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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

UNITED STATES OF AMERICA EX. REL. DONALD MINGE and DAVID KIEHL and DONALD MINGE AND DAVID KIEHL, individually v. TURBINE ENGINE COMPONENTS TECHNOLOGIES CORPORATION, TECT AEROSPACE, INC., TECT AEROSPACE WELLINGTON, INC., RAYTHEON AIRCRAFT COMPANY, AND HAWKER BEECHCRAFT CORPORATION.

Case No. 07-1212-MLB

FOURTH AMENDED COMPLAINT Plaintiffs and Relators Donald Minge and David Kiehl allege as follows:

I. Introduction

1. This is an action to recover damages and civil penalties on behalf of the United

States of America arising out of false claims approved and presented by

Defendants in connection with the sale of aircraft to various departments and

agencies of the United States of America (hereinafter referred to as the ―United

States‖), from at least November 13, 1997, continually through the present.

Defendant Hawker Beechcraft Corporation (hereinafter referred to as ―HBC‖),

formerly known as Raytheon Aircraft Company (hereinafter referred to as


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―RAC‖) (collectively ―RAC/HBC‖ hereinafter refers to Raytheon Aircraft

Company and/or Hawker Beechcraft Company), has contracts with the United

States to sell, and has delivered to the United States, United States Air Force and

United States Navy‘s Joint Primary Aircraft Training System‘s (―JPATS‖) T6A

trainer aircraft and King Air aircraft. Defendants Turbine Engine Components

Technologies Corporation, TECT Aerospace, Inc. (hereinafter referred to as

―TECT Aerospace‖) and TECT Aerospace Wellington, Inc. (hereinafter referred

to as ―TECT‖ or ―TECT Wellington‖) (collectively the previously mentioned

TECT entities are hereinafter referred to as ―TECT Defendants‖ or ―Defendants

TECT‖) manufactures and is the sole source of wing spars, the main longitudinal

beams of the airplane wings, used by RAC/HBC on the T 6A trainer aircraft and

King Air aircraft sold to the Government.

2. Defendants failed to adhere to the contractually required design specifications and

quality standards for the T6A trainer aircraft and King Air aircraft, yet

misrepresented that they had. Further, Defendants had certified that their

manufacturing processes for wing spars for the T 6A and King Air aircraft would

be controlled in a manner to produce repeatable and reliable wing spars. It was

not. First, the TECT Defendants hand-formed spars. Hand-forming at TECT was

not an occasional act by a rogue employee; it was one of the sequential steps in

TECT‘s written manufacturing instructions, which included a next step

―blending‖ (meaning, covering up) any marks on the piece left by hand-forming

it. TECT used hammers, pry bars and grinders to force spars to fit the ―check

fixture‖ supplied by RAC or HBC. TECT has done this, and RAC/HBC has


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known of it, since at least 1997. Because hand-forming of wing spars was

prohibited by RAC/HBC specifications. Hand-work adds risk of stressors which

cause loss of strength and corrosion sensitivity of the aluminum alloy and the

premature failure of the material in-service due to sustained shear stresses.

Worse, the irregularity of hand-formed pieces makes it impossible to know the

level of stress to which each part was subjected and makes the entire lot suspect.

Second, TECT‘s drawings allow the lower spars to be hot formed without

artificial age hardening to the original design temper, even though RAC/HBC‘s

design specifications allow hot forming the aluminum alloy only when the

engineering drawing provides for ―artificial age hardening‖ after hot forming.

TECT‘s drawings, therefore, violated RAC/HBC‘s specifications and RAC/HBC

knew this.

3. Every T 6A and King Air aircraft sold to the Government contained wing spars

that were manufactured using defective processes. Because of this, no one can be

sure whether some or any of the spars conformed to the contractually required

design specifications and performance standards. Even wing spars that were

known by Defendants to have been hand-formed, including spars initially rejected

by RAC/HBC because of impact marks, re-worked by TECT to obliterate those

marks and re-submitted to RAC/HBC, were accepted by RAC/HBC for use on the

aircraft.

4. RAC/HBC must be ―held to the letter of the contract . . . under the maxim that

‗men must turn square corners when they deal with the Government.‘‖ United

States ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296, 302 (6th Cir.


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1998). The Government did not bargain only for aircraft with wing spars that

could withstand a certain amount of force during the bargained for useful life of

the planes; it also bargained for the confidence that comes with aircraft

manufactured in accordance with a repeatable manufacturing process. It is critical

that the spars be uniformly manufactured so that each is designed to assure that

fracture critical and flight critical wing spars were made to the original design

data in all respects and had undergone rigorous testing and quality assurance

procedures. Supplying aircraft with wing spars without the contractually required

manufacturing process, quality assurance procedures and testing are per se non-

conforming even if some of the aircraft purchased by the Government have spars

with the same basic performance characteristics as those that would have been

produced in compliance with the terms of the contracts.

5. In requesting and receiving millions of dollars in payments for the T 6A trainer

aircraft and King Air aircraft sold to the United States, Defendants expressly and

impliedly certified that, in compliance with the contract documents, drawings,

specifications and federal regulations, they had established and had used a

repeatable manufacturing process designed to assure that fracture critical and

flight critical wing spars for use on these Federal Aviation Administration Type

Certified aircraft were made to the original design data in all respects and had

undergone rigorous testing and quality assurance procedures. These certifications

were false and were known by Defendants to be false. Alternatively, Defendants

act and acted with deliberate indifference and/or reckless disregard as to the truth

or falsity of the claims.


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6. Relators assert causes of action under the False Claims Act for submission of

knowingly false or fraudulent claims for payment or approval, and knowingly

false records or statements to get a false or fraudulent claims paid or approved, in

violation of 31 U.S.C. § 3729(a)(1)-(3). Additionally, Donald W. Minge

(hereinafter referred to as ―Minge‖) and David Kiehl (hereinafter referred to as

―Kiehl‖) bring individual claims against the TECT Defendants for unlawful

retaliation in violation of 31 U.S.C. §3730(h). Minge and Kiehl individually also

allege against the TECT Defendants the state law tort of retaliatory discharge as

an alternative to their federal law retaliation claim. Kiehl individually also alleges

the state law tort of outrage against the TECT Defendants.

II. Organizational Statement

7. The Fourth Amended Complaint is organized by subject matter. The table below

is a guide and not offered as a limitation on the paragraphs cited. Some paragraphs will

refer to more than is listed below and some topics will be addressed in subject areas other

than those identified below:

a. Paragraphs 1-6 - introduction;

b. Paragraphs 8-10 - jurisdictional theme;

c. Paragraphs 11-24 - introduction of parties;

d. Paragraphs 24-73 – definitions - identification of aircraft part numbers and

Government contracts at issue;

e. Paragraphs 74-94 - FAA regulations with quality and certification

mandates that pertain to these aircraft;

f. Paragraphs 95-96 – TECT‘s required certificates of conformance;


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g. Paragraphs 97-111 - federal regulation quality certification requirements,

including DD250 requirements of the DOD;

h. Paragraphs 112-123 - HBC quality requirements;

i. Paragraphs 124-136 - industry standards for good manufacturing practices;

j. Paragraphs 137-145 – facts supporting Defendants‘ general knowledge of

TECT‘s non-conformance with previously identified regulatory and contractual

requirements;

k. Paragraphs 146-176 - Defendants‘ knowledge of TECT‘s practices of hot-

forming in manner not specified in contract;

l. Paragraphs 177-199 – facts demonstrating TECT‘s longstanding hand-

working of parts and Defendants‘ knowledge of that hand work;

m. Paragraphs 200-223 – Minge‘s investigation and findings of specific parts

that were re-worked by hand and then accepted by HBC for use on airplanes;

n. Paragraphs 223-288 - Minge and Kiehl‘s investigation, discoveries, and

termination;

o. Paragraphs 289-299 – false certifications made by HBC and supplied to

the Government for payment with specific examples.

III. Jurisdiction and Venue

8. The Court has jurisdiction pursuant to 31 U.S.C. § 3729(a) and 28 U.S.C. §§ 1331

and 1345. This court also has supplemental jurisdiction to entertain the common

law causes of action pursuant to 28 U.S.C. § 1367(a). The Court may exercise

personal jurisdiction over Defendants pursuant to 31 U.S.C. § 3732(a) because

Defendants transact business in the District of Kansas.


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9. This action is brought by Relators on behalf of the United States against all

Defendants to recover treble damages and civil penalties under the False Claims

Act (―FCA‖), 31 U.S.C. § 3729 et seq. Additionally, Minge and Kiehl,

individually, bring claims against Defendants, TECT Aerospace, Inc., TECT

Aerospace Wellington, Inc. for unlawful retaliation in violation of 31 U.S.C.

§3730(h). Minge and Kiehl individually also allege against TECT the state law

tort of retaliatory discharge as an alternative to their federal law retaliation claim.

Kiehl individually also alleges the state law tort of outrage against the defendant

TECT.

10. Venue is proper in this district under 31 U.S.C. § 3732(a) and 28 U.S.C. §

1391(b) and (c) because Defendant RAC and Defendant HBC are Kansas

corporations and Defendants maintain and operate manufacturing plants and other

operations within this District.

IV. Plaintiffs

11. Plaintiff/Relator Minge is a citizen of the United States of America and is a

resident of Butler County, in the State of Kansas. Minge worked at defendant

TECT Aerospace and its predecessor Tru-Circle Aerospace Corporation, a

forfeited Kansas corporation, from June 2000 through June 15, 2007 as the

Quality Assurance Director. Minge brings this action as an individual and on

behalf of the United States.

12. Plaintiff/Relator Kiehl is a citizen of the United States of America and is a

resident of Sumner County, in the State of Kansas. Kiehl had a contract with

TECT Aerospace and worked at TECT Wellington, a subsidiary of TECT


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Aerospace, from December 2006 through May 8, 2007 as the Plant Manager and

then as the Engineering Manager for TECT‘s plant in Wellington, Kansas. Kiehl

has also worked as an employee of Raytheon Missile Systems Division for twelve

years, Raytheon Engineering and Construction for two years, and RAC for seven

years. Kiehl brings this action as an individual and on behalf of the United States.

13. As required under the False Claims Act, 31 U.S.C. § 3730(a)(2), Relators,

provided to the United States Attorney General and the United States Attorney for

the District of Kansas a statement of all material evidence and information related

to these pleadings. This disclosure statement supports the existence of ―claims‖

under the False Claims Act, 31 U.S.C. § 3729(a)(1-3).

14. The United States of America is here named a plaintiff because funds of the

United States were and are paid to Defendants as a result of the false claims

alleged in this Third Amended Complaint.

V. Defendants

15. Defendant Turbine Engine Components Technologies Corporation, doing

business as TECT Corporation, is a delinquent Delaware corporation (according

to the Delaware Secretary of State) with its principal place of business at 1211

Old Albany Road, Thomasville, Georgia. Plaintiffs believe that Turbine Engine

Components Technologies Corporation is a wholly owned subsidiary of UCA

Holdings, Inc., a privately held Delaware corporation, or Stony Point Group, Inc.,

a privately held Delaware corporation with its principal place of business in

Asheville, North Carolina.


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16. Upon information and belief, in 2004 either UCA Holdings, Inc. or Stony Point

Group, Inc. acquired through a Section 363 bankruptcy sale the Wichita, Kansas

and Kent, Washington assets of Minge‘s former employer, Tru-Circle Aerospace

Corporation.

17. Upon information and belief, in the wake of the purchase in 2004 of the former

L&S Machine Company, Metal Form, Inc. and the assets of Tru-Circle Aerospace

Corporation, Defendant Turbine Engine Components Technologies Corporation

formed Defendant TECT Aerospace, a delinquent Delaware corporation

(according to the Delaware Secretary of State and the Kansas Secretary of State)

with its principal place of business at 1211 Old Albany Road, Thomasville,

Georgia, as a wholly owned subsidiary.

18. Upon information and belief, in 2005, Turbine Engine Components Technologies

Corporation, acquired through a stock purchase BAE Systems Precision

Aerostructures Inc. (see www.tectcorp.com), which was a successor by name

change to Plessey Aero Precision Corporation, GEC Precision Corporation, and

Marconi Precision Aerostructures, Inc. (―Marconi‖). Turbine Engine Components

Technologies Corporation changed the name of the acquired entity to TECT

Wellington, a delinquent Kansas corporation (according to the Kansas Secretary

of State).

19. Plaintiffs believe that TECT Wellington is a wholly-owned subsidiary of TECT

Aerospace. Upon information and belief, in 2006, the highest ranking officer of

TECT Wellington had the title Vice President and General Manager and the

person who held that position is believed to have been an employee of TECT


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Aerospace and reported directly to the President of TECT Aerospace. Upon

information and belief, in 2007, the highest ranking officer of TECT Wellington

had the title General Manager and reported directly to the President of TECT

Aerospace.

20. TECT Wellington is an aviation parts manufacturer based in Wellington, Kansas.

Its primary business is to subcontract the manufacture of airplane parts for

airplane manufacturers. The Wellington facility has approximately 700,000

square feet of manufacturing space. The products manufactured at that facility

include wing spars, wing planks, stringers, ladder assemblies, floor beam

assemblies, and fuselage panel assemblies for commercial, military, business and

general aviation aircraft.

21. Defendant RAC, was a Kansas corporation with manufacturing facilities and

other operations in Wichita, Kansas. According to information from the Kansas

Secretary of State, in March 2007, RAC changed its name to Hawker Beechcraft

Corporation. Defendants RAC and HBC contracted with the United States for the

sale and production of completed aircraft.

22. The term ―Defendants‖ will refer collectively to the aforesaid Defendants acting

by and through their employees.

23. Employees of the Defendants, in doing the acts and things described in this

complaint, were acting within the course and scope of their respective agencies

and/or employment with the Defendants, individually and collectively, with the

knowledge and consent of the Defendants, and each of them, unless otherwise

indicated.


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24. At all relevant times, with respect to the allegations below concerning the JPATS

and King Air programs, each Defendant was the authorized agent of each other

Defendant.

VI. Specific False Claims and Fraudulent Statements A. Defined Terms 25. ―Spars” are the main longitudinal beams of the airplane wings or tail, which

means they bear a significant load when the airplane is in flight. Because of this,

they are designated ―critical‖ or ―fracture critical‖ in the airplanes‘ design

drawings and specifications.

26. ―Fracture critical‖ parts are those parts whose loss would compromise the safety

of flight. Fracture critical parts must be manufactured using processes that ensure

their structural integrity is maintained. This requires rigorous compliance with all

customer drawings and related specifications.

27. A ―Flight critical‖ part is an airframe part, or component, which has little or no

redundancy, whose failure could cause direct loss of the aircraft or whose failure,

if it remained undetected, could result in the loss of the aircraft.

28. ―JPATS” is the acronym for the United States Air Force and United States

Navy‘s Joint Primary Aircraft Training System program for training Joint Primary

Pilot Training students in basic flying skills common to Air Force and Navy pilots

prior to transitioning into advanced flight training.

