for the Aerospace and Defense Supplier Sector." Thompson was upbeat about his company's future and made no mention of the raid during the panel discussion, according to a webcast of the event.
Beneski said the Dulles and Chandler facilities stayed open during the raid, but some parts of the company's operations were affected by the presence of federal agents.
Yesterday, he said, Orbital was "completely open for business."
Staff writers Bradley Graham and Jerry Markon contributed to this report.