U.S. Demands Missile Records From Hughes : Aerospace: Subpoena suggests the government might believe it was overcharged. Hughes is also named in a whistle-blower suit with Micronics International.
Hughes Aircraft has received a federal administrative subpoena for a massive number of records pertaining to four missile programs, a source close to Hughes said Friday. It is the first indication that a federal investigation is under way against the aerospace firm’s missile operations, headquartered in Canoga Park.
A Hughes spokesman confirmed late Friday that the firm has received a subpoena from the Defense Department Inspector General, asking for the production of documents relating to “inventories and scrapage” on four of the firm’s tactical missile systems.
Separately, Hughes is also a defendant, along with Orange County-based Micronics International, in a sealed whistle-blower lawsuit filed in U.S. District Court in Los Angeles, it was learned Friday. The suit contends that defective equipment was used in Hughes missiles.
The programs affected by the subpoena are the Navy air-to-air Phoenix, the Air Force air-to-ground Maverick, the Air Force AMRAAM and the Army anti-tank TOW, the source close to Hughes said. The four programs represent all of Hughes’ major missile production built in Tucson, Ariz.
The Defense Department Inspector General and the Defense Criminal Investigative Service are involved in the probe, according to a knowledgeable source. It could not be determined what specific allegations are at issue, but administrative probes usually are launched on the basis that the government believes it has been overcharged.
The demand for documents is believed to be exhaustive and company officials at Los Angeles-based Hughes were staggered by the volume of documents that federal officials demanded, sources said. Hughes acknowledged its concern about the volume.
“Hughes complies with all legitimate governmental requests for information,” the spokesman said. “The administrative subpoena issued by the Department of Defense Inspector General does not relate to any grand jury investigation of Hughes.
“It calls for the production of information relative to surplus inventory. We are not aware of any Hughes conduct that would justify the issuance of such a sweeping request for documents. Our lawyers are reviewing the subpoena to determine whether it has been properly issued and what information Hughes must produce,” he added.
According to a source familiar with the probe, the subpoena, dated Nov. 26, asked for certain records going back to the inception of the programs. The Phoenix and TOW programs are decades old and the documents for those programs alone could probably fill a small warehouse.
The Defense Inspector General has the power to issue civil or administrative subpoenas. The Hughes spokesman could not elaborate on what aspects of inventory and scrap the government is probing.
Inventory in a defense program is often considered government-owned property and the handling of that inventory is covered by exhaustive regulations. Similarly, scrap is also owned by the government and must be accounted for properly. Some types of very sophisticated missile electronic components, for example, can have scrap rates approaching 50% of total production.
As for the lawsuit against Hughes and Micronics, the complaint encompasses allegations that arose several years ago when it was disclosed that the Navy was unable to use hundreds of missiles because of defects in Micronics equipment. Navy documents obtained by The Times show that the service was concerned about the Micronics equipment in the early 1980s.
Federal officials said in October, 1988, that they had launched a criminal probe against Micronics, which supplied the safety and arming mechanism for many Hughes missiles.