(a) The JPATS program developed the T-6A (Texan), which is a single-

engine, turboprop training aircraft as a replacement aircraft for the Service‘s fleets

of primary trainer aircraft (Air Force T-37B and the Navy T-34C ) and associated


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Ground Based Training Systems. The T-6A is a derivative of Raytheon‘s

Beech/Pilatus PC-9 Mk II aircraft. It has a Pratt & Whitney Canada PT6A-68

turbo-prop engine that delivers 1,100 horsepower. Because of its thrust-to-weight

ratio, the aircraft can perform an initial climb of 3,100 feet (944.8 meters) per

minute and can reach 18,000 feet (5,486.4 meters) in less than six minutes. The

aircraft is fully aerobatic and features a pressurized cockpit with an anti-G system,

ejection seat and an advanced avionics package with sunlight-readable liquid

crystal displays.

(b) On January 5, 1996, RAC was awarded the JPATS acquisition and

support contracts. The first operational T-6A arrived at Randolph Air Force Base,

Texas, in May 2000. The full rate production contract was awarded in December

2001.

(c) The JPATS program calls for the delivery of 768 T-6A aircraft into early

2016. Logistic support plans for these aircraft extend beyond 2050.

29. ―King Air Program.” RAC or HBC has contracted with the United States for

the purchase of King Air aircraft.

(a) C-12 is the military designation for a series of twin-engine turboprop

aircraft based on the Beechcraft Super King Air B200 series and Beechcraft 1900.

C-12 variants are used by the United States Air Force, United States Army, and

the United States Navy for various duties, including embassy support, medical

evacuation, as well as passenger and light cargo transport.

(b) The Beech King Air 350 twin turboprop has been built in civil and

military versions. The King Air 350 special mission version is available as a


http://en.wikipedia.org/wiki/Turboprop

http://en.wikipedia.org/wiki/Beechcraft_Super_King_Air

http://en.wikipedia.org/wiki/Beechcraft_1900

http://en.wikipedia.org/wiki/United_States_Air_Force

http://en.wikipedia.org/wiki/United_States_Army

http://en.wikipedia.org/wiki/United_States_Navy

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surveillance aircraft fitted with cameras. An extended-range special mission

variant is designated the King Air 350ER. Foreign Governments have also taken

delivery of the military versions of the Model 200 and the Model 300. In

addition, in March 2007, HBC announced that the Iraqi Air Force ordered five

King Air 350ERs for delivery commencing late in 2007. In March 2008, HBC

announced the delivery of a Model B200GT to the United Kingdom‘s Royal Air

Force and the delivery of second B200GT in the summer of 2008, which will be

in addition to the seven B200‘s already in service.

(c) Defendant TECT Wellington, and its predecessors by name change,

contracted with HBC to manufacture wing spar part numbers 101-120127-33 and

-35 for installation in King Air aircraft, some of which were purchased by the

United States. Only HBC sold King Air aircraft and only TECT Wellington, and

its predecessors by name change, manufactured these wing spar parts, so every

King Air aircraft purchased by the Government contained parts manufactured by

TECT.

30. With respect to the JPATS and King Air programs the United States entered into

contracts, which required RAC/HBC to perform work in accordance with the

contract and any drawings and specifications made a part of the contract. The

requirements specified in the contract, drawings and specifications flow down by

contract and regulations to suppliers, such as TECT Wellington. A

―nonconformance‖ as used herein is a departure from the requirements specified

in the contract, drawings or specifications.


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B. JPATS Contracts

31. The original JPATS contract between the United States and RAC was for Lots 1

through 8 and was competitively awarded under the Federal Acquisition

Regulations (―FAR‖) Part 15, was changed for Lots 9 through 13 to a commercial

FAR Part 12 contract and was changed again for Lots 14 through 20 to a ―sole

source‖ procurement subject to full FAR Part 15 requirements.

32. On January 5, 1996, RAC was awarded an $84,786,545 fixed price incentive

contract to provide for manufacturing development of the JPATS aircraft,

associated data, technical orders, training, and the Ground Based Training Center.

RAC won the contract after a competition among seven aircraft manufacturers.

Wright-Patterson Air Force Base, Ohio, was the contracting activity (F33657-

94/C-0006).

33. In February, 1996 RAC was awarded a $43,862,082 face value increase to its

fixed price incentive contract to provide for Lot 2 production of three JPATS

aircraft. Wright-Patterson AFB, Ohio was the contracting activity (F33657-94/C-

0006, P00001).

34. In September, 1996 RAC was awarded a $31,071,973 face value increase to a

fixed price incentive contract to provide for six JPATS aircraft (Lot 3). Wright-

Patterson AFB, Ohio, was the contracting activity (F33657-94/C-0006, P00009).

35. In April, 1997 RAC was awarded a $63,149,578 face value increase to a fixed

price incentive contract to provide for fifteen JPATS aircraft (Lot 4). Wright-



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36. In July, 1997 RAC was awarded a $73,520,267 face value increase to a fixed

price incentive contract to provide for engineering and manufacturing

development of the JPATS aircraft. Wright-Patterson AFB, Ohio, was the

contracting activity (F33657-94/C-0006, P00031).

37. In February, 1998 RAC was awarded a $60,015,750 face value increase to a fixed

price incentive contract to provide for twenty-two JPATS aircraft (Lot 5) and

components for the Parachute Procedures Trainer. Wright-Patterson AFB, Ohio,

was the contracting activity (F33657-94/C-0006, P00043).

38. In May, 1999 RAC was awarded a $64,464,569 face value increase to a fixed

price incentive contract to provide for twenty-two JPATS aircraft (Lot 6),

organizational maintenance training, and engine structural integrity program test

support. Wright-Patterson AFB, Ohio, was the contracting activity (F33657-94/C-

0006, P00107).

39. In July, 1999 RAC was awarded a $16,779,001 face value increase to a fixed

price incentive contract to provide to provide for three lots of Training Integrated

Management System software in support of the Ground Based Training System

supporting the JPATS. Wright-Patterson AFB, Ohio, was the contracting activity

(F33657-94/C-0006, P00114).

40. In January, 2000 RAC was awarded a $11,262,522 face value increase to a fixed

price incentive contract to provide to provide for one Operational Flight Trainer,

two Instrument Flight Trainers, and two Unit Training Devices supporting the

JPATS. Wright-Patterson AFB, Ohio, was the contracting activity (F33657-94/C-

0006, P00129).


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41. In 2000, the Air Force declared JPATS a ―commercial program‖ for the purposes

of a FAR Part 12, Acquisition of Commercial Items determination.

42. In June, 2000 RAC was awarded a $101,225,378 option to a fixed price incentive

contract to provide for forty JPATS aircraft (Lot 7), Engine Structural Integrity

Program test support for forty engines, operational site activation at Vance AFB,

Okla., technical manual updates, and data. Wright-Patterson AFB, Ohio, was the

contracting activity (F33657-94/C-0006, P00160).

43. In February, 2001 RAC was awarded a $15,860,025 modification to a fixed price

incentive contract to provide for forty JPATS aircraft (Lot 7), Engine Structural

Integrity Program test support for three Training Integration Management

System/Computer Based Training System, one Ejection Seat Trainer, one Egress

Procedures Trainer, one Training Integration Management System, one Aircrew

Training Device, and one Modification and Update Support System. Wright-


44. In April, 2001 RAC was awarded a $101,225,378 option to a fixed price incentive

contract to provide for fifty-nine JPATS aircraft (Lot 8). Wright-Patterson AFB,

Ohio, was the contracting activity (F33657-00-C-2192-P00002).

45. In May, 2001 RAC was awarded a $5,468,445 fixed price incentive firm contract

to provide for computer work stations, and software and Training Integrated

Management System in support of the JPATS program and the T-6A aircraft.

Wright-Patterson AFB, Ohio, was the contracting activity (F33657-94-C-0006-

P00183).


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46. In December, 2001 RAC was awarded a $193,250,689 a fixed price incentive

contract to provide for forty JPATS aircraft (Lot 9), two operational flight

trainers, two instrument flight trainers, technical manual updates, data, dedicated

support and fire familiarization training at Laughlin AFB, Texas. Wright-

Patterson AFB, Ohio, was the contracting activity (F33657-01-C-0022).

47. In March, 2002 RAC was awarded a $15,795,000 firm-fixed-price contract

modification to provide for contractor logistics support for the JPATS program.

Wright-Patterson AFB, Ohio, was the contracting activity (F33657-96-C-0180,

P00031).

48. In April, 2002 RAC was awarded a $29,904,000 contract option to increase the

quantity of the JPATS aircraft for Pensacola Naval Air Station, Pensacola, Fla., to

seven. Wright-Patterson AFB, Ohio, was the contracting activity (F33657-01-C-

0022, P00003).

49. In November, 2002 RAC was awarded a $169,987,608 firm-fixed-price contract

to provide for Lot 10 option exercise for JPATS aircraft, technical manuals and

updates, instrument flight trainer, and unit training device. Wright-Patterson AFB,

Ohio, was the contracting activity (F33657-01-C-0022).

50. In February, 2003 RAC was awarded a $40,122,966 firm-fixed-price contract

modification for Lot 10 JPATS aircraft, operational flight trainers, unit training

device, data, management information system admin/maintenance and dedicated

support. Wright-Patterson AFB, Ohio, was the contracting activity (F33657-01-C-

0022 P00013).


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51. In December, 2004 RAC was awarded a $240,535,650 firm-fixed-price contract

modification to provide for Lot 12 option exercises for JPATS aircraft (fifty

aircraft). Wright-Patterson AFB, Ohio, was the contracting activity (F33657-01-

C-0022, P00073).

52. In February, 2005 RAC was awarded a $59,003,241 firm-fixed-price contract

modification to provide for Lot 12 option exercises for JPATS aircraft (six

aircraft), Technical Manual Updates, Technical Manual Reviews, Operational

Flight Trainers, Instrument Flight Trainers, Unit Training Devices, Management

Information System Administration, Ejection Set Trainer, Egress Procedures,

Data, Storage Article #615, six engineers, 3 Logistical, 2 Ground Base Training

Systems, and Functional Check-Flight Training. Wright-Patterson AFB, Ohio,

was the contracting activity (F33657-01-C-0022, P00081).

53. In December, 2005 RAC was awarded a $268,994,493.60 firm-fixed price

contract modification for Lot 12 option exercises for JPATS (sixty-four aircraft),

Lot 13 option exercises for JPATS (sixty-four aircraft), and Retrofit Material Kit

B option exercise. Wright-Patterson AFB, Ohio, was the contracting activity.

(F33657-01-C-0022/P00109).

54. In August, 2006 RAC was awarded a $9,932,738 commercial firm-fixed-price

contract modification for Navy Lot 13 JPATS aircraft (2 aircraft). Wright-

Patterson AFB, Ohio, was the contracting activity (F33657-01-C-0022/P00129).

55. In June, 2007 HBC was awarded a $59,639,687 undefinitized contract to facilitate

the continuation of long lead aircraft parts ordering, engineering services, and


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data deliverables. Wright-Patterson AFB, Ohio was the contracting activity

(FA8617-07-D-6151).

56. In October, 2007 HBC was awarded a contract modification for $3,000,000,000

to procure Lot 14 through Lot 20 of the JPATS aircraft, and procure related items

to the aircraft such as ground-based training systems, field service support, and

aircraft change modifications. Wright-Patterson AFB, Ohio was the contracting

activity (FA8617-07-D-6151 P00002).

57. In December, 2007 HBC was awarded a firm-fixed-price contract for

$37,316,342 for fourteen JPATS aircraft with program and manufacturing

management; program support; data; field services representatives, diminishing

material shortages management support and training. 664th AESS/PK, Wright-

Patterson AFB, Ohio, was the contracting activity (FA8617-07-D-6151, Delivery

Order 0001, Modification-10).

58. Upon information and belief, the United States entered into exclusive contracts

with RAC/HBC to manufacture, according to agreed specifications, the JPATS

aircraft. The contracts between RAC/HBC and the United States Government

include but are not limited to F33657-94-C-0006, F33657-00-C-2192, F33657-01-

C-0022.

59. TECT Wellington, and its predecessors by name change, at its facility in

Wellington, Kansas, manufactures parts for RAC/HBC. Those parts include wing

spar Part Numbers 133-100051-3 and 133-100052-3 (and previous parts numbers

51-1 and 52-1) for use in the T-6A and all derivatives of the airplane sold by

RAC/HBC. TECT Wellington, and its predecessors by name change, was the


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exclusive contractor for the wing spar parts it produced, so each airplane

purchased by the Government as part of the JPATS program contained parts

manufactured by TECT Wellington or its predecessors by name change.

60. These wing spars are identified by RAC/HBC and the U. S. Department of

Defense as either ―flight critical‖ or ―fracture critical‖ parts.

61. RAC/HBC has delivered 600 JPATS aircraft to the United States since its first

deliveries started in 2000. In addition, RAC/HBC has delivered 26 T-6A to the

NATO Flying Training in Canada (NFTC) program and 45 T-6A aircraft to the

Hellenic Air Force of Greece as a primary, weapons and navigation trainer.

62. Throughout the period of the contracts mentioned above and as explained below,

when RAC/HBC invoiced the United States for delivered JPATS aircraft,

defendants expressly or impliedly certified that, in compliance with the contract

documents, drawings, specifications and federal regulations, they had established

and had used a repeatable manufacturing process designed to assure that fracture

critical and flight critical wing spars for use on these FAA Type Certified aircraft

were made to the original design data in all respects and had undergone rigorous

testing and quality assurance procedures, even though they knew they had not

complied.

C. King Air Contracts 63. In January, 2000 RAC was awarded an $11,400,625 firm-fixed-price contract for

two Beech Super King Air C-12R/AP (B200) Aircraft with special mission

equipment provisions, one camera system, spares, additional avionics,

publications, and training, for Greece. The U.S. Army Aviation & Missile


21

Command, Redstone Arsenal, Ala., was the contracting activity (DAAH23-00-C-

0081).

64. In February, 2000 RAC was awarded a $132,300,000 firm-fixed-price contract for

five King Air 350 Extended Range Intelligence, Surveillance, and

Reconnaissance aircraft and one King Air 350 Light Transport Aircraft. Wright-

Patterson AFB, Ohio, was the contracting activity (FA8620-07-C-4010).

65. In January, 2007 RAC was awarded a $132,300,000 firm-fixed-price contract for

five King Air 350 Extended Range Intelligence, Surveillance, and

Reconnaissance aircraft and one King Air 350 Light Transport Aircraft. Wright-

Patterson AFB, Ohio, was the contracting activity (FA8620-07-C-4010).

66. In July, 2008 HBC was awarded an estimated $48,800,000 firm-fixed-price

contract for the procurement of six C-12 replacement aircraft for the Navy. The

Naval Air Systems Command, Patuxent River, Md., was the contracting activity

(N00019-08-C-0057).

67. In September, 2008 HBC was awarded a firm-fixed-price contract for

$10,516,139 for five King Air 350 Extended Range Intelligence, Surveillance,

and Reconnaissance aircraft, one King Air 350 Light Transport Aircraft, spares

and contractor logistics support in support of foreign military sales to Iraq.

