Multi-year aluminum fraud scheme blamed for two NASA mission failures

[Shawn Knight]

A hot potato: An Oregon aluminum supplier has admitted to altering test results and falsifying certifications over a nearly 20-year period, costing victims millions of dollars and potentially putting lives at risk. Fortunately, nobody was hurt during two failed NASA missions directly linked to the faulty materials.

An Oregon-based aluminum extrusion manufacturer has agreed to pay $46 million to NASA, the Department of Defense and other customers to settle charges related to a 19-year fraud scheme that ultimately resulted in two failed NASA missions.

Hydro Extrusion Portland, Inc., formerly known as Sapa Profiles Inc. (SPI), admitted to altering test results of extruded aluminum and falsifying certifications for nearly 20 years. Assistant Attorney General Benczkowski of the Department of Justice’s Criminal Division said corporate and personal greed perpetuated this fraud against government and other private customers.

Jim Norman, NASA’s director for Launch Services at NASA Headquarters in Washington, said that while NASA does perform its own testing, they are not able to retest every single component which is why they require and pay for certain parts to be tested and certified by the supplier.

When test results are tampered with and certifications are falsified, missions fail. Such was the case with the nose cones on the Taurus XL rockets involved in NASA’s Orbiting Carbon Observatory (OCO) and Glory missions in 2009 and 2011, respectively.

The two failures resulted in the loss of more than $700 million and years of scientific work at NASA alone.

“It is critical that we are able to trust our industry to produce, test and certify materials in accordance with the standards we require,” Norman said. “In this case, our trust was severely violated.”

NASA no longer uses the supplier as a government contractor and proposed the company be banned government-wide.

Permalink to story.

https://www.techspot.com/news/79890-multi-year-aluminum-fraud-scheme-blamed-two-nasa.html

 

[amstech]

What is this, an ice cream scoop? What did that cost...$400?

 

[r8bwp]

Think turn means hurt needs an edit
Fortunately, nobody was turn during two failed NASA missions directly linked to the faulty materials.

 

[Uncle Al]

Fines and penalties are not enough. The person(s) responsible should go to prison for wasteing tax payer money as well as putting lives at risk (in space as well as on the ground).

 

[Nima304]

I'm really tired of companies breaking the law and getting slaps on the wrist because of it. Fraud on this level for this long should end with lengthy prison sentences for those involved, not a measly fine that doesn't even come close to covering the losses of a single affected organization.

 

[kevbev89]

I get what the aluminum supplier did was wrong (I 100% agree), but I bet they did what they did in part due to the demands from the government. If you have ever seen government bids before, they go with the supplier that can provide the service or goods at the cheapest cost. Government projects don't choose the best price/performance option at all.

 

[elementalSG]

What is this, an ice cream scoop? What did that cost...$400?

Julius Levinson:
"You didn't think they actually spent ten thousand dollars for a hammer and thirty thousand for a toilet seat, did you?"

 

[mailpup]

I get what the aluminum supplier did was wrong (I 100% agree), but I bet they did what they did in part due to the demands from the government. If you have ever seen government bids before, they go with the supplier that can provide the service or goods at the cheapest cost. Government projects don't choose the best price/performance option at all.

But if you can't meet the bid specs without lying or cheating, you shouldn't be bidding in the first place.

 

[kevbev89]

But if you can't meet the bid specs without lying or cheating, you shouldn't be bidding in the first place.

You will honestly be surprised at how it works. A lot of times people say they can get it or meet w/e requirements during the bid. Or say they have it and then get it before the deliver the goods/services.

In the end it is all about the money :\

 

[avioza]

A lot of times people say they can get it or meet w/e requirements during the bid. Or say they have it and then get it before the deliver the goods/services.

Ok, I could see a failure to produce on the first year, but for twenty years? That is egregious.

 

[kevbev89]

Ok, I could see a failure to produce on the first year, but for twenty years? That is egregious.

No idea about that honestly... fake it till you make it?

 

[mailpup]

You will honestly be surprised at how it works. A lot of times people say they can get it or meet w/e requirements during the bid. Or say they have it and then get it before the deliver the goods/services.

In the end it is all about the money :\

You partially blamed the government on requirements that may have been too demanding. I'm not saying that bidders don't lie or cheat. I'm just saying if they can't meet the bid specs, they shouldn't bid. Mind you, not that they don't bid anyway, just that they shouldn't.

