NASA aluminum fraud scheme probe

In summary: The problem is basically lies in the process of design based on specs calculations instead of tests. Sending the materials to independent lab for evaluation before usage is increasing costs for end user, but provide the deterrent against the fraudulent material makers. On the other hand, fines and sanctions are retribution rather than deterrent. Large fine can force fraudulent company out of business, but nobody can guarantee if the replacement companies would behave better, especially companies with the rapid management turnover as @mfb correctly noted.Therefore, quite moderate $46 mln. fine in this case.Yet another fraud case: 10 past or planned SpaceX launches affected, including the Crew Dragon demonstration and the planned crewed flight.For electronics which could harbor malware, the future of supply chain nightmares
  • #1

nsaspook

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https://www.engadget.com/2019/05/01/nasa-aluminum-fraud-scheme-probe/
When the launch of NASA's Orbiting Carbon Observatory and Glory missions failed in 2009 and 2011, the agency said it was because their launch vehicle malfunctioned. The clamshell structure (called fairing) encapsulating the satellites as they traveled aboard Orbital ATK's Taurus XL rocket failed to separate on command. Now, a NASA Launch Services Program (LSP) investigation has revealed that the malfunction was caused by faulty aluminum materials. More importantly, the probe blew a 19-year fraud scheme perpetrated by Oregon aluminum extrusion manufacturer Sapa Profiles, Inc., which Orbital ATK fell victim to, wide open.

Only fined for $46 Million?
“For nearly two decades, SPI and its employees covered up substandard manufacturing processes by brazenly falsifying test results,” said U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia. “They then provided the false test results to hundreds of customers across the country, all to increase corporate profits and obtain production-based bonuses. 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. I want to thank our partners at NASA-OIG, DCIS, and the FBI for their efforts in helping bring much-needed oversight and reform to these companies.”
 
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  • #2
The $46 million don't even look like a fine. They are used to clean up the remaining mess - pay the investigation and replace bad parts that are still around.
On the other hand: This was ~20 years ago, the company has been bought by another company in the meantime, management changed (probably more than once). A fine as punishment wouldn't have an effect any more. At best you could get more money back that was lost in the failed missions.
 
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  • #3
mfb said:
The $46 million don't even look like a fine. They are used to clean up the remaining mess - pay the investigation and replace bad parts that are still around.
On the other hand: This was ~20 years ago, the company has been bought by another company in the meantime, management changed (probably more than once). A fine as punishment wouldn't have an effect any more. At best you could get more money back that was lost in the failed missions.

I'm sure VW would have loved that sort of 'fine' for their cheating scandal.
 
  • #4
A current case of forged documents.
https://www.justice.gov/usao-wdny/pr/penn-yan-man-charged-falsifying-inspection-reports-space-parts
The complaint states that in January 2018, an internal audit by SQA Services, Inc. (SQA), at the direction of SpaceX, revealed multiple falsified source inspection reports and non-destructive testing (NDT) certifications from PMI Industries, LLC, for Falcon 9 and Falcon Heavy flight critical parts. SpaceX notified PMI of the anomalies. Source inspections and NDT are key tools used in the aerospace industry to ensure manufactured parts comply with quality and safety standards. Specifically, the signed source inspection report had a forged signature of the SQA inspector. SpaceX and SQA officials believed the signature of the inspector was photocopied and cut and pasted onto the source inspection report with a computer.
 
  • #5
While the fraudulent certification came to light during investigation into the technical failure, it did not actually find that the technical failure was due to the quality of the extrusions. I would still be looking for an engineering problem with the trigger or the pyrotechnical components.

The cost of replacing existing components with suspect certification is reasonable. The failure of NASA's project has not been shown to be due to alloy quality. That may explain why no claim for the $700 million lost investment has been supported.
 
  • #6
nsaspook said:
The scheme is not unique. Kobe Steel had very similar scheme uncovered in 2018.
https://www.reuters.com/article/us-...nearly-five-decades-ceo-to-quit-idUSKBN1GH2SM
The problem is basically lies in the process of design based on specs calculations instead of tests. Sending the materials to independent lab for evaluation before usage is increasing costs for end user, but provide the deterrent against the fraudulent material makers. On the other hand, fines and sanctions are retribution rather than deterrent. Large fine can force fraudulent company out of business, but nobody can guarantee if the replacement companies would behave better, especially companies with the rapid management turnover as @mfb correctly noted.
Therefore, quite moderate $46 mln. fine in this case.
 
  • #8
For electronics which could harbor malware, the future of supply chain nightmares has only begun.

It would be a great time to begin new paths of research into fault tolerance when each and every component in the system is potentially corrupted.
 
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  • #9
That's why some manufacturers inspect incoming parts. It pays off in lower warranty costs.
 
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