AESS/SYKA was the contracting activity (FA8620-07-C-4010).

68. In November, 2008 HBC was awarded a firm-fixed-price commercial contract for

$171,511,482 for twenty-three Beechcraft King Air 350ER‘s with an option for 6

additional aircraft. AESG/SYK, Wright-Patterson AFB, Ohio was the contracting

activity (FA8620-09-C-3020).


22

69. In November, 2008 L3 Communications Integrated Systems, Greenville, Tex.,

was awarded a firm-fixed-price commercial contract for $7,490,711 for one

Beechcraft King Air 350ER aircraft. AESG/SYK, Wright-Patterson AFB, was the

contracting authority (FA8620-09-C-3021).

70. In December, 2008 was awarded a firm-fixed-price contract for the purchase of

two Super King Air Model 350 aircraft. U.S. Army Aviation and Missile

Command, Redstone Arsenal, Ala., was the contracting activity (W58RGZ-09-C-

0087).

71. TECT Wellington, and its predecessors by name change, at its facility in

Wellington, Kansas, manufactures parts for RAC/HBC. Those parts include wing

spar Part Numbers 101-120127-33 and -35 for installation in King Air aircraft

sold by RAC/HBC. TECT Wellington, and its predecessors by name change, was

the exclusive contractor for the wing spar parts it produced, so each airplane

purchased by the Government as part of the King Air program contained parts

manufactured by TECT Wellington or its predecessors by name change.

72. These wing spars are identified by RAC/HBC and the U. S. Department of

Defense as either ―flight critical‖ or ―fracture critical‖ parts.

73. Throughout the period of the contracts mentioned above and as explained below,

when RAC/HBC invoiced the United States for delivered JPATS aircraft,

defendants expressly or impliedly certified that, in compliance with the contract

documents, drawings, specifications and federal regulations, they had established

and had used a repeatable manufacturing process designed to assure that fracture

critical and flight critical wing spars for use on these FAA Type Certified aircraft


23

were made to the original design data in all respects and had undergone rigorous

testing and quality assurance procedures, even though they knew they had not

complied.

D. The United States Bargained With RAC/HBC for the Confidence That Comes With a Reliably Manufactured Product That Has Been Subjected to Rigorous Quality Assurance Procedures

74. Close adherence to design specifications and manufacturing quality standards

play a crucial role in procuring reliable and maintainable aircraft.

75. Defendants were required by contract and by operation of law to provide the

subject aircraft to the United States Government based upon a rigorous quality

assurance and certification regimen. Specifically, and among other provisions,

Defendants were required by Standard Form 1449 contract (prescribed by 48

C.F.R. 53.212) and FAR 52.212-4 contract clause, which could not be modified

by the parties (48 C.F.R. 12.3012(b)), to ―comply with all applicable Federal,

State and local laws, executive order, rules and regulations applicable to its

performance under this contract.‖ Defendants were therefore required by contract

and applicable federal laws, described below, to adhere to their quality, design

and manufacturing requirements, including Defendants‘ internal commercial

policies, procedures, standards, and disciplines for quality, management,

documentation, and verification; Federal Aviation Administration (FAA)

Regulations; Federal Acquisition Regulations (FAR); Defense Federal

Acquisition Regulations (DFARS); industry aerospace standards; the International


24

Organization for Standardization (ISO); Department of Defense Handbook on

Airworthiness Certification Criteria (MIL-HDBK-516A); the Joint Service

Specification Guide (JSSG 2006); the Federal Aviation Administration Advisory

Circular AC 21-1B (Circular), and to submit specific certification forms for

aircraft to be delivered to the Government, which forms were necessary for both

airworthiness certification and payment by the United States.

76. Conformance of the subject aircraft with design and performance requirements

was not the only condition for acceptance of the aircraft under the government

contracts. The aircraft also had to be be manufactured under certain controls. The

government contracts in question contain quality assurance requirements that are

independent of aircraft performance. If contractually required quality assurance

controls are lacking, the aircraft is defective even if it performs as intended.

1. FAA Regulations 77. The FAA issues initial and renews existing certificates that allow manufacturers to build

aircraft. The FAA also, issues and enforces regulations and minimum standards to

manufacture aircraft. The manufacturer initiates the FAA certification process for

aircraft by completing FAA Form 8110-12, Application For Type Certificate, Production

Certificate, Or Supplemental Type Certifcate, and submitting the form to the FAA. The

form states,‖[n]o certificate may be issued unless a completed application form has been

received.‖ In Block 4(a) of the form, the aircraft must be ―completely described in the

required technical data, including drawings representing the design, material,

specifications, construction, and performance of the aircraft, aircraft engine, propeller

which is the subject of this application.‖ To obtain a Production Certificate, Block 5 of


25

the form requires the manufacturer to ―submit with this form, in manual form, one copy

of quality control data or changes thereto covering new products, as required by

applicable FAR.‖ Block 7 states, ―I certify that the above statement are true,‖ followed

by a signature box for the ―Certifying Official.‖ ―The certifying official must be the

holder or the person duly authorized to sign for the holder, company, or corporation.‖

FAA Order 8110.4B, Type Certification, Appendix 1, Exhibit 1.

78. The FAA awards a Type Certificate, to a manufacturer after it has been

established that the particular design of a civil aircraft has fulfilled the FAA‘s

current prevailing airworthiness requirements for the safe conduct of flights. The

applicant for a Type Certificate submits documents to the FAA, detailing how the

proposed design would fulfill the airworthiness requirements. After investigations

by the FAA, the final approval of such documents, becomes the basis of the

certification. The manufacturer follows it and draws a proposed timetable of

actions required for certification tests.

79. An initial design sample known as a prototype aircraft is built. The prototype is

subjected to different tests. The prototype is first used for ground and system

tests. When all ground tests are completed, the prototype is made ready for flight

tests, which establish the ultimate flight limits of the aircraft within the

airworthiness rules. Simultaneous with aircraft testing, the applicant drafts a

maintenance program to support continuous airworthiness after approval of the

design. The maintenance program is submitted to the FAA for comment and

approval.


http://en.wikipedia.org/wiki/Airworthiness

26

80. After successful completion of ground and flight tests, along with an approved

maintenance program, the prototype is approved by the FAA, and the

manufacturer is granted the Type Certificate for the prototype. The Type

Certificate establishes that the particular design of the aircraft has fulfilled the

FAA‘s current prevailing airworthiness requirements for the safe conduct of

flights. The Type Certificate normally includes the ―type design,‖ the operating

limitations, the Type Certificate Data Sheet, the applicable regulations, and other

conditions or limitations prescribed by the FAA. ―Type design‖ consists of the

drawings and specifications, dimensions, materials and processes, airworthiness

limitations, and other data to describe the product design and to determine the

airwothiness and other characteristics of the aircraft as certified. 14 C.F.R. §

21.31.

81. The Type Certificate is the foundation for other approvals, including production

and airworthiness approvals. The final manufactured aircraft, including materials

and products used and the manufacturing process itself must comply with the

Type Design. 14 C.F.R. § 21.33. The type certified prototype serves as a template

for aircraft production. Each manufactured aircraft should be identical to the

prototype, and each given a serial number.

82. The Model 200, Super King Air received a Type Certificate in 1973 and

subsequently other variations of the King Air have received Type Certificates.

Application was made for a Type Certificate on the T-6A on January 15, 1996. A

one year extension of the Type Certification date was granted by the FAA in

January 1999. The Model 3000 Type Certificate was obtained by Raytheon under


http://en.wikipedia.org/wiki/Airworthiness

27

Delegation Option Procedures under authority of FAR Part 21, Subpart J. The

FAA granted the T-6A a Type Certificate Data Sheet No. A00009WI, in 1999.

There have been seventeen revisions to the Type Certificate Data Sheet No.

A00009WI (February 15, 2000 (Rev. 1), February 16, 2000 (Rev. 2), July 26,

2000 (Rev. 3), October 20, 2000 (Rev. 4), May 31, 2001 (Rev. 6), September 10,

2001 (Rev. 7), November 26, 2001 (Rev. 8), April 23, 2003 (Rev. 9), March 26,

2007 (Rev. 10), April 5, 2007 (Rev. 11), November 6, 2007 (Rev. 12), January

15, 2008 (Rev. 13), May 19, 2008 (Rev. 14), August 6, 2009 (Rev. 15), October

2, 2009 (Rev. 16), and February 3, 2010 (Rev. 17)).

83. A Production Certificate documents the FAA‘s approval to manufacture duplicate

products under an FAA-approved type design. To obtain one, the manufacturer

must follow the FAA‘s production application and approval process. As part of

that process the manufacturer must show the FAA that it “has established and

can maintain a quality control system for any product, for which he requests

a production certificate, so that each article will meet the design provisions of

the pertinent type certificate.” 14 C.F.R. § 21.139. The FAA conducts a

quality system audit to determine compliance with the applicable requirements of

14 CFR part 21. This audit evaluates the applicant‘s organization, production

facility, quality control or inspection system, and approved quality control and

design data for compliance with applicable requirements. Among other things, the

manufacturer must show that every part assembled into the aircraft strictly

conforms to specific engineering design drawings which themselves are to be


http://www.faa.gov/aircraft/air_cert/production_approvals/prod_cert/prod_approv_proc/

28

approved. This requires the collection and preservation of objective data from the

manufacturing process. 14 C.F.R. § 21.143(a).

84. If the applicant‘s quality control or inspection system, organization, and facilities

are in compliance with 14 CFR part 21, subpart F or subpart G, the FAA will

issue: (a) an approval letter for an approved production inspection system; and (b)

a Production Certificate, FAA Form 8120-4, and a Production Limitation Record,

FAA Form 8120-3 (identifies which products or parts are authorized for

production). The intent of production certification is to ensure that each product

conforms to its type design, and that it is in a condition for safe operation.

85. 14 C.F.R. § 21.165 provides that the Production Certificate holder shall

―maintain the quality control system in conformity with the date and procedures

approved for the production certificate‖ and ―determine that each part and each

completed product . . . conforms to the approved design and is in a condition for

safe condition.‖ See also FAA Order 8120.2, Production Approval and Certificate

Management Procedures, ¶ 43(d) and ¶ 123(a).

86. Raytheon was granted Production Certificates for the King Air and Production

Certificate No. PC-8 for the T-6A.

87. In support of RAC/HBC obligations described above, 14 C.F.R. § 21.33(b)

requires RAC/HBC to inspect and test to determine, among other things, that

―materials and products conform to the specifications in the type design,‖ ―parts

of the products conform to the drawings in the type design,‖ and ―the

manufacturing processes, construction and assembly conform to those specified in

the type design.‖ The FAA has responsibility for issuing an Airworthiness


http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=27ea979a198bf3edff1b203d21e4f9f5&rgn=div5&view=text&node=14:1.0.1.3.9&idno=14#14:1.0.1.3.9.6

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=27ea979a198bf3edff1b203d21e4f9f5&rgn=div5&view=text&node=14:1.0.1.3.9&idno=14#14:1.0.1.3.9.7

29

Certificate for each type certificated plane manufactured under the terms of

Production Certificate.

88. 14 C.F.R. § 21.53 requires that for each type certificated plane, RAC/HBC must

submit to the FAA a ―statement of conformity.‖ Prior to 2007, for military aircraft,

including the JPATS and King Air aircraft in question, RAC/HBC was required to

complete and present to the FAA and the authorized military representative FAA

Form 8130-2, Conformity Certificate-Military Aircraft. A box on the form, to be

completed by the contractor, states ―[t]his certifies that the aircraft described above

has been manufactured in conformity with the data forming the basis for Type

Certificate No. ________, and any revision or modification thereefo approved by

the Federal Aviation Administration (FAA) dated as of ___________, with the

exception of the following deviations _______________.‖ By completing the form

without noting deviations to FAA approved type design, the contract certifies

conformance to Type Design. In 2007, for military aircraft, FAA Form 8130-31,

Statement of Conformity—Military Aircraft, superceded FAA Form 8130-2. FAA

Order 8110.101, 5-4 through 5-5 (September 7, 2007). The form states ―[t]his

certifies that the aircraft described above has been manufactured in conformity with

the data forming the basis for Type Certificate No. ________, and any revision or

modification thereefo approved by the Federal Aviation Administration (FAA)

dated as of ___________.‖ There are two boxes for the contractor to check as part

of this statement of conformity. The statement related to the first box is ―there are

no identified deviations to FAA approved type design. The statement related to the

second box is ―MILITARY DEVIATIONS> FAA conformity inspection(s) of the


30

aircraft configuration have identified deviations in configuration from the FAA

approved type design which are not FAA certified or approved, but may be

required or specified by military contract. The deviations may include installations,

assemblies, or componenent which have been either (REMOVED) or (ADDED) to

the FAA approved type design configuration. (Deviations are llisted in Part G of

this statement of conformity.‖ The instructions which are part of the form state,

―[b]y marking the appropriate box, the manufacturer confirms there are no

deviations to FAA approved type design, or that deviations are identified and listed

in Part G.‖

89. In addition, to obtain FAA certification of airworthiness, the plane manufacturer

must complete and present to the FAA Form 8130-9, Statement of Conformity. The

certification states, ―[t]he aircraft described above, produced under type certificate

only (14 CR, part 21, Subpart F), conforms to its type certificate, is in a condition

for safe operation . . .‖ Below this statement, the form provides space for a

description of any ―deviations.‖ At the bottom of the form there is a box for the

―Signature of Certifier.‖ The instructions accompanying the form explain that ―the

certification must be signed by an authorized person who holds a responsible

position in the manufacturing organization.‖ For each plane there is a FAA Form

8130-6, Application for U.S. Airworthiness Certificate, which requires the certifier,

either RAC/HBC or a purchaser relying on RAC‘s/HBC‘s representation of

conformity, to complete the box, ―the aircraft does not meet the applicable

airworthiness requirements as follow[s].‖ An applicable FAA Form 8130-9,

Statement of Conformity would be attached to the Application.


31

90. If the FAA determines that the plane conforms to Type Design and is in safe

operating condition it issues an Airworthiness Certificate for that plane. 49 U.S.C.

§44704(c) and 14 CFR § 21.183(a), (b), and (c). 14 C.F.R. 3.5(b)(2) prohibits

the making of any intentionally false statement about the airworthiness of any

type-certified product or about the acceptability of any part for installation on a

type-certified product.

91. For commercial derivative aircraft, such as the T-6A and King Air aircraft, an

FAA approved Certificate of Airworthiness is the initial step in approval of safety

for flight. Ultimately, the operating service of the military ―has the responsibility

for the airworthiness certification approval under public aircraft rules.‖ MIL-

HBDK-516B, Department of Defense Handbook Airworthiness Certification

Criteria, pp. 1-2 (Sept. 26, 2005). The contractor, such as RAC/HBC, is

responsible to qualify, or demonstrate compliance to the military airworthiness

authority. The certification materials used by the military include the contractor‘s

DD Form 250, discussed below.

