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Catch of the Week — Rocket and Missile Parts Manufacturer Hydro Extrusion Portland

Posted  April 26, 2019

Our Catch of the Week goes to Hydro Extrusion Portland, Inc., formerly Sapa Profiles Inc., an aluminum extrusion manufacturer that made parts used by NASA and the Missile Defense Agency (MDA) in rockets and missiles.  The DOJ agreed to resolve criminal and civil claims relating to the manufacturer’s 19-year fraud scheme for $46 million in forfeitures, criminal fines, and amounts to settle civil False Claims Act allegations.  DOJ alleged Hydro made thousands of false certifications and falsified critical tests regarding the aluminum extrusions it sold.

Aluminum extrusion is a process where aluminum is pushed through a die to make shapes with complex cross-sections.  Hydro manufactured these extrusions and sold them to U.S. government contractors, who in turn sent them to NASA and the MDA to use as joints in their rockets and missiles.  According to admissions made by Hydro, its employees altered its product test results, either by hand or in a computer system, to change failing results to passing results.  These false results were then typed into a certification that Hydro provided to its customers.  The lab testing supervisor also instructed employees to violate testing standards.  Hydro allegedly engaged in the fraud to hide product quality issues, avoid production delays and additional costs, boost company profits, and ensure employee bonuses relating to production.

Hydro’s fraudulent actions had severe consequences, both for commercial and government customers.  NASA maintains that Hydro’s faulty extrusions caused two failed rocket launches, resulting in the loss of important scientific missions. Earlier reporting in The Oregonian quotes NASA’s flight director for one of the two failed missions saying “People at NASA were devastated. They had poured their lives into these missions.”

In the settlement announcement, DOJ assistant Attorney General Jody Hunt emphasized the impact of this kind of fraud not just on NASA and the MDA, but also on the public: “Today’s settlement reflects the Civil Division’s commitment to pursue fraudulent conduct . . . The Department will vigorously pursue those who seek to take advantage of American taxpayers and undermine the safety and integrity of critical government programs.”

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Tagged in: Catch of the Week, Contract Non-Compliance, FCA Federal, Government Procurement Fraud,