I do have a fair idea of how it works though. I have written a few requests for proposals (RFPs) on behalf of the government agency I worked for albeit not for nearly the amounts of money discussed here but the process is similar nonetheless. I've also participated in other aspects of RFPs whether written by me or not. Occasionally, the requirements of an RFP were such that we received no bids at all. If that happens, we contact the prospective vendors to find out why and go from there. That's how it should have worked but evidently it didn't.

 

[psycros]

Fines and penalties are not enough. The person(s) responsible should go to prison for wasteing tax payer money as well as putting lives at risk (in space as well as on the ground).

Not even the smaller military contractors ever see real punishment for the fraud that's endemic throughout the industry. If this had been one of the big fish like Raytheon or Boeing the company would have taken the bid and then after a while just said, "Yeah, we need more money" and their buddies at the Pentagon would have happily written them a bigger check. At least the product would have actually worked as advertised. Its one big happy family in the Military-Industrial Complex - tee time a 9 AM.

 

[wiyosaya]

You partially blamed the government on requirements that may have been too demanding. I'm not saying that bidders don't lie or cheat. I'm just saying if they can't meet the bid specs, they shouldn't bid. Mind you, not that they don't bid anyway, just that they shouldn't.

Agreed! Unfortunately, it is all about $$$ in our regressive modern society. If they cannot be in business honestly, then they should not be in business at all, IMO - especially if there is a process within NASA to do what you describe when they receive no bids. Had that happened, the company may well have gotten extra funding to deliver "to spec" parts.

However, the company is feeling the heat, now.

 

[kevbev89]

Agreed! Unfortunately, it is all about $$$ in our regressive modern society. If they cannot be in business honestly, then they should not be in business at all, IMO - especially if there is a process within NASA to do what you describe when they receive no bids. Had that happened, the company may well have gotten extra funding to deliver "to spec" parts.

However, the company is feeling the heat, now.

Yep. It is honestly how everything is driven. Can I make money, and at what cost?
They totally should not have entered the bid if they don't meet the requirements, but evidently it didn't stop them.

 

[kevbev89]

You partially blamed the government on requirements that may have been too demanding. I'm not saying that bidders don't lie or cheat. I'm just saying if they can't meet the bid specs, they shouldn't bid. Mind you, not that they don't bid anyway, just that they shouldn't.

I do have a fair idea of how it works though. I have written a few requests for proposals (RFPs) on behalf of the government agency I worked for albeit not for nearly the amounts of money discussed here but the process is similar nonetheless. I've also participated in other aspects of RFPs whether written by me or not. Occasionally, the requirements of an RFP were such that we received no bids at all. If that happens, we contact the prospective vendors to find out why and go from there. That's how it should have worked but evidently it didn't.

To clarify, I wouldn't say I'm blaming the government necessarily, it is just their specifications and demands for how much they are willing to pay are just unrealistic at times. You get what you pay for (in most cases).

...well maybe indirectly I am blaming them.

 

[mailpup]

To clarify, I wouldn't say I'm blaming the government necessarily, it is just their specifications and demands for how much they are willing to pay are just unrealistic at times. You get what you pay for (in most cases).

...well maybe indirectly I am blaming them.

I agree that the specs, demands and requirements can be unrealistic. No argument there. Also, perhaps blamed wasn't the right word. I probably should have used the word attributed.

 

[kevbev89]

I agree that the specs, demands and requirements can be unrealistic. No argument there. Also, perhaps blamed wasn't the right word. I probably should have used the word attributed.

Your original comment didn't offend me at all. Just thought I'd clarify, since articles are never really "objective." Just wanted to inform people of the possible other side of the story.

 

[Cycloid Torus]

Sorry, but what I don't get is 20 years without a conformance test. It is part of the function of purchasing - so why wasn't it done?

 

[Mr Majestyk]

Fines and penalties are not enough. The person(s) responsible should go to prison for wasteing tax payer money as well as putting lives at risk (in space as well as on the ground).

+1000

This is the sort of corruption rife in China, but it goes on everywhere to some extent.

 

[lazer]

Paying $46 million for causing some $700 million and years of scientific work ruined is what I call getting off very soft.

Why were the people responsible not put in jail?

 

[Aux101]

Wow! That's a new low, a very serious and dangerous one.
Penality isn't matching the gravity of their wrong doing.

 

[Danny101]

Paying $46 million for causing some $700 million and years of scientific work ruined is what I call getting off very soft.

Why were the people responsible not put in jail?

This.

 

[timespacematter]

Such are the times we live in, pay your fine and walk, no jailtime....

 

[DAOWAce]

...corporate and personal greed perpetuated this fraud...

Sums up America.