92. RAC/HBC as the holder of the Type Certificate and Production Certificate and

must require that its parts suppliers, such as the TECT Defendants, ―establish and

maintain written procedures and flow charts defining their quality control

systems(s)‖ and follow those written procedures and flow charts, and maintain

accessible data supporting that process. FAA Advisory Circular (AC) No. 21-

20B, 4/22/96.

93. RAC/HBC must require that its parts suppliers, such as the TECT Defendants,

determine and measure the variation of key characteristics, and show statistical


32

control and capability of key characteristics. RAC/HBC must, therefore, require

that its part suppliers, such as the TECT Defendants, certify that its parts conform

to quality standards imposed on it by RAC/HBC as a condition of sale, such as the

collecting of data proving that its manufacturing process adheres to First Article

Inspections, thereby creating safe parts.

94. FAA AC AC21-13 production certificates, provides acceptable means of

complying with the law. This AC contains the FAA intended application of key

terms in the new statutory definition. The term ―supplier‖ is defined as any person

who furnishes services to a holder of a production certificate which affects a type

certified product, or who supplies articles for installation on a type certificates

product. Defendants were obligated to comply with the following provisions of

FAA, AC21-1B:

Par 8. FAR 21.139- QUALITY CONTROL A total quality control system meeting the requirements of FAR 21.139 would provide control over all phases of manufacture, including control over the manufacture of all supplier furnished articles.

Par 9. FAR 21.143 QUALITY CONTROL PARTS REQUIREMENTS . . . b. In general, the requirements for FAR 21.143 are self-explanatory

and the following paragraphs provide an example of acceptable compliance:

. . . (5) . . . (d) A listing of manufacturing processes which are relied

upon to assurance quality, conformity and safety of the completed product.

c. An acceptable means of compliance with FAR 21.143 (b) would be to

provide in the quality control data a description of the system used to evaluate, monitor and control all suppliers to whom the holder of a production certificate has delegated inspection duties for controlling conformity and quality


33

. . . d. . . . (2) Manufacturing processes. An inspection planning system that would

provide the means for selecting and controlling procedures governing methods for:

(a). Selection of appropriate inspection methods and plans for

articles to insure that all characteristics affecting safety will be inspected as required, to ensure conformity to approved design data and to eliminate discrepancies from completed products and spare articles.

. . . (d). Production planning is commonly achieved through

use of fabrication and inspection instructions, shop travelers, checklists, or similar media, which not only provide control over fabrication and assembly operations but also ensure that necessary inspections and tests will be conducted in the proper sequence, when articles and processes are in an inspectable condition.

. . . (4). Inspection/Identification. Identifying articles or controlling

documentation with appropriate stamps or marks traceable to individual inspector, is a means of ensuring that only those articles and processes which have been accepted and found to conform to FAA approved design data are used in the product.

. . . (6) Tool and gauges control (a) Adequate manufacturing facilities, equipment and tooling

would have the capability and reliability to ensure production of uniform duplicate articles and products conforming to the approved type design data.

(b) To preclude acceptance of nonconforming articles or

rejections due to improperly controlled tools and gauges, a quality control system should incorporate a schedule for inspection and calibration, to certified national measurement standard of all inspection tools, gauges and testing equipment, as well as production jigs, fixtures, templates, etc., which are depended upon as media or inspection. An acceptable schedule would have the inspection intervals established on the basis that such tool and gauges would be inspected prior to their becoming inaccurate, or requiring adjustment, replacement or repair.


34

(7.) Supplier Control. The holder of a production certificate is primarily

responsible under the requirements of FAR 21.165 for each article used in his product; therefore, he should establish a system to ensure conformity to the type design of all articles or services obtained from suppliers. Such a system would ensure that:

. . . (d) Suppliers to the holder of a production certificate would

formally advise that their facilities system, data, equipment, personnel and articles being supplied are subject to evaluation and inspection by the production certificate holder and the FAA since, in effect, such suppliers facilities constitute extension of the facilities of the holder of a production certificate.

. . . (f) An effective purchasing and receiving inspection system

precludes release to production of nonconforming or unsafe articles procured from outside sources. Such a system would ensure that:

1 Purchase orders provide specifications or

other design data in the detail necessary to ensure procurement of the articles or services which meet the requirements of the approved type design.

2 All incoming articles conform to approved

type design data prior to their acceptance and release to production.

. . . 4 Records are maintained of all inspections and

tests performed by or for the holder of a production certificate in controlling the design configuration and conformity of all supplier furnished articles.

5 Inspection/Test records are utilized, as

appropriate to document, as evidence of accomplishment, all required inspections, tests, rework, or rejections.

. . . (9). Materials review. A materials review system provides the means to: (a) Control the identification, rework, and use of nonconforming

articles including the isolation and scrapping of unusable articles.


35

(b) . . .The materials review system is a method acceptable to

the administration for the approval of minor changes in type design in lieu of submitting to the Administrator any substantiating or descriptive data (Ref FAR 21.95) including manufacturing errors

VII. TECT’s Required Certificates of Conformity

95. In support of its requirements, RAC/HBC required its suppliers to include a

statement of conformity with every shipment for presentation to the FAA

representative. Specifically, here, RAC/HBC required TECT to certify that every

wing spar it shipped conformed to the engineering drawings and the contract

requirements. Raytheon Purchase Order Attachment 1600—Supply Chain

Management Quality Assurance Supplier Quality Requirements Document states

at ¶ 7.5: ―All shipments must be accompanied by a Certificate of Conformance (C

of C). Certificate of Conformance shall be included inside the shipping container .

. . The C of C will validate the material and/or processes performed and

completed per Raytheon Aircraft Company engineering requirements up to

and including final inspection.‖ (Emphasis in original). TECT would comply

with this requirement by signing and placing an acceptance stamp, at or near the

―statement of conformity‖ on the packing slip. Relator Donald Minge witnessed

the preparation of such certifications.

96. Before TECT shipped spars to RAC/HBC, all required documentation had to be

complete, accurate and acceptable. TECT's Quality Administrator, Virginie

Drouhard, who worked for Relator Donald Minge, would collect and review all


36

job routers, non-conformance documents, special processing certifications and

any other documents relating to the production of the spars for accuracy and

completeness. TECT‘s packing slip had a ―statement of conformity‖ that

complied with P.O. Attachment 1600, Raytheon Aircraft Company Supplier

Quality Requirements. The packing slip stated, ―I hereby certify that this

shipment complies with all applicable specifications and the terms of the purchase

order. Authorized Signature:_________________________ Date: _______.‖ If

all the documentation was acceptable, Virginie Drouhard would then sign and

acceptance stamp, the ―statement of conformity,‖ on the corresponding packing

slip. The signature and acceptance stamp would attest that the product conformed

to the engineering drawings and the contact requirements as required by the

referenced Raytheon document. Each packing slip identified by part number,

serial number, and quantity the product to be shipped. The packing slip was the

mechanism for payment. Relator Donald Minge witnessed the completion of

packing slips on many occasions.

2. Federal Acquisition Regulations

97. The DoD Guide for Achieving Reliability, Availability, and Maintainability,

August 3, 2005, http://www.acq.osd.mil/sse/docs/RAM_Guide_080305.pdf,

states: ―The primary objective of Department of Defense (DoD) acquisition is to

acquire quality products that satisfy user needs with measurable improvements to

mission capability and operation support in a timely manner, and at a fair and

reasonable price.‖ ¶1.1, p. 1-1 (citing DoD Directive 5000.1, The Defense

Acquisition System, May 12, 2003, Para. 4.2, p. 2). Quality assurance standards,


www.acq.osd.mil/sse/docs/RAM_Guide_080305.pdf

37

applied during design and manufacture, play a key role in producing products that

meet the Government‘s performance requirements and are safe, reliable and

maintainable. Id. at ¶ 2.3.1, p. 2-15. ―Manufacturing must be a controlled

process that does not adversely effect the item with production defects.‖ ¶2.4.1, p.

2-23.

98. The provisions of FAR explicitly required RAC/HBC as the contractor to ensure

that the Government receives conforming products. Under FAR, RAC/HBC‘s

responsibilities include

control the quality of supplies or services, tender to the Government for acceptance only those supplies or services that conform

to the contract requirements, ensure that vendors or suppliers of raw materials, parts, components, subassemblies,

etc., have an acceptable quality control system, and maintain substantiating evidence that the supplies or services conform to quality

requirements. FAR 46.105(a). Specifically, and among other things, RAC/HBC‘s quality control must

include ―manufacturing processes, to ensure that the product is produced to, and meets,

the contract‘s technical requirements.‖ FAR 46.105(b).

99. Under FAR Part 12, agencies ―shall rely on contractors‘ existing quality assurance

systems as a substitute for Government inspection and testing before tendor for acceptance… FAR 12.208; see also FAR 46.202-1.

100. The intent of FAR Part 12 is reflected in the standard terms and conditions which

are required in solicitations and contracts, FAR 52.212-4, ―Contract Terms and

Conditions- Commercial Items.‖ FAR 12.303 requires that ―solicitations and

contracts for the acquisition of commercial items‖ include FAR 52.212-4,

―Contract Terms and Conditions- Commercial Items.‖


38

101. FAR 52.212-4 (a) provides that ―the Contractor shall only tender for acceptance

those items that conform to the requirements of this contract.‖ The provision

further states that the Government reserves the right to inspect or test any supplies

or services that have been tendered for acceptance. The intent is that the

Government does not perform surveillance prior to the time the contractor tenders

commercial items for Government acceptance. In fact, FAR 12.402 states, ―The

acceptance paragraph in 52.212-4 is based upon the assumption that the

Government will rely on the contractor‘s assurances that the commercial item

tendered for acceptance conforms to the contract requirements. The Government

inspection of commercial items will not prejudice its other rights under the

acceptance.‖

102. Defendants were obligated to comply with, among others, 14 C.F.R. Part 3

―General Requirements‖ and 14 C.F.R. Part 21, which provide in pertinent part as

follows:

a. 14 C.F.R. Part 3.1 Applicability

(a) This part applies to any person who makes a record regarding:

(1) A type-certified product, or

(2) A product, part, appliance or material that may be used on a type-certified product.

b. 14 C.F.R. Part 3.5 Statements about products, parts, appliances and materials

. . .

(b) Prohibition against fraudulent and intentionally false statement. When conveying information related to an advertisement or sales transaction, no person may make or cause to be made:


39

(1) Any fraudulent or intentionally false statement in any record about the airworthiness of a type-certified product, or the acceptability of any product, part, appliance or material for installation on a type certified product.

. . .

c. 14 C.F.R. Part 21.3 Reporting of failures, malfunctions, and defects.

. . .

(b) The holder of a Type Certificate (including a Supplemental Type Certificate), a Parts Manufacturer Approval (PMA), or a TSO authorization, or the licensee of a Type of Certificate shall report any defect in any product, part, or article manufactured by it that has left its quality control system and that it determines could result in any of the occurrences listed in paragraph (c) of this section.

(c) The following occurrences must be reported as provided in paragraphs (a) and (b) of this section:

. . .

(8) A significant aircraft primary structural defect or failure caused by any autogenous condition (fatigue, understrength, corrosion, etc.).

d. 14 C.F.R. Part 21.139 Quality control. The applicant must show that he has established and can maintain a quality control system for any product, for which he requests a production certificate, so that each article will meet the design provisions of the pertinent type certificate.

e. 14 C.F.R. Part 21.165 Responsibility of holder. The holder of a production certificate shall (a) Maintain the quality control system in conformity with the data and procedures approved for the production certificate; and (b) Determine that each part and each completed product, including primary category aircraft assembled under a production certificate by another person from a kit provided by the holder of the production certificate, submitted for airworthiness certification or approval conforms to the approved design and is in a condition for safe operation.

f. 4 C.F.R. Part 21.607 General rules governing holders of TSO authorizations. Each manufacturer of an article for which a TSO authorization has been issued under this part shall (a) Manufacture the article in accordance with this part and the applicable TSO; (b) Conduct all required tests and inspections and establish and maintain a quality


40

control system adequate to ensure that the article meets the requirements of paragraph (a) of this section and is in condition for safe operation; . . .

g. 4 C.F.R. Part 25.601 General. The airplane may not have design features or details that experience has shown to be hazardous or unreliable. The suitability of each questionable design detail and part must be established by tests.

h. 14 C.F.R. Part 25.605 Fabrication methods.

(a) The methods of fabrication used must produce a consistently sound structure. If a fabrication process (such as gluing, spot welding, or heat treating) requires close control to reach this objective, the process must be performed under an approved process specification.

(b) Each new aircraft fabrication method must be substantiated by a test program.

VIII. Certifications and DD250

103. Upon delivery of commercial items, the Contractor is required by Department of

Defense acquisition regulations to give explicit and implicit assurances that the

item tendered for acceptance conforms to the contract requirements. The

Department of Defense supplemental regulations (―DFARS‖ at Chapter 2 of 48

C.F.R.) require ―[a]t the time of each delivery of supplies or services under this

contract, the Contractor shall prepare and furnish to the Government a material

inspection and receiving report in the manner and to the extent required by

Appendix F, Material Inspection and Receiving Report, of the Defense FAR

Supplement.‖ DFARS 252.246-7000; see also DFARS 246.370, 246.601.

DFARS Appendix F ―contains procedures and instructions for the use,

preparation, and distribution of the material inspection and receiving report

(MIRR) (DD Form 250 series) and commercial shipping/packing lists used to

document Government contract quality assurance.‖ DFARS Appendix F, F-101.


41

Among other purposes the Material Inspection and Receiving Report (MIRR) or

DD250 (as it is most commonly called), certifies that each product delivered to

the Government was manufactured in conformance with the contract documents.

DFARS Appendix F, F-103(a).

104. The DD Form 250 has 23 blocks. DFARS Appendix F provides instructions to the

contractor for putting the required information into those blocks. The contractor

inserts the federal contract number (Block 1), shipment number (Block 2), date

shipped (Block 3), invoice number (Block 6), the name and address for the federal

contract administration office (Block 10), the name and address of the federal

payment office (Block 12), the item number used in the contract (Block 15), the

stock number, part number and description of the part (Block 16), the quantity

shipped (Block 17), the unit price (Block 19), and the amount from the

Government for the item (Block 20). DFARS Appendix F, F-301(b)(1 through

20).

105. DD Form 250, Block 21—Contract Quality Assurance has the following

preprinted language ―ACCEPTANCE of listed items has been made by me or

under my supervision and they conform to contract, except as noted herein or on

supporting documents.‖ (―conform to contract‖). DFARS Appendix F, F-

301(b)(21) notes that the phrase ―conform to contract‖ relates to ―quality and

quantity of the items on the report‖ and it cautions the contractor ―[d]o not modify

statements.‖ However, the contractor is instructed to ―[e]nter notes taking

exception [to the statements] in Block 16 or on attached supporting documents

with an appropriate block cross-reference.‖ DFARS Appendix F, F-301(b)(21)(ii).


42

The use of Block 16 to note exceptions is permitted when an item is to be

accepted with known deficiencies that the contractor will correct within a specific

period of time. guidebook.dcma.mil/77/dd250_helpfulhints.doc In such

situations, ―Block 16 of the DD 250 shall be annotated with the deficiencies:

listing the deficiencies, and when/how the Contractor will make the corrections.‖

Id. Before submitting a DD Form 250 with noted deficiencies, the contractor

must discuss this with the Government‘s contracting officer. Id 90. The

authorized government representative places an ―X‖ in the acceptance box in

Block 21 of the DD Form 250 to show acceptance of the item by the Government.

DFARS Appendix F, F-301(b)(21)(iv)(A)(1).

106. DFARS Appendix F, F-201 and PGI F-201 requires that the contractor ensure that

its subcontractors use the commercial shipping document/packing list to evidence

that the required quality assurance actions have occurred at the subcontractor‘s

facility.

107. Another use of the DD Form 250 is ―[a]s commercial invoice support.‖ DFARS

Appendix F, F-103(a). The Defense Contract Management Agency

(“DCMA”) requires that the DD Form 250 be received and processed by the

Contract Management Office as a condition to payment of the contractor’s

invoice. Defense Contract Management Agency, ―DD Form 250 Guidance to the

Contractor‖

http://guidebook.dcma.mil/77/dc05-244DD%20Form%20250%20Guidance%20for%20 for%20the%20Contractor.htm

(―in order to get paid on your invoices by DFAS, your DD250s must be received and processed by the CMO‖).


43

108. The mandatory terms and conditions under FAR Part 12 include the standard

implied warranties of merchantability and fitness for a particular purpose. FAR

12.404(a). FAR 52.212-4 (o) states, ―The Contractor warrants and implies that the

items delivered hereunder are merchantable and fit for use for the particular

purpose described in this contract.‖ Additionally, agencies are required to obtain

at least the same express warranties as are offered to commercial customers.

3. Department of Defense Handbook on Airworthiness Certification Criteria

109. Department of Defense Handbook, Airworthiness Certification Criteria (MIL-

HDBK-516A), provides guidance for the manufacture and sale of the aircraft at

issue. Section 4.4 ―Manufacturing, support, and quality,‖ requires at section 4.4.3

verification that ―all critical quality standards exist to meet key product

characteristic requirements.‖

110. Following FAA airworthiness certification of the aircraft, the operating service of

the military has the final responsibility for the airworthiness certification approval

under public aircraft rules. MIL-HBDK-516B, Department of Defense Handbook

Airworthiness Certification Criteria, pp. 1-2 (Sept. 26, 2005). The certification

materials relied upon by operating service of the the military include the

contractor‘s DD Form 250. Id. at 24.

4. Joint Service Specification Guide

111. DoD, Joint Service Specification Guide, Aircraft Structures (JSSG 2006)

establishes the joint structural performance and verification requirements for the

airframe. These requirements are derived from operational and maintenance

needs and apply to the airframe structure which is required to function, sustain


44

loads, resist damage and minimize adverse operational and readiness impacts

during usage for the entire service life. JSSG 2006 was incorporated into

RAC/HBC‘s contracts with the Government described above as required

specifications for structural performance and verification of the airframes of the

subject aircraft. Defendants failed to conform to, including, but not limited to,

certain JSSG 2006 provisions on ―Requirements,‖ ―Verification,‖ and ―Notes,‖

including but not limited to the following:

a. 3.2.19 Materials and processes. Materials and processes shall be selected in accordance with the following requirements so that the airframe meets the operational and support requirements.

a. Relevant producibility, maintainability, supportablilty, repairability, and availability experience with the same, or similar, materials processes shall be a governing factor for suitability of the airframe design. Environmentally conditioned tests must be performed at the appropriate development test level to meet relevant design conditions.

b. Material systems and materials processes selected for design shall be stable, remain fixed, and minimize unique maintenance and repair practices in accordance with the specified operational and support concepts.

b. 4.2.19 Materials and processes. Inspections, analyses, and tests shall verify that the materials and processes selected are in compliance with the requirements of 3.2.19. The following requirements also apply:

a. Materials and processes development and characterization and the selection process must be documented. Second source materials (when established as a program requirement) must be qualified and demonstrated through testing to have equivalent performance and fabrication characteristics as the selected baseline material.

b. Materials and processes characteristics for critical parts (see definitions in 6.1.23) shall comply with the requirements of the parts control processes as specified in 3.13.

c. 4.16 Production facilities, capabilities, and processes. These requirements shall be incrementally verified by examination, inspections,


45

analyses, demonstration, and/or test. The incremental verification shall be consistent with the expectations for design maturity expected at key decision points in the program.

d. 6.1.57 Key production process. Those production processes which control key product characteristics. This may be a fabrication process, assembly process, test process, or an inspection process.

e. 6.1.58 Process capability index (Cp). The ratio of the design tolerance to the process variablity. Cp = design tolerance = upper spec limit - lower spec limit process spread 6 sigma process spread (6s).

f. 6.1.59 Process performance index (Cpk). A comparison of the variability and centering of a controlled manufacturing process with the governing design parameter and its tolerance band. It is defined as the minimum of the following two items. (1) process mean minus the lower specification limit, all divided by half the process spread (3 sigma), or (2) the upper specification limit minus the process mean all divided by half the process spread (3 sigma). Cpk = Min[(process mean - lower spec limit), (upper spec limit - process mean)] 1/2 process spread (3s). Variables data to support this may be derived form various sources. Among these are control charts created as part of formal statistical process control (SPC) procedures, data from automated or manual inspection, automated non-destructive evaluation, or computer generated information from machines operating under adaptive controls.

g. 6.1.62 Production process. The basic methods required to manufacture, fabricate, assemble, and test hardware, including sub-assemblies, assemblies, components, subsystems, and systems, the associated process control technologies, and the quality assurance requirements implementation.

5. RAC/HBC Supplier Quality Requirements Document

112. RAC/HBC‘s ―Supplier Quality Requirements Document‖ (hereinafter referred to

as the ―Document‖), provides requirements for quality assurance system approval

and obligates RAC/HBC and the TECT Defendants, as a RAC/HBC supplier, to

fully and completely implement quality systems and evaluate for compliance by

RAC/HBC Quality Assurance representatives.

113. The stated purpose of the Document is ―to clearly communicate our requirements


46

for HBC designed parts/product.‖ Document, 1.0 Introduction and Scope.

114. The Document incorporates by reference the following standards and specifications: 2.2. Beech (Hawker Beechcraft) Specifications • BS383, Materials, Equipment, and Requirements for Identification

Marking . . . • BS25116, Fracture Critical and Durability Critical Parts Control

Requirements • BS25691, Control of Product Manufacturing Processes for

Suppliers and Outside Production • BS25696, Fracture Critical and Durability Parts Control Listing

and Identification/Serialization Requirements for Model 3000 T- 6A Texan II

2.3. Federal and International Regulations, Requirements, and Standards • 14 CFR. Title 14 of the U.S. Code of Federal Regulations; Federal

Aviation Regulations (U.S. Federal Aviation Administration; FAA)

. . . • 49 CFR. Title 49 of the U.S. Code of Federal Regulations (U.S.

Department of Transportation; DOT) . . . • Order 8100.7, FAA Aircraft Certification Systems Evaluation

Program (ACSEP) 2.4. International Organization for Standardization (ISO) • ISO9001, Quality Management and Quality Assurance Standard . . . 2.7. SAE International • AS9100, Quality Management Systems – Aerospace – Requirements • AS9102, Aerospace First Article Inspection Requirement 115. The Document provides:

4.0. QUALITY SYSTEM FOUNDATION. The requirements set forth in this document are designed to assure that the supplier‘s quality practices are consistent with, and supportive of compliance with, the federal aviation regulations, aerospace industry standards, and Hawker Beechcraft Corporation practices, specifically:


47

• Title 14 of the U.S. Code of Federal Regulations (Aeronautics and

Space), administered by the Federal Aviation Administration (FAA).

• The requirements of ISO 9001:2000, administered by the International Organization for Standardization (ISO).

• The requirements of Aerospace Standard AS9100 Revision B, administered by SAE International.

• The requirements of the Nadcap industry program, administered through the Performance Review Institute (PRI).

• Best industry practices for aerospace supplier quality management. • Hawker Beechcraft Corporation specific requirements (e.g.,

specifications, standards, forms, processes, and practices). The FAA requires that HBC ensure that its suppliers have an acceptable

quality control system under 14 CFR Part 21.139. Although Part 21.139 explicitly refers to the production approval holder (PAH, i.e., HBC), it is understood by FAA to extend to the PAH‘s suppliers as well, as written in FAA Advisory Circular 21-20B, para. 5.a. This document is intended to explain and supplement, but not to replace or nullify any specifications, standards, terms and conditions, purchase order terms, purchase agreements, or other contractual agreements. Any deviations to the requirements of this document must be approved with written consent of Supply Chain Management Quality Assurance.

116. The Document provides:

5.0. FEDERAL AVIATION ADMINISTRATION REQUIREMENTS. All component parts, systems, and assemblies that are installed on a Type Certificated aircraft must be defined and described in an approved Type Design, and their manufacture must be sufficiently controlled to maintain conformity to the Type Design. Adherence to these requirements is defined in a series of FAA and HBC Engineering, Quality Assurance, and Supply Chain Management policies and procedures, manuals, purchase order notes, clauses, and attachments, and HBC QA Instructions (QAIs) and Work Instructions (WIs). Failure to comply with these requirements carries consequences for the supplier. These consequences may include, but are not limited to, one or more of the following:

• Parts rejected at receiving. • Revocation of supplier‘s authorization to ship completed

parts/product. • HBC-provided source inspection, conducted at the supplier‘s

expense. • Poor supplier ratings leading to reduced follow-on business. • Removal of approved supplier status (removal from Approved

Vendor List), prohibiting the issuance of future purchase orders.


48

• Removal of parts from aircraft and stock locations, and/or replacement/rework of such parts at the supplier‘s expense.

117. The Document provides:

7.2. Supplier Surveillance 7.2.1. General Hawker Beechcraft Corporation Supply Chain Quality Assurance will

perform surveillance activities with suppliers during their approval duration. These activities may include, but are not limited to:

• Onsite audits or visits to assure ongoing compliance to

requirements • Supplier Development Visits to help improve performance • Supplier improvement programs to address specific issues Special process suppliers are required to maintain current Nadcap

accreditations throughout the duration of their approval. Hawker Beechcraft Corporation reserves the right of entry to the facilities of suppliers and their sub-tier suppliers for inspections, tests, and audits as deemed necessary by Hawker Beechcraft Supply Chain Management Quality Assurance. The supplier must allow entry and provide reasonable facilities and access as described in HBC‘s General Terms & Conditions, which can be found at: http://www.hawkerbeechcraft.com/rac/about_us/supply_chain/info/terms/. No process changes will be allowed on HBC-designed parts/product without the written consent of HBC Engineering. All special processing suppliers are required to flow down the HBC Engineering requirements for machining and processing of HBC-designed parts/product to their sub- tier suppliers. (Emphasis in the original).

118. The Document requires adherence to Beech Specification BS25691, Control of

Product Manufacturing Processes for Suppliers and Outside Production:

8.0. HAWKER BEECHCRAFT-SPECIFIC QUALITY REQUIREMENTS 8.1. Adherence to Special Manufacturing Requirements 8.1.1. BS25691 Requirements All suppliers to Hawker Beechcraft Corporation, both first-tier

(direct) and sub-tier (indirect, subcontract), must adhere to the manufacturing and processing requirements presented in Beech Specification BS25691, Control of Product Manufacturing Processes for Suppliers and Outside Production. Suppliers holding engineering


http://www.hawkerbeechcraft.com/rac/about_us/supply_chain/info/terms/

49

design authority (i.e., supplier-created engineering designs/drawings), suppliers holding an FAA product Type Certificate (TC) or Supplemental Type Certificate (STC), and suppliers manufacturing parts/product under FAA Product Manufacturing Authority (PMA) or Technical Standard Order (TSO) are exempt from the requirements in section 8.0 of this document.

BS25691 is an HBC Engineering specification and its use as a manufacturing control document is stipulated in every HBC Engineering drawing and engineering data package through HBC Engineering Drawing No. 130450, Standard Practice Notes. Hawker Beechcraft Corporation holds its first-tier suppliers accountable for controlling and for flowing down all HBC quality and technical requirements to all of their sub-tier suppliers. Therefore, all first-tier (direct) HBC suppliers must flow down BS25691 to all of their sub-tiers by specifying compliance to this engineering document on each purchase order. Flow down of BS25691 ensures that purchase order and technical requirements are imposed and maintained throughout the supply chain. (Emphasis in the original).

119. BS25691 provides at § 1.3:

The use of manufacturing processes that are proprietary require the approval of RAC Process Engineering. These processes may also require the Supplier or Outside Manufacturer to be licensed or obtain a proprietary agreement (RAC Process Engineering shall make the determination). Contact RAC Supply Chain Management. The methods (planning/procedures) used in manufacturing processes that are proprietary must be approved by RAC Process Engineering. Any technical changes or revisions to these methods (planning/procedures) also require RAC Process Engineering approval. Contact RAC Supply Chain Management. When encountering processes and practices where Government, Industry, and/or RAC documents do not exist as a guide in these processes and practices (e.g. Light Chemical Etching of Aluminum, Chromic Dip for Lead Alloys), RAC Process Engineering shall provide direction. Contact RAC Supply Chain Management.

The same specification at § 4.2 states, ―[p]rocedures and processes not authorized

by this specification shall not be performed without written authorization from

HBC Engineering.‖ (Emphasis in the original).


50

120. The Document requires supplier compliance with its terms as well as SAE

AS9100. Document, §8.2.

121. With respect to ―Fracture Critical‖ parts, the Document at §8.5 states, ―[t]he

supplier must assure that all requirements listed in Engineering Specification

BS25116, Fracture Critical and Durability Critical Parts Control Requirements,

and BS25696, Fracture Critical and Durability Critical Parts Control Listing and

Identification/Serialization Requirements for Model 3000 T-6A Texan II are

present throughout the supplier‘s planning processes.‖ With respect to changes in

the production process, the same section of the Document states, ―[p]roduction

process changes involving critical process parameters such as, but not limited to,

processing times, temperatures, chemicals, or test methods must be submitted for

approval via the Data Submittal web-based tool . . .‖ The Document addresses

the processes for control of nonconforming parts at §8.6.

122. The Document also requires adherence to Beech Specification BS25691, Control

of Product Manufacturing Processes for Suppliers and Outside Production.

BS25691 is a ―manufacturing control document . . . stipulated in every HBC

Engineering drawing and engineering data package through HBC Engineering

Drawing No. 130450, Standard Practice Notes.‖ Document, § 8.1.1. BS25691

provides at § 1.3:

The use of manufacturing processes that are proprietary require the approval of RAC Process Engineering. These processes may also require the Supplier or Outside Manufacturer to be licensed or obtain a proprietary agreement (RAC Process Engineering shall make the determination). Contact RAC Supply Chain Management. The methods (planning/procedures) used in manufacturing processes that are proprietary must be approved by RAC Process Engineering. Any technical


51

changes or revisions to these methods (planning/procedures) also require RAC Process Engineering approval. Contact RAC Supply Chain Management. When encountering processes and practices where Government, Industry, and/or RAC documents do not exist as a guide in these processes and practices (e.g. Light Chemical Etching of Aluminum, Chromic Dip for Lead Alloys), RAC Process Engineering shall provide direction. Contact RAC Supply Chain Management.

