NASA Defrauded By Metals Company Blamed For $700 Million In Losses And Two Failed Launches

An Oregon-based metals manufacturer faked test results and provided faulty materials to NASA, which the agency says caused over $700 million in losses and two failed satellite launches, according to the results of an internal investigation. 

Hydro Extrusion Portland, Inc. - formerly known as Sapa Profiles, Inc., (SPI) falsified thousands of certifications for aluminum components over a 19-year period for hundreds of customers, including NASA. 

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. -Engadget

SPI would generally alter the tests in one of two ways. Between 1996 and 2006, an SPI plant manager "led a scheme to make thousands of handwritten alterations to failing test results by changing failing numbers that fell below the minimum required test results to appear to be passing," according to the Justice Department. Then, from around 2002 through 2015, SPI testing lab supervisor Dennis Balius "led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers." He also instructed employees to routinely violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a way that did not meet testing standards. 

Balius was sentenced to three years in prison and ordered to pay more than $170,000 in restitution

"When testing results are altered and certifications are provided falsely, missions fail," said NASA's Director for launch services, Jim Norman, who added that years of scientific work were lost because of the fraud. 

The Oregon company has agreed to pay $46 million for the fraud, including $34.1 million in combined restitution to NASA, the Department of Defense’s Missile Defense Agency (MDA), and commercial customers. They will also forfeit $1.8 million in ill-gotten gains.

"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," said Brian Benczkowski, assistant attorney general of the criminal division at the Department of Justice, in an April 23 statement reported by Bloomberg

A Norsk Hydro spokesman said that the case was settled, and that it had invested "significant time and resources to completely overhaul our quality and compliance organizations."