A NASA subcontractor will pay a $46 million fine after admitting to falsifying test results in aluminum manufacturing for nearly two decades, the Justice Department said Tuesday.
The aluminum parts in question made their way into use in “frangible” joints that hold explosive charges in rockets used by NASA and missiles used by the Missile Defense Agency. NASA blames the aluminum parts for two failed rocket launches, something the company disputes and the Justice Department did not prove.
As part of the agreement, the Norway-based company has pleaded guilty to one count of mail fraud and the agency has agreed not to file any additional charges.
The company, formerly called Sapa Extrusions and now Hydro Extrusion, has been suspended from government contracting since September 2015.
Since the investigation began, prosecutors say Hydro Extrusion has fired the employees involved and overhauled its internal testing and quality control systems.
“This proposed resolution ensures that the victims of this conduct, including the U.S. military, can replace faulty product put into the supply chain and help recover the costs foisted on taxpayers to investigate this scheme,” U.S. Attorney for the Eastern District of Virginia Zach Terwilliger said in a statement.
The failed launches occurred in 2009 and 2011; protective covering did not separate as planned and the rockets were too heavy to get into orbit, according to NASA. A subsequent NASA inspector general’s investigation led to Sapa’s aluminum production plant in Portland, where a former lab supervisor admitted in 2017 to falsifying aluminum test results and instructing others to do the same. He is serving a three-year prison sentence.
Thousands of test results were faked between 1996 and 2015, according to the court documents released Tuesday, giving the government and other clients false assurance of the aluminum’s ability to hold up to stress and elongation. Those products should have been scrapped after failing to meet testing standards, prosecutors said.
Aluminum extrusions used by NASA failed the agency’s own tensile tests despite having been certified as passing by the company, according to court filings. But prosecutors in Alexandria wrote they could not find the original 2007 test results to confirm that they were altered as part of the scheme.
Employees who raised concerns were ignored, according to the court documents, including a lab technician who in 2014 told the main plant manager he was “dreading” the “daily practice” of being asked to “fake tests, pass failing material or enter fake data.”
A former production manager for the Portland plant was acquitted on fraud charges in federal court in that city this year, after arguing that he did not know the end customer for the aluminum was the U.S. government.
Sapa Extrusions acknowledged the misconduct in a 2015 statement.
The Hydro company on Tuesday posted a statement about the plea and the investigation.
“Since learning of the misconduct and reporting it to the government and customers, we have invested significant time and resources to completely overhaul our quality and compliance organizations,” including a $14-million investment in automated tensile-testing equipment, said Charlie Straface, the business unit president for Extrusion North America.
“We are looking forward to concluding this matter with DOJ. We are committed to serving the needs of our customers and conducting business with the highest level of ethics and integrity,” Straface said in the statement.