The same specification at § 4.2 states, ―[p]rocedures and processes not authorized

by this specification shall not be performed without written authorization from

HBC Engineering.‖ (Emphasis in the original).

123. Any additional requirements for part identification are listed in the clauses and

notes on the RAC/HBC purchase order, including HBC Purchase Order

Attachment 1022, Quality Assurance Purchase Order Clauses, which incorporates

quality provisions in each purchase order. In addition, RAC/HBC‘s ―JPATS Lot

14 And Up PO Appendices, Dated 9/15/06‖ at § 3040.2.3 requires suppliers to

maintain a quality system.

6. Industry Standards and Good Manufacturing Practices 124. SAE AS9100 ―promotes the adoption of a process approach when developing,

implementing and improving the effectiveness of a quality management system,

to enhance customer satisfaction by meeting customer requirements.‖ (SAE

AS9100 Revision B, Introduction). Despite Defendants‘ obligations to conform to

the Aerospace Standards and their representations of compliance, Defendants

failed to fully and completely conform to AS9100 Rev. B.

125. The Aerospace Quality Management System in place within TECT Defendants

was required to comply with SAE AS9100. Under AS9100, the top management


52

of TECT Defendants is required to ensure that quality objectives, including those

needed to meet requirements for product are established at relevant functions and

levels within the organization. The quality management system requirements

specified in AS9100 are complementary (not alternative) to contractual and

applicable law and regulatory requirements.

126. AS9100 Rev. B, paragraph 5.5.2 requires that top management of TECT

Defendants appoint a member of management who, irrespective of other

responsibility, has responsibility and authority that includes:

(a) ensuring that processes needed for the quality management system are

established, implemented and maintained,

(b) reporting to top management on the performance of the quality

management system and any need for improvement,

(c) ensuring the promotion of awareness of customer requirements

throughout the organization, and

(d) the organizational freedom to resolve matters pertaining to quality.

127. AS9100 requires the top management of TECT Defendants to review the

organization‘s quality management system annually, and at other planned

intervals, to ensure its continuing suitability, adequacy and effectiveness. This

review includes assessing opportunities for improvement and the need for changes

to the quality management system, including the quality policy and quality

objectives.

128. AS9100 requires TECT Defendants to ensure that product which does not

conform to product requirements is identified and controlled to prevent its


53

unintended use or delivery. The controls and related responsibilities and

authorities for dealing with nonconforming product are defined in a documented

procedure that addresses the responsibility for review and authority for the

disposition of nonconforming product and the process for approving personnel

making these decisions.

129. AS9100 requires that TECT Defendants deal with nonconforming product by one

or more of the following ways:

(a) by taking action to eliminate the detected nonconformity,

(b) by authorizing its use, release or acceptance under concession by a

relevant authority and where applicable, by the customer, or

(c) by taking action to preclude its original intended use or application.

130. Raytheon‘s ―Purchase Order Attachment 1600—Raytheon Aircraft Company

Supplier Quality Requirements Document,‖ Para. 7.5 Control of Nonconforming

Products, describes a required system for the disposition, documentation and

control of nonconforming products or processes. The provision incorporates

International Organization for Standardization (ISO) 9001:2000, Para. 8.3. The

primary purpose of these standards is to ensure that when there is a

nonconformance it is identified, documented, and the problem is fixed so as to

make it unlikely that it will occur again.

131. Under the ISO 9001:2000 standard, there were four ways to deal with

nonconforming products:

a. Rework - which releases the discrepant material for completion of operations or

additional processing. Satisfactory completion of rework on the material will result in the


54

item being in complete conformance with the original requirements and, therefore, the

discrepancy will no longer exist. For example, if a steel plate was supposed to be cut to 5

1/2‖ and it was cut instead to 6‖ it could be re-cut to the specified measure.

b. Repair - which releases discrepant material for additional processing to correct the

deficiency. Satisfactory repair of the material will result in the item being useable but not

in complete conformance with requirements. The original deficiency will have been

corrected, but acceptance of the lesser deficiency resulting from the repair will be

supported by Customer authorized and approved repair instructions.

c. Scrap - which releases the discrepant material for destruction. The discrepancy is of

such a nature that the item cannot feasibly or economically be corrected for further use.

The item is removed from operations and destroyed. Final disposition of items identified

as scrap is subject to the terms of a contract (or program) concerning control of scrap

material. For example, if a steel plate was supposed to be cut to 5 1/2‖ and it was cut

instead to 5 1/8‖, the part may be deemed scrap because the undersized condition

adversely affects the form, fit or function of the end products.

d. Use As Is - which authorizes the acceptance and subsequent use of the discrepant

material. Customer approval is required for this disposition and the release and

subsequent processing of discrepant material. For example, if a steel plate was supposed

to be cut to 5 1/2‖ and it was cut instead to 5 7/16‖, the part may be deemed acceptable as

is by the Customer if it does not affect the form, fit or function of the end product.

132. Raytheon‘s ―Purchase Order Attachment 1600—Raytheon Aircraft Company

Supplier Quality Requirements Document,‖ Para. 7.5 required TECT to segregate

the nonconforming parts. Under TECT‘s internal procedure, TECT was supposed


55

to affix to each such part a TECT Defect Non Conformance Tag that identified

the part by lot number and serial number and documented the areas of

nonconformance on the part.

133. If TECT discovered parts that did not conform to Raytheon engineering

requirements prior to being shipped to Raytheon, TECT was required to

electronically submit an HBC Variation Request to Raytheon which triggered the

creation of a Quality Notification Form at Raytheon. The Quality Notification

Form was used by Raytheon /HBC to document the required engineering

disposition for the parts.

134. If Raytheon received parts and then discovered parts as non-conforming,

Raytheon prepared a Quality Notification Form which would document and

describe the non-conformance and the required engineering disposition for the

discrepant parts. A copy of this Quality Notification would then be forwarded to

TECT. If TECT wanted to challenge whether parts that Raytheon had determined

did not conform to Raytheon engineering requirements could still be acceptable

for use, TECT would complete a Form 78-33431 Variation Request (VR) and

submit it to Raytheon. HBC used these same procedures.

135. Minge was the designated Management Representative for TECT Defendants as

required by AS9100 Rev. B, paragraph 5.5.2. At all times material, Minge was

acting as an agent for the TECT Defendants.

136. Minge, as the Management Representative for TECT Defendants and the Quality

Assurance Manager for TECT Aerospace, was responsible for the

implementation, oversight, and compliance with TECT Defendant‘s Quality


56

Management System at the various TECT Aerospace sites (Wichita, Kansas;

Wellington, Kansas; Kent, Washington; Everett, Washington; and Woodinville,

Washington). Each of those sites, including TECT Wellington, had a Quality

Manager who reported to Minge.

E. RAC/HBC and Defendants TECT Knew that (1) the Wellington Plant Had Failed to Comply with Federal Regulations, Industry Standards and RAC/HBC Standards Requiring Implementation of Effective Quality Control Systems, Procedures, and Practices, (2) Introduced Variability of Staggering Proportions Into What Should Have Been a Tightly Controlled Process For Manufacturing JPATS and King Air Spars, and (3) Yet Accepted Non-Conforming Spars from TECT and Used Them on JPATS and King Air Aircraft

137. Defendants TECT were aware that RAC/HBC had contracted with the United

States through the JPATS program to supply the United States Navy and the

United States Air Force with T-6A aircraft for use in flight and weapons training.

138. Defendants TECT were aware that HBC contracted with the United States for the

purchase of King Air aircraft.

139. Defendants TECT knew that TECT Wellington‘s predecessors by name change

had subcontracted with RAC/HBC to manufacture and supply JPATS spars, Part

Numbers 133-100051-3 and 52-3 and their predecessors 51-1 and 52-1, and King

Air spars, Part Numbers 101-120127-33 and -35 and -19.

140. Defendants TECT knew that TECT Wellington‘s predecessors by name change first

delivered the subject JPATS parts to RAC in the late 1990s and that TECT Defendants

continue to deliver such parts to HBC. Previously, TECT Wellington‘s predecessors by

name change had supplied parts for the King Air.

141. Defendants TECT were aware that HBC contracted with the United States for the

purchase of King Air aircraft. Defendants TECT, including predecessors by name


57

change, represented to HBC that parts number 101-120127-33 and -35, which

were installed on King Airs, were manufactured in compliance with HBC Spec

BS25339, Rev. A (―Hot Bending or Forming of Aluminum Alloys‖).

142. BS 25339, Rev. A, section 1.2 and 1.3 and 3.3 did not allow hot forming of 7050

aluminum alloy materials without prior approval of HBC‘s process engineering.

Defendants TECT had no prior approval to hot form parts made of 7050

aluminum materials. Part Numbers 101-120127-33 and -35, which were the King

Air spars, were made of 7050 aluminum.

143. Upon information and belief, Defendants TECT were ―hot forming‖ Part

Numbers 101-120127-33 and -35 without prior approval, which was not

compliant with the BS 25339, Rev. A specifications. This ―hot forming‖ caused

the parts to wrinkle. Defendants TECT then ―reworked‖ the King Air wing spars

in an unauthorized manner by using hammers to ―bash‖ the wrinkles out of non-

conforming parts. This was not compliant with HBC Spec BS25339, Rev A,

section 3.2.6, which prohibits impact loading.

144. Upon information and belief, this hot forming and rework process had not been

approved by HBC‘s process engineering group or Material Review Board.

Alternatively, as a part of the scheme to defraud the Government, HBC knew of

the process and did not require the Defendants TECT to change their

manufacturing processes to come into compliance with all drawings,

specifications and contractual requirements.


58

145. Throughout the period of JPATS and King Air contracts referenced above

RAC/HBC procurement, manufacturing, and quality personnel became aware

that TECT was delivering nonconforming spars to RAC/HBC.

1. In a clear violation of quality standards RAC/HBC failed to ensure that the manufacturing specifications prohibited hot forming 2024-T3 material and failed to police whether such material was being hot formed

a. References to hot forming specifications 146. Two very different hot forming specifications are referenced in the spar cap

drawings: PS 54240 Hot Bending or Forming of Aluminum Alloys (Rev. 12), the

internal spec used at RAC/HBC and the BS 25339 Hot Forming specification that

RAC/HBC flowed down to TECT Defendants. The key differences between

these specifications are:

Under 1.2 Applications of the PS specification there is a reference to 7050 material whereas the same section of the BS spec. does not have this reference. The reference in the PS specification applies to the King Air spars.

Table I in 3.3 Time and Temperature Limits in the PS specification includes 7050 material whereas the BS specification does not have this reference. Again this reference in the PS spec. applies to the King Air spars.

Note #3 referenced in Table I of both the PS spec. and the BS spec. states, ―Hot

forming of 2024 in the -T3, -T351, -T4 and -T42 tempers is allowed only when

the engineering drawing provides for artificial age hardening to the -T81, -T851, -

T6, or -T62 as appropriate; after hot forming.‖ The engineering drawings for the

JPATS spars do not allow for subsequent age hardening to any of these referenced

tempers for the JPATS spars made from 2024-T3 material. 2024-T3 alloys have

excellent fracture toughness and slow crack growth rate as well as good fatigue


59

life. The 7050 alloys have higher strength than the 2024 but lower fracture

toughness. The 2024-T3 is used for the lower spar cap, which is prone to fatigue

due to applications of cyclic tensile stresses. 2024-T3 should not be hot formed

unless it is subsequently artificially age hardened.

(1) JPATS Parts 33-100051-1 & -3 147. The drawing Parts List (P/L) for 3-100051-1 & -3 Rev. C dated 4/21/99 & Rev. 6 dated

12/22/05 both provide: ―Make from 132438-414-00 extrusion (7075T73511 QQ-A-

200/11).‖ Note #11 specifies that the parts should be formed per BS25339. However, on

page 2 of the P/L there is also a reference for PS54240 Hot Bending or Forming of

Aluminum Alloys.

148. RAC P.O. 1022 Quality Requirements - General Note 175 states ―Fabricate parts as

outlined on RAC Tool Operation Sheet (TOS). RAC furnishes the supplier with a copy

of RAC‘s in-house manufacturing job traveler (TOS) and parts are to be made as outlined

in this RAC supplied documentation.‖ General Note 177 states ―Disregard all references

to RAC PS specifications.‖

149. The TOSs supplied to TECT Defendants by RAC dated June 5, 1997 and dated March 2,

1999 call out the correct material per the P/L and state ―Form per PS54240‖. The TOSs

do not say that BS25339 Hot Forming specification should be used in lieu of the

PS54240 specification.

150. TECT Defendant‘s Shop Traveler Master for 133-100051-3 dated January 14, 2000

references the PS54240 Hot Forming specification. TECT‘s Shop Traveler Master was

revised February 27, 2002 to reference the BS25339 Hot Forming specification.

(2) JPATS Part 133-100052-1


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151. The drawing Parts List (P/L) dated June 26, 1996 & Rev. 7 dated December 22, 2005

both provide: ―Make from 132439-414-00 extrusion (2024 T3511 QQ-A-200/3).‖

According to Notes CP and CA on the P/Ls these parts are Fracture Critical Parts.

152. TOS‘s supplied to TECT Defendants by RAC/HBC for the 133-100052-1 spars dated

December 12, 1997, January 29, 1998, and February 16, 1999 call out the correct

material per the P/L and state, ―Form per PS54240‖.

153. RAC/HBC supplied TOS dated August 30, 2000 still references the PS54240

specification but adds the note: ―All suppliers refer to applicable industry standard - PS

specification for internal RAC use only.‖ Presumably, after August 30, 2000 TECT

Defendants were therefore required to use the BS25339 Hot Forming specification in lieu

of PS54240.

154. The 133-100052 engineering drawing does not allow for artificial age hardening nor does

it allow a final part temper other than T3511. Likewise, the TOSs do not call for artificial

age hardening.

(3) JPATS Part 133-100052-3

155. On 8/10/99, P.O. 5-30148 (1/98) Change Order 0001 rolled JPATS part number 133-

100051-1 to a -3 and JPATS part number 133-100052-1 rolled to a -3.

156. Internal Marconi e-mails in August, 1999 reflect that the number changes required no

changes in the manufacturing process.

157. The RAC TOS for the 133-100052-3 spars dated August 30, 2000 states ―Form per B/P

(blueprint or drawing).‖ Unlike the TOS for 52-1, this TOS does not allow for hot

forming.

158. TECT‘s 52-3 Shop Traveler Masters & Job Travelers state ―-3 same as -1 except primed


61

entirely with fuel cell epoxy primer.‖ The 52-3 job travelers reference the BS25339 Hot

Forming specification. (Master dated 12/11/01 references BS25339 Hot Forming

specification; Master dated February 27, 2002 no forming specification referenced;

Master dated May 1, 2003 references BS25339 Hot Forming specification, however, Job

Traveler #052-3 dated May 5, 2003 references no forming specification).

