Teledyne Tried to Falsify Data, Lawsuit Claims : Defense: A former quality control manager contends he was fired for refusing to submit phony test results for military equipment.
A former quality control manager for a Teledyne Inc. unit has accused the large Los Angeles defense contractor of firing him illegally because he refused to falsify test results on sensitive electronic equipment that is extensively used by the U.S. military.
In a related matter, the government has compelled a Teledyne division to suspend shipments of critical electronic equipment to the military after the equipment failed during testing, according to government documents obtained by the Times.
The lawsuit, which was filed by Emil Stache in Los Angeles County Superior Court on Tuesday, and the government-imposed suspension appear to be related to an ongoing federal probe of Teledyne’s Hawthorne-based relays division.
Last October, the FBI raided the Hawthorne plant and confiscated a number of documents. Additionally, several employees of the company have been subpoenaed to testify before a federal grand jury, according to a report that Teledyne filed with the Securities & Exchange Commission March 31.
“The grand jury investigation is ongoing,” said Janet L. Goldstein, a former federal prosecutor who is one of Stache’s lawyers.
Teledyne spokesman Berkeley Baker said the company could not comment on the suit since it had not been served yet.
Last January, according to a government document, Teledyne was compelled by the government to send out an alert to the defense industry about problems in its relay systems, which operate as electronically operated switches that play a critical part in most complex weapon systems. A faulty relay can affect a missile’s guidance system or the ability of a satellite to be launched.
Since that time, the relays division has been unable to make any sales to the government, causing millions of dollars of business to be lost, according to Stache. Teledyne’s Baker said the company had no estimates on lost business.
If the company’s suspension continues, it could have a significant impact within the government contracting industry because Teledyne supplies more than 50% of the most sophisticated relays used in defense programs, according to government sources.
According to an internal company document, Teledyne Relays’ president Harry Emerzian informed employees on May 22 that the government’s Defense Electronics Supply Center told Teledyne officials a week earlier that its suspension from shipping relays to the military would continue until “several open issues,” had been resolved.
“The primary issue,” according to the internal memo, was the disclosure by Teledyne that several of its relays failed during evaluation tests.
Other open issues in the investigation, according to the company memo and government officials, are Teledyne Relays’ use of offshore facilities for certain steps in its manufacturing process and the proper interpretation of tests conducted by the company on its relay systems.
Some of the company’s manufacturing work had been done in India and Mexico, Stache said in an interview. Stephen A. Stromp, a spokesman for the Defense Electronics Supply Center, headquartered in Dayton, Ohio, said Teledyne had done work in foreign countries that were not approved, but he declined to state which countries.
In order to sell its electromagnetic relays to the government, Teledyne must comply with a rigorous testing program designed to ensure the product’s reliability.
These tests are what led to Stache’s problems, his lawsuit states.
“Military specifications require tests to determine initially whether the parts meet a certain level of preformance and quality, and extensive follow-up tests are required to determine whether the parts continue to qualify for military use,” the suit notes.
Shortly after he was hired in December, 1983, Stache, a quality control manager, “discovered that the machines on which Teledyne was ostensibly conducting” certain quality tests were “not even turned on in a manner that would indicate if a relay had failed the testing. He then directed laboratory employees to hook the machines up properly, after which the tests immediately revealed failures in violation of military specifications.”
His superiors evaded his questions about reporting the failures to the government, the suit alleges.
A few months later, a company vice president asked him to destroy records of tests and said new false documentation would be created.
From late 1984 until early 1990, Stache “gradually discovered more and more instances of defendant Teledyne’s dishonest, unethical and illegal testing practices,” according to the suit.
Throughout this period, Teledyne’s relays “continued to experience testing failures,” yet Teledyne “routinely submitted reports to the government indicating that the relays passed the testing,” according to the suit, which was filed by attorneys Goldstein and Lauren K. Sanders, of Hall and Phillips, a West Los Angeles firm that specializes in defense contract fraud.
Teledyne’s relays are used in the Nike missile, the space shuttle and various satellites, according to the lawsuit.
Stache repeatedly questioned his superiors at the Hawthorne plant about how they could “sign off” on parts that they knew could fail to operate properly when installed in extremely sensitive, critical military and space systems. His superiors intimated and sometimes told him outright that he would lose his job if he did not go along, the suit states.
Finally, last July, Stache, 43, was fired.
In an interview, Stache said the company had failed to report test failures over a long period of time because if the failures had been disclosed to the government, it would have cost the company a lot of money. He said that from 1983 to 1990, on average, the Hawthorne plant shipped $5.5 million of goods, 90-95% of them going to the military.
A company’s record on the tests, Stache stressed, affects not only how much it can sell to the government but the price at which its goods are sold.
“It was very stressful working in that environment,” Stache said. “Being familiar with field failures (of defense systems) made it morally stressful, as well,” said Stache, a Vietnam veteran.
He said he is now working for another defense contractor, where life is easier. “The company acknowledges its failures and lives with the consequences,” Stache said.
Stache’s suit asks for compensatory and punitive damages and for him to be reinstated to his prior position.
