Allied-Signal Holds Deliveries, Fearing Faked Vendor Tests

Allied-Signal Aerospace was forced to stop shipments of control systems for commercial and military aircraft after it discovered discrepancies in test reports submitted by a parts supplier two weeks ago, company officials disclosed. The firm has since resumed some but not all shipments.

Federal agents, meanwhile, are conducting an investigation into allegations that Supreme Steel Treating, an El Monte-based heat treating shop, provided false certifications indicating that it had conducted inspection tests on the Allied-Signal parts, according to a government source and industry officials.

Supreme Steel owners Neal Begerow and Bobby Abert could not be reached, and a company office manager said the firm was declining to comment.

The investigation is being conducted by the Defense Criminal Investigative Service, a Pentagon agency that specializes in defense fraud cases.

Allied-Signal’s AiResearch Los Angeles division, based in Torrance, uncovered the discrepancies in the test reports during a routine audit of vendors.

Auditors found that certification documents for heat-treated parts submitted since the beginning of 1989 were actually photocopies of earlier certification documents but with dates altered, said the AiResearch division president, John Boppert.

After making the discovery, AiResearch officials notified Defense Department officials and its major commercial customers. The firm is the world’s leading supplier of aircraft pressurization and heating and cooling equipment. It also makes actuators, the devices that operate control surfaces on aircraft.

Virtually every U.S. aircraft, including those produced by McDonnell Douglas, Boeing, Northrop and Lockheed, and most foreign aircraft contain the firm’s systems.

“The things that happened here are an example of how the system ought to work,” Boppert said, referring to AiResearch’s discovery of the discrepancies during a routine audit and its effort to locate the suspect parts. “Our part of the industry is more meticulous than is generally known by the public.”

Falsification of tests, nonetheless, is a growing problem in the aerospace industry. Dozens of federal felony cases have been brought across the country for falsification of tests of castings, forgings, electronic parts, welds and a variety of other products, Pentagon officials say.

Efforts are mounting in Congress to reform the system by either creating a requirement for independent testing of aircraft parts or at least establishing national standards for the training of inspectors who conduct the tests. Meanwhile, prime contractors such as Boeing are increasing their surveillance of parts vendors and have created special internal investigative units to cope with fraud problems.

Supreme Steel, a small heat-treating operation that employs about two dozen workers, was on AiResearch’s approved vendor list.

But in 1989, the federal Occupational Safety and Health Administration cited the firm for a series of employee safety hazards and imposed penalties of $12,700. Among other citations, the firm failed to train employees in the handling of toxic chemicals, OSHA alleged.

Boppert said the cost to AiResearch of the delay in shipments, retesting of suspect parts and man-hours devoted to locating parts will be in the hundreds of thousands of dollars. Boppert estimated that the cost of properly conducting the tests on the heat-treated parts would have amounted to a small percentage of total costs.

AiResearch was able to resume making shipments after it determined that the suspect parts were not used in all its products, Boppert said.

AiResearch is still attempting to determine which categories of parts may have been treated at Supreme Steel, a difficult task since AiResearch carries inventories of more than 40,000 types of parts, Boppert said.

Supreme Steel was not a direct subcontractor to AiResearch, but provided heat-treating service to parts manufacturers under subcontract to AiResearch, Boppert said.

On Sept. 26, after auditors discovered the discrepancies in the test records, the firm notified its computer programming staff to stay through the night and develop special computer programs that would scan company records for types of parts that would require heat treating, Boppert said.

At the same time, calls were placed to hundreds of supplier firms, asking them to determine whether they had hired Supreme Steel for heat-treating services, Boppert said.

After several days, AiResearch narrowed the list of suspect parts to about 300 and began searching its warehouses for those parts for retesting. By this week, the firm hopes to pare the list of suspect part types to 20, which in some cases will have to be retrieved from aircraft in current operation.

The suspect parts are not known to have caused safety problems and their failure would be unlikely to cause a serious incident, Boppert said.

In some cases, however, the parts in question were found to have not been heat-treated properly. In other cases, the parts appeared to have been heat-treated to some extent, but simply lacked proper certification.

Heat treating is a process in which a metal part is heated and then cooled at a controlled rate, either slowly or very quickly by quenching it. The process increases the strength of the metal, but also makes it more brittle. Thus, heat treating must have the correct balance between strength and hardness.