(4) King Air spars

159. Defendants TECT, including predecessors by name change, represented to HBC

that parts number 101-120127-33 and -35, which were installed on King Airs,

were manufactured in compliance with HBC Spec. BS25339, Rev. A (―Hot

Bending or Forming of Aluminum Alloys‖).

160. BS 25339, Rev. A, section 1.2 and 1.3 and 3.3 did not allow hot forming of 7050

aluminum alloy materials without prior approval of HBC‘s process engineering.

Defendants TECT had no prior approval to hot form parts made of 7050

aluminum materials. Part Numbers 101-120127-33 and -35, which were the King

Air spars, were made of 7050 aluminum.

161. Upon information and belief, Defendants TECT were ―hot forming‖ Part

Numbers 101-120127-33 and -35 without prior approval, which was not

compliant with the BS 25339, Rev. A specifications. This ―hot forming‖ caused

the parts to wrinkle. Defendants TECT then ―reworked‖ the King Air wing spars

in an unauthorized manner by using hammers to ―bash‖ the wrinkles out of non-

conforming parts. This was not compliant with HBC Spec. BS25339, Rev A,

section 3.2.6, which prohibits impact loading.


62

162. Upon information and belief, this hot forming and rework process had not been

approved by HBC‘s process engineering group or Material Review Board.

Alternatively, as a part of the scheme to defraud the Government, HBC knew of

the process and did not require the Defendants TECT to change their

manufacturing processes to come into compliance with all drawings,


b. RAC/HBC knew that the Wellington plant had hot formed spar caps in violation of RAC/HBC specifications

163. On October 31, 2006, Phil Perry (―Perry‖), RAC Supplier Quality Engineer, e-mailed

TECT's Rick McGee (―McGee‖) requesting information about the manufacturing process

used to form Part 133-100052-3, Serial Number (―S/N‖) 0452. Perry noted that TECT's

Job Traveler for S/N 0452, called out the BS25339 Hot Forming specification.

164. On December 7, 2006, Perry e-mailed TECT's David Roll (―Roll‖) about RAC‘s

investigation of S/N 0452. Perry wrote, ―Meeting today raised engineering concerns

involving current manufacturing processes and methods used to form the spar

caps…Destructive testing to determine residual stresses may be required…This activity

may grow to include the 133-100051-3 also.‖ Perry requested additional detailed

information from TECT.

165. On January 5, 2007, Perry wrote the following e-mail message to McGee: ―RAC needs

to know whether any of the 133-100052-3 parts previously manufactured at TECT have

actually been Hot Formed in the past or whether this is just an error on the job traveler.‖

166. Perry sent McGee a follow up e-mail on January 11, 2007, in which Perry again asked for

the information about hot forming.

167. On January 26, 2007, Perry notified McGee that RAC wanted to observe the forming and


63

the rework processes.

168. On April 30, 2007, Kiehl sent the following e-mail message to RAC‘s Perry and Julie

Duff:

On p/n 101-120127 there is a callout to hot form per BS 25339. The 101-120127‘s are made from alloy 7050 and this alloy is not covered under the BS 25339. Included in the BS spec is PS54240 which allows for forming alloy 7050 in-house at RAC only.

169. On May 1, 2007, Kiehl sent the following e-mail to TECT‘s Ken McEntire regarding

HBC‘s visit on May 3, ―They will also be looking at the 127 spars that had the waviness.

Possibly rework may be one hot (hot will require a preheat of the dies or tools contacting

the part) & one cold.‖

170. On May 4, 2007 Minge and Roll visited HBC‘s JPATS assembly line with Perry. There

was also a discussion about waiting for HBC Engineering to address the issue of hot

forming the King Air parts, PN 101-120127-19/-33/-35.

171. On May 10, 2007, Minge received a copy of the following e-mail from Roll to Denise

Fox: ―This morning I received a call from Phil Perry. Phil has been ‗queued back‘ from

the Engineer regarding the subject part numbers and VRs . . .he said the Engineer wanted

to know why TECT is hot-forming the parts?‖

172. On May 15 and 16, 2007 HBC conducted an unannounced audit of the -127 spar

processes and records. On May 16, 2007, HBC viewed the forming process and reviewed

the King Air -127 job routers, hot forming temperature logs and other records.

173. On May 17, 2007, Minge sent Perry an e-mail asking for confirmation of what Perry said

during the visit that TECT could not arbitrarily hot form unless it was called out on the

engineering drawing and the drawing referenced the appropriated RAC specification.

174. On May 17, 2007, HBC issued QM Notification Overviews for the -127 King Air spars


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that Minge red tagged on May 4, 2007. HBC noted that BS 25339 Rev. A, page 4, para.

3.3 did not allow 7050 aluminum to be hot formed.

175. On May 30, 2007, TECT received the following authorizations from Perry and Michael

Londagin, HBC metallurgist:

It is OK to go ahead and proceed with the forming of the 101-120127-19 parts in order to complete the matched sets which include the existing -33 and -35 parts that have already been through the hot form operation. Please provide any communication regarding the follow up on the Hot Form work instructions. Parts will need to be submitted on variation requests until HBC Engineering has completed the linking of engineering, specifications and material work out.

176. On May 31, 2007, Minge received a telephone call from Rick Friesen of HBC. Friesen

said he could not reconcile the data on the -127 temperature logs with the job routers.

Friesen scheduled a meeting at TECT on June 6, 2007 with Minge and Roll to discuss

this.

2. In a clear violation of quality standards RAC/HBC knew that the Wellington Plant used prohibited cold forming techniques, including “bashing” with a sledgehammer, of fracture critical parts to remove wrinkles on spar caps a. Applicable forming specifications 177. Throughout the period of supplying these parts, Defendants TECT, including

predecessors by name change, represented to RAC/HBC that it had complied with

BS25116, Rev. 8 (―Fracture Critical and Durability Critical Parts Control Requirements‖)

in its manufacture of Part Number 133-100052-3 (and part number 52-1) for the JPATS

program. BS 25116, Rev 8, Section 3.9 required that any rework (which would include

hand-forming back to approved type design) of fracture critical parts was to be

coordinated through RAC/HBC‘s Material Review Board. Defendants TECT did not


65

coordinate the rework on Part Number 133-100052-3 (and Part Number 52-1) through

RAC/HBC‘s Material Review Board.

178. Throughout the period of supplying these parts, Defendants TECT, including

predecessors by name change, represented to RAC/HBC that it had complied with HBC

Spec BS25339, Rev A (―Hot Bending or Forming of Aluminum Alloys‖) in its

manufacture of JPATS Part Number 133-100051-3 (and part number 51-1) and King Air

Part Numbers101-120127-33 and -35. Section 3.2.6 of the specification prohibits impact

loading, such as striking a part with a hammer or other object. TECT Defendants and

their predecessors have used hammers, pry bars (―wrinkle sticks‖) and dotcos (small

grinders) to force parts to fit the ―check fixture‖ supplied by RAC or HBC. A part is

placed in a ―check fixture‖ to gauge whether it is the right size and shape to comply with

the drawing requirements. Bending, grinding and hammering JPATS Part Number 133-

100051-3 (and its predecessor 51-1) and King Air Part Numbers -33 and -35 violate HBC

Spec BS25339, Rev A, Section 3.2.6.

b. RAC’s knowledge of the Wellington plant’s use of hand cold forming in the 1990s 179. RAC has known of the poor manufacturing practices at the Wellington plant and the

plant‘s non-compliance with the contract documents in the manufacture of spars for the

JPATS program since the 1990‘s. In a November 13, 1997 internal RAC e-mail from

Keith Hoch (―Hoch‖) on the subject of ―GEC spar feedback‖ which was also faxed to

GEC (TECT‘s predecessor) that same day, RAC asked GEC personnel to come to RAC

and review front spar cap variation in the bend region. Hoch wrote, ―We need them to

improve their forming process in this region.‖

180. A May 17, 1999 internal RAC memo from Jeff Whearty (―Whearty‖), Sr. Manufacturing


66

Engineer – JPATS Division, to James Parker on the subject of JPATS Spar Caps

addresses Whearty‘s concerns with another TECT predecessor‘s (Marconi)

manufacturing processes. Whearty wrote, ―I have concluded that Marconi‘s fabrication

process needs improving. I have explained my position on numerous occasions with

Marconi. At the beginning of the JPATS Program, Keith Hock and myself met with

Duane Creveling and Bob Cink of Marconi, during these visits a plan was developed to

utilize tooling holes for fabricating the spar caps.‖ Instead of adhering to the process that

Marconi had promised RAC it would follow, Marconi was scribing a line at the center of

the spars in lieu of the tooling holes and indexed off these lines for the fabrication and

bend processes. Whearty noted,

Marconi needs to productionize the method in which they put in the dihedral bends. Marconi should fabricate dedicated match dies for putting in the bends. With all the HAND FORMING done on these parts, the forming dies should pay for themselves quickly. The spar caps should index off the holes near the dihedral bends. I believe Marconi should reconsider their tooling philosophy and utilize the tooling holes located on the RAC drawing. Marconi will be required to develop a plan on when dedicated forming dies can be used to fabricate all the spar cap dihedral bends. If Marconi‘s answer is to go with the current fabrication process, TSD will insist on 100% RAC source inspection through the check fixtures.

Whearty also expressed concern about Marconi‘s unilateral modification of the RAC

provided 810, T00161 check fixture used for the 133-100051 & 52 spar caps: ―I informed

Mr. Condit that before any more features are added to the check fixture, Marconi will

have to get prior approval from RAC before any more details are added to the check

fixture.‖ RAC faxed this memo to Marconi.

181. On December 5, 2000, John Ewing (―Ewing‖), RAC Senior Process Engineer

(Metallurgy), identified ―manufacturing problems‖ with the JPATS wing forward


67

spars that had been reworked at BAE Systems, another TECT predecessor.

Ewing wrote in an RAC internal memorandum, ―When the fabricated forward

spar assembly is installed in the wing structure jig (position 12E0, the spar caps

do not always properly align with the machined ribs in the wing and shimming is

required.‖ Ewing‘s memorandum further described the problem and noted that

BAE had modified the RAC check fixture. In addition, Ewing‘s memorandum

included ―considerations for rework of previously produced spar caps in an effort

to achieve required geometrical conformity of that existing stock.‖ Ewing

recommended that all non-conforming spar caps be dispositioned on an NCR to

BAE Systems for ―rework,‖ meaning ―to cold form the spar cap to shape and

confirm the geometry in the check fixture.‖

c. RAC’s knowledge of the Wellington plant’s use of hand cold forming from 2004 through 2006 (1) Illustrative part dispositions 182. During the period from 2004 through 2006 there were many instances in which RAC

rejected nonconforming spar caps, communicated such rejections to the Wellington plant

and that the parts were subsequently either reworked or scrapped. From these back and

forth discussions it is clear that RAC knew of the extensive use of cold forming and/or

hot forming of parts to remove wrinkles. For illustrative purposes, set forth below is a

chronological discussion of the disposition of certain rejected parts by part serial

numbers.

(a) Job Traveler #09882, Serial Numbers 0294 through 0300s.

183. The following is a chronology for 133-100052-3 Serial Numbers 0294 through 0300s


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manufactured on March 30, 2004, per RAC rejection documents:

4/16/04 – RAC rejects S/N 0294 on QN #200469087 for tapering gaps and returns part to TECT, which reworked part initially on Job Traveler #09882R277. 5/20/04 – RAC rejects S/N 0299 on QN #200478186 for tapering gaps and returns part to TECT, which reworked part initially on Job Traveler #09882R298 as referenced on TECT Defect Tag Non-Conf. #35377 under Job Number. 7/09/04 – RAC rejects S/N 0300 on QN #200489654 for vertical leg being wavy and returns part to TECT, which reworked part initially on Job Traveler #09882R328.

3/3/05 – S/N‘s 0294, 0299 and 0300 were actually all initially reworked by TECT prior to receiving formal approval and disposition instructions from RAC via the following respective QN‘s and dates: S/N 0294 – QN # unknown, disposition date unknown but believed to be 3/3/05.

Rework process certifications. S/N 0299 – QN # 200544987 disposition dated 3/3/05. Rework process

certifications. S/N 0300 – QN # 200544895 disposition dated 3/3/05. Rework process

certifications. 4/21/05 – After receiving RAC‘s approval and disposition instructions, TECT realized RAC‘s instructions required parts to undergo eddy current inspection for cracks. TECT had not subjected the referenced parts to this process so TECT had to generate the following for each S/N: S/N 0294 - Defect Tag Non Conf. #35379 dated 3/15/05 and new rework Job Traveler

#09882D5364 to have eddy current inspection accomplished. S/N 0299 – Defect Tag Non Conf. #35377 dated 3/15/05 and new rework Job

Traveler #09882D5362 to have eddy current inspection accomplished. S/N 0300 – Defect Tag Non Conf. #35378 dated 3/15/05 new rework Job Traveler

#09882D5363 to have eddy current inspection accomplished.

On April 21, 2005, S/N‘s 0294, 0299 and 0300 were eddy current inspected by Metal Finishing Co., certification #569428. Rework Job Traveler #‘s are referenced on certifications.

4/17/07 - S/N‘s 0294 and 0300 are scrapped by TECT on Defect Tag Non Conf. #82416 and Defect Tag Non Conf. #82417 respectively for being ―Out of Form.‖

184. TECT History of 133-100052-3 S/N0299 shows TECT‘s initial rework for the parts


69

consisted of:

Parts HAND FORMED to fit check fixture!! Parts stripped at Kansas Dry Strip Alkaline etched at Metal Finishing Co. Penetrant inspected at Metal Finishing Co. Chem filmed and primed per spec. at Metal Finishing Co.

185. All of the above amount to Unauthorized Rework and violates RAC‘s BS25116 Fracture

Critical and Durability Critical Parts Control Requirements, specifically:

Section 3.9, page 10, 2nd sentence of the last paragraph states: ―Any component variance of a fracture critical part or raw material must be coordinated through RAC MRB Liaison Engineering and DADT Engineering for approval,‖ and Section 3.10, page 10, 2nd sentence of the first paragraph states: ―Any disposition

to use or rework critical parts will be coordinated through the Durability and Damage Tolerance Engineering group for evaluation and approval.

