Memos Appear to Support Allegations of Flaws in MX
Internal Northrop audits and documents appear to contradict key points of testimony that a company executive made to Congress in defense of the firm’s performance in the troubled MX missile guidance system program.
When Northrop executives were called before Congress this summer to answer critics and explain why the company was four months behind schedule in deliveries, they described allegations that the missile was flawed as “nonsense.”
But Northrop auditors, in addition to an Air Force scientific advisory board, have substantiated in written reports at least some of the allegations made by whistle-blowers that Northrop’s manufacturing procedures are disorganized and its products are technically suspect.
One draft audit discloses that at least seven MX guidance systems contained parts that did not meet specifications and 11 other systems contain unidentified parts that lack any documentation. The audit repeatedly finds that “employee discipline and managerial emphasis . . . is lacking.”
Another audit seems to refute Northrop statements that parts purchased through a fictitious company set up with a quarter of a million dollars of Northrop “petty cash” never ended up inside missile guidance sets. The audit said at least six groups of parts that were used inside guidance systems were never inspected and came from unapproved suppliers. They were purchased through a highly irregular organization, known as Liaison Engineering Services, that was set up by Northrop employees to buy parts.
The auditor who investigated the MX program and who wrote some of the reports, Northrop senior auditor and project leader T. F. Shielke, has gone into hiding and was the subject Tuesday of an FBI search. Shielke told The Times in an earlier interview that Northrop management attempted to suppress his findings and discredit his work.
“They don’t want to fix anything,” he said. “The bottom line is that I became very discouraged and almost disgusted with Northrop’s attitude toward its responsibility.”
Meanwhile, the audits are expected to be part of a congressional hearing this morning when Northrop Vice Chairman Frank Lynch will be called to testify before the House Energy and Commerce Committee’s oversight and investigation subcommittee.
Rep. John Dingell (D-Mich.), the subcommittee chairman, said in an interview: “Northrop is going to have to claim either fraud or incompetence, I am not sure which. There is an unfortunate third choice that is the worst of all worlds. That is that they are both.”
Shielke had been expected to testify before the subcommittee until he disappeared last week. Dingell asked the Justice Department on Monday to conduct a Federal Bureau of Investigation search for him.
Shielke had originally provided the documents to Herbert Hafif, a Claremont attorney who is suing Northrop under the federal False Claims Act. Hafif then provided the documents to the subcommittee, The Times and CBS News’ “60 Minutes.”
Phone Contact
Hafif said Tuesday that he had been in telephone contact with Shielke and that he “refuses to come forth at the present time until the concerns for his safety have been met.”
Shielke was hired by Northrop in June, 1986, and assigned to audit the operations of Northrop Electronics Division, he said. Before that, he was an auditor for about 16 years at Lockheed, he said.
Defective Metal Challenged
In October, 1986, he and two other Lockheed auditors filed a still pending lawsuit that alleged Lockheed used defective metal in the C-5B aircraft. Shortly afterward, Northrop assigned him to conduct various audits on its MX program, according to Robert Kilborne, an attorney working with Hafif.
Four key audits and memos, along with personal handwritten notes from Shielke of audit committee staff meetings, were obtained by The Times from Hafif. Of the four audits, two were written or directed by Shielke and two were authored by other individuals at Northrop.
The audits leaked by Shielke address problems in Northrop electronics clean rooms, lack of traceability of critical electronic circuits, the activities of the fictitious companies and problems in manufacturing inspection procedures.
Northrop officials questioned the completeness of one particular audit, involving the alleged lack of traceability, noting that it was undated, unsigned and had never been sent to senior management.
A Northrop spokesman said the draft “fails to mention” that the parts in question were properly reviewed by a formal Northrop materiel review board and the Air Force. He said the Air Force specifically approved the use of the parts in 1986 and 1987. Such approvals are sometimes granted under waivers and deviations.
In addition, he said the guidance sets involved in the audit have recorded 33,000 hours of operations with a failure rate that is 10% better than planned.
Congressional sources said, however, that Northrop officials have told them that they consider the audits as confidential documents that are part of a lawsuit and hence are private. But the congressional sources said Northrop officials have not disputed the substance of the reports.
9 Major Findings
The audit citing the improper parts covered the three months ending August 28, 1987. The report contained nine major findings or allegations. One of the most important was that 11 guidance sets, called inertial measurement units or IMUs, contained electronic parts that had no documentation and could not be identified.
Such a finding would call into question the integrity of the entire guidance system, because traceability of parts is a cornerstone in an intercontinental ballistic missile system. The MX carries 10 nuclear warheads and is believed to be the most lethal weapon ever developed.
Northrop Group Vice President David N. Ferguson told the House Armed Services Committee last June that the company had full traceability of the parts inside the IMUs when questioned by committee staff member Anthony Battista.
“If you wanted to go to a missile and pick an IMU . . . it will agree with the documentation to the tee,” Ferguson said. Battista responded: “One hundred percent?” And Ferguson answered: “One hundred percent.”
Audit Backs Whistle-Blowers
Another audit leaked by Shielke substantiates many of the allegations made this summer by two whistle-blowers, David Peterson and Jeff Kroll, who were Northrop engineers.
Peterson and Kroll disclosed earlier this year that they had received about $250,000 of petty cash that they funnelled through a fictitious business known as Liaison Engineering Services to purchase MX parts.
Northrop acknowledged the existence of the operation, which was set up to respond more quickly to factory needs than the official purchasing department could. But Northrop said all of the parts purchased through Liaison Engineering were used only in test equipment and that none ever ended up in IMUs.
When Rep. Andy Ireland (R-Fla.) asked Ferguson whether those parts were used inside the IMU, he responded, “Was not used, that is correct.” “Is that correct?” Ireland insisted. “That is correct,” he responded.
But the audit leaked by Shielke found that approved suppliers were not always used by Liaison Engineering and six electronic parts categories did end up in missile hardware.
In some cases, Northrop openly purchased parts from unapproved vendors, using a waiver known as Executive Bulletin 9-4. The audit warns that use of the waiver “is in conflict with the requirements set forth” in corporate policy and military specifications.
Ferguson told the Armed Services members in June that the Northrop IMUs were far more reliable and accurate than the Air Force had expected and the equipment was exceeding its requirements. Ferguson rebutted criticism of the reliability of a complex electronic part called a hybrid circuit, noting that only one failure had occurred in 15 million hours of operation of the circuits in fielded missiles.
233 Failures
But one document dated August 20, 1987, discloses that 233 hybrids have failed in the field since 1983, including 43 failures last year and 37 failures from January to August this year. A Dingell subcommittee staff member said he believes it is mathematically impossible that only one of those failures occurred in an operational MX missile.
Among the other documents leaked by Shielke is a May 7 memorandum that details an inspection of various clean rooms, which are used to produce and assemble sensitive electronic parts that must have a dust free environment. Such clean rooms require employees to wear white jump suits to contain microscopic dust and body cells.
The memo’s general findings stated, “Floors, walls and workbenches had dust, dirt, grime and visible deposits of fluids and solvent spills. Floor panels and baseboards were lifting and cracked. Walls had evidence of masking tape and other extraneous materials. Test equipment had dirt, grime and dust throughout table tops and tool boxes. Trash containers were painted with white paint, this paint is chipped and peeling off.”
‘Dirt, Grime and Rust’
The report notes that in the Class 10,000 room, which is supposed to be very clean by commercial electronics industry standards, “Cables had dirt, grime and rust deposits on them. Wheels on carts used to move equipment was exceptionally filthy.” The report goes on and on.
Among the many other disclosures contained in the Shielke documents is the allegation that Northrop attempted to preempt the Dingell hearing by seeking a hearing before the Armed Services Committee. Shielke said that Brig. Gen. Charles A. May Jr. even flew out to Northrop prior to the armed services committee hearings in June to “coordinate” testimony on the MX issue. May declined a request for an interview last week.