(b) Job Traveler #19740, Serial Numbers 0360 through 0363 & 0369 186. The following chronology relates to 133-100052-3 Serial Numbers 0360 through 0363 &

0369:

4/19/05 – TECT shipped S/N 0360 through 0363 & 0369 5/26/05 - TECT shipped S/N 0356 through 0359 5/26/05 - TECT shipped S/N 0364 through 0366 & 0368, 0370

6/24/05 - RAC rejects S/N 0375 on QN #200577375 because of gaps on assembly 7/22/05- S/N 0375 returned to TECT on Return P.O. 4501598809 8/23/05 - TECT generates Defect Tag Non-Conf. ID #RMA602 to document the rejection of S/N 0375 9/14/05 – S/N 0384 rejected by RAC on QN #200597993 for gaps and bent condition. Part returned to TECT as ―Not acceptable for Production.‖ 9/21/05 – S/N 0382 and S/N 0388 rejected by RAC on QN #200599915 for bowed condition and QN #20059914 for tapering gaps respectively. Parts returned to TECT as ―Not acceptable for Production.‖ Also an entry on QN #20059914 states ―Again this is


70

not acceptable for RAC to gamble on trying to make work and then have a failure at our expense.‖ 9/30/05 - QN #200598905 was initiated by RAC (referencing QN #200577375) with a Temporary Disposition to Rework S/N 0375. There is no evidence of review and approval by DCMA. TECT issues Job Traveler #19740R602 for rework (Job Traveler unavailable)

(c) Serial Numbers 0382, 384 and 388

187. The following chronology relates to 133-100052-3 Serial Numbers 0382 through 0384 &

0388:

9/14/05 – S/N 0384 rejected by RAC on QN #200597993 for gaps and bent condition. Part returned to TECT as ―Not acceptable for Production.‖ 9/21/05 – S/N 0382 and S/N 0388 rejected by RAC on QN #200599915 for bowed condition and QN #20059914 for tapering gaps respectively. Parts returned to TECT as ―Not acceptable for Production.‖ Also an entry on QN #20059914 states ―Again this is not acceptable for RAC to gamble on trying to make work and then have a failure at our expense.‖

(d) Serial Numbers 0390 through 0396 188. The following chronology relates to 133-100052-3 Serial Numbers 0390 through 0396:

12/12/05 – Serial Numbers 0390 through 0396 submitted to RAC on VR and QN #20622086 generated by RAC. Temporary disposition ―Check fit parts at RAC.‖ 12/13/05 - Disposition DISAPPROVED by DCMA‘s Michael Fox. His disposition: ―leave parts at TECT until inspection table is reworked (check fixture) and certified for part locator buttons. A new First Article will also need to be performed due to locator button change.‖ 1/27/06 - S/N 0395 rejected at RAC on QN # 200632507 with disposition: ―TECT to reform at LH dihedral maintaining all B/P requirements and specifications‖ There is no indication that this disposition was sent to DCMA for review and approval.

(e) Job Traveler #24926-S, Serial Numbers 0398 through 0400, 0402, 0403 and 0405. 189. The following chronology relates to 133-100052-3 Serial Numbers 0398 through 0400,

0402, 0403 and 0405:

10/27/05 – TECT shipped SN 0398 thru 0400, 0402, 0403 and 0405


71

10/27/05 - RAC Source Inspection rejects S/N‘s 0398 & 0399 (2 each) then S/N‘s 0400, 0402, 0403 and 0405 (4 each) due to contour problems with the parts when loaded into the RAC check fixture at TECT. 10/28/05 - Variation Requests (VR) # 056564 and #056563 respectively were submitted by TECT to RAC. TECT also generates internal Defect Tag Non-Conf. ID #47388 for all 6 parts. RAC generates QM Notifications #200610460 for S/N‘s 0398 and 0399 (2 each) then #200610459 for S/N‘s 0400, 0402, 0403, and 0405 (4 each). 11/04/05 - DCMA‘s Bob Hopper, TSG0012, rejects RAC‘s disposition at Activity 0004 of both QN #200610459 and QN #200610460 respectively stating: ―DCMA, request C/A. We are releasing spar caps for fit check only. Do not use caps without Gov. concurrence first.‖ 11/07/05 - S/N‘s 0398, 0399, 0400, 0402, 0403 and 0405 ship from TECT per the DCMA disposition on the respective QN‘s. (2) Dialogue between RAC/HBC and the Wellington plant

190. During the period 2004 through 2006, the root causes of the rejected spars were discussed

by RAC/HBC and TECT Defendants in numerous meetings and correspondence. As

early as February 2005, RAC/HBC recognized that TECT Defendants unauthorized

rework procedures could induce defects. From February 28, 2005 through March 16,

2005 there were a series of e-mails among RAC‘s Michael Klepacki, Michael Londagin

(Metallurgical Process Engineer), Johnny Smith (Principal Multi-Disciplined Engineer -

RAC Delegated FAA Representative) and Andrew Snow (Sr. Process Engineer

Metallurgical Operations), about the risks and options for re-forming the 133-100052-3

spar caps. Mr. Snow wrote the following to Mr. Smith: ―Rework inherently adds risk of

induced defects. Reforming could cause isolated problems (macro and micro

cracks)…additional mechanical damage…exposed open grain…and residual stress from

reforming in critical areas.‖

191. On August 4, 2005, at a BAE System Supplier Meeting there was a presentation by RAC


72

and DCMA to TECT‘s immediate predecessor, BAE, concerning BAE‘s performance for

the period July 4 and 5, 2005. At the time, RAC had given BAE a quality rating of

―UNACCEPTABLE to MARGINAL.‖ Of the 153 total defects involving JPATS part

numbers identified by RAC as BAE‘s responsibility, 88% of the total defects (135 of

153) occurred during the period January 2005 through July 2005 and 69% of the total

occurred during the period May 2005 through July 2005. 133-100052-3 parts had 97 of

the 153 total defects or 63%. 20 of these 97 defects, or 21%, were classified as Gaps,

Material Missing, Dents, Misformed, Bowed and Low areas. RAC identified new issues

with 133-100052-3 parts in Lot # 19740 (same as Job Traveler #19740) received from

BAE and rejected by RAC in June 2005. Specifically, S/N‘s 0358,0359, 0361, 0366,

0370, 0374 and 0375 had excessive gaps when installed in RAC‘s assembly jig.

Additionally, S/N‘s 0358, 0361 and 0374 were bowed.

192. On September 22, 2005, RAC‘s Alex Anderson e-mailed TECT‘s Denise Fox and Mike

Kidder about non-conforming 133-100051-3 and 133-100052-3 spars for thin

spine/excessive gaps and bowed/twisted conditions respectively.

193. On October 21, 2005, Pat Blackwell, TECT Wellington‘s Operations Manager, e-mailed

David Nolletti, TECT Aerospace Vice President and General Manager, and other TECT

employees. Blackwell wrote: ―RAC has requested a visit to walk the JPATS process

flow - the spec for fracture critical parts is very demanding and we have some areas of

concern… RAC will also send a team to review the ongoing check fixture issues.‖

194. On November 15, 2005, RAC issued Corrective Action #200614451 (A) & (B) for 133-

100051-3 and 133-100052-3 respectively to TECT stating: ―Discrepancies seem to have

come from some form of hand forming by the supplier. Request C/A statement from the


73

supplier concerning noted condition.‖ TECT‘s response was due December 20, 2005.

195. On November 21, 2005, there was a meeting between TECT Defendants and RAC.

During the meeting, four parts were check fit in RAC‘s assembly jig with the following

results:

P/N 113-100051-3 (s/no‘s 0467 and 0471) twisted. P/N 113-100052-3 (s/no‘s 0394 and 0397). All 4 parts DID NOT conform to the assembly jig but appeared functional.

The meeting generated the following action items:

RAC to rework check fixture located at TECT. RAC to review drawing tolerances. TECT to submit all parts on VR‘s until check fixture rework is complete.

TECT‘s minutes of the meeting state: ―We do not want to hand form parts by bending to

fit the check fixture. Surfaces must be straight between the dihedral bends in order to fit

correctly on the assembly jig.‖

196. On December 12, 2005, RAC performed a tooling audit at TECT.

197. On December 14, 2005, TECT issued its C/A #200614451 (A) & (B) responses to RAC.

The referenced corrective action included both the 133-100051-3 and the 133-100052-3

spar caps. TECT‘s response includes the following comments:

DIRECT CAUSE OF CONDITION: ―Hump outboard of Rib 6 and 2 high areas inbd [inboard] of Rib 20 referenced in discrepancy are a result of HAND FORMING the part to the Raytheon supplied check fixture.‖

CONTRIBUTING CAUSES OF CONDITION: ―Raytheon check fixture has been

altered three times in the past ten months and the fixture tolerance has been changed correspondingly. TECT working with Raytheon found check fixture to not be measuring the same points as the assembly check fixture creating a conflict between acceptance fixtures… Causing excessive HAND FORMING was performed, to conform the part to the fixture.‖

DIRECT CORRECTIVE ACTION TAKEN: ―Currently as a temporary process

alteration, Raytheon has agreed to permit TECT to check the parts on the detail check fixture with NO HAND FORMING and opened the tolerance window on a verbal


74

agreement; parts are to be submitted on a VR for acceptance.‖ 198. On January 20, 2006, RAC/HBC‘s Perry wrote a memo to Roger Sabo, copied to Tim

Hayes. The memo concerns TECT‘s responses to #CA 200614451. It summarizes the

root causes of the spar discrepancies as:

Manual hand forming of localized areas on the spar caps when difficulty was encountered in form and fit to the check fixture

RAC check fixture did not match the RAC assembly fixture The engineering drawing tolerances

Corrective Actions included: Elimination of manual hand forming of spars in localized areas Current evaluation of spar cap forming operations Check fixture rework Increasing the engineering drawing profile tolerances

The changes were supposed to correct the issues with the spar caps and be effective on

S/N 0476 for the 133-100051-3 and S/N 0407 for the 133-100052-3.

199. In September 2006, RAC/HBC‘s Perry informed TECT‘s McGee that DCMA at

RAC/HBC was no longer signing off or accepting QM rework instructions for JPATS

Spars manufactured by TECT Defendants because of the continuing stream of QM‘s and

the lack of effective corrective actions.

3. Don Minge investigated TECT Defendants’ process for forming JPATS and King Air spars and began blowing the whistle 200. In September 2006, Minge was asked by TECT Aerospace‘s General Manager of

the Wellington Plant and Vice President, David Nolletti, and TECT Wellington‘s

Operations Manager, Pat Blackwell, to investigate why TECT Wellington had

approximately16 JPATS Spars worth approximately $70,000 that had been

rejected as scrap by Raytheon. Minge determined that because of discrepancies

like wavy and dished conditions on the spar flange common to the skin surface,


75

tapering of the spar flange at various locations causing the flange thickness to be

undersized and causing gaps between the flange and the skin during assembly at

RAC/HBC, twisted conditions, and improperly over-formed or under-formed

parts, many of the spars were scrapped when the parts would not fit in the

Raytheon-provided check fixture at TECT. Minge learned that TECT personnel

would grind and pry on the flanges to make them fit the check fixture. Minge

advised McGee, TECT Wellington Quality Assurance Manager, that those were

not acceptable shop practices.

201. In the fall of 2006, Minge participated in a meeting with Denise Fox, TECT

Program Manager for RAC; George Wetzler, TECT Sales Representative; Doug

Mattingly (―Mattingly‖), TECT Wellington‘s Engineering Manager, and McGee

to discuss why the spars had been rejected by RAC. During the meeting, when

Minge questioned Mattingly about non-compliant spars being ground and hand-

formed at TECT, Mattingly denied that TECT ever did those things.

202. Also in the fall of 2006, Minge, Denise Fox, and McGee met at RAC with RAC‘s

Jim Dolbee, Perry, RAC‘s Senior Supplier Quality Engineer, and Julie Duff, RAC

Buyer. During the meeting, Perry noted that the spars in question were rejected

because of wavy conditions and dished areas on the flanges.

203. Minge learned that on October 9, 2006, RAC rejected S/N 0452 and issued QN

#200704820, which identified a misformed area on the dihedral of the vertical leg.

The disposition was: ―Return to supplier as Scrap. Part is not acceptable for

rework.‖ RAC issued Corrective Action (―C/A‖) #200709299 as a result of this

rejection. In the C/A for S/N 0452, Perry reminded TECT that it had been


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previously counseled about hand-forming issues in a different corrective action

(C/A 200614451). Perry noted that 133-100052-3 was a Fracture Critical part.

Prior to the rejection of S/N 0452, TECT had promised RAC that it would resolve

its forming issues on these fracture critical spars. Despite that assurance, TECT

was still submitting parts that were obviously hand-formed.

204. On October 31, 2006, Perry requested specific manufacturing process information

relating to S/N 0452. RAC reviewed TECT‘s Job Traveler for S/N 0452. The

Job Traveler is the contractually required form that travels with the part and

describes sequentially each step in the manufacturing process. RAC Engineering

discovered that the BS25339 Hot Forming specification is called out on a fracture

critical part that should be cold formed.

205. On November 20, 2006, TECT submitted its response to C/A #200709299.

TECT said:

DIRECT CAUSE OF CONDITION: Form dies and pusher/rocker block did not hold part adequately causing vertical stem to WRINKLE.

CONTRIBUTING CAUSES OF CONDITION: Part missed straightening

operation during HAND FORMING.

DIRECT CORRECTIVE ACTION TAKEN: . . .submitted request for repair to RAC Engineering to straighten part that was dispositioned Scrap.

CORRECTIVE ACTION FOR CONTRIBUTING CAUSES: Initiated

work instruction to supplement traveler. Effectivity 11/10/06

206. On November 21, 2006, RAC rejected S/N 0450 and issued QN #200719210,

noting a dent in the radius of the intersection of the horizontal and vertical legs.

The spar was reworked at RAC and DCMA contracting officer at HBC, Michael

Fox, approved the disposition.


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207. On December 7, 2006, RAC‘s Perry wrote in an e-mail to TECT‘s Roll in

reference to S/N 0452: ―Meeting today raised engineering concerns involving

current manufacturing processes and methods used to form the spar

caps…Destructive testing to determine residual stresses may be required…This

activity may grow to include the 133-100051-3 also.‖ RAC Engineering

requested additional detailed information from TECT.

208. On January 5, 2007, Perry sent the following e-mail to McGee: ―RAC needs to know

whether any of the 133-100052-3 parts previously manufactured at TECT have actually

been Hot Formed in the past or whether this is just an error on the job traveler.‖ On

January 11, 2007, Perry told McGee this still needed to be addressed.

209. Minge discovered a January 20, 2006 RAC memo from Perry to Roger Sabo for

133-100051-3 & 133-100052-3 JPATS Spar Caps concerning #CA 200614451

issued in November 2005 to TECT. The memo notes that one of the causes of the

nonconforming spars was the manual hand-forming that TECT performed to force

the parts to fit the RAC-provided check fixture. In the memo, Perry

recommended the elimination of this practice.

210. On January 26, 2007, Perry told McGee that RAC Engineering wanted to review and

witness the forming rework suggested by TECT and the entire forming process,

preferably on a day that week. On February 14, 2007, Perry wrote to Denise Fox and

David Roll regarding the engineering review to be performed at TECT:

Rework process of S/N 0452 Rework process for a bowed spar Review normal forming process Review rework forming process TECT documents ―Temporary Disposition‖ from QN #200704820 for S/N 0452

to Defect Tag Non-Conf. ID #RMA1050. It requires RAC Engineering to witness


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rework process for S/N 0452. 211. On Thursday, February 22, 2007, an RAC Engineering Team witnessed TECT form a

133-100052-3 spar.

212. On Friday, February 23, 2007, Perry provided the following recap of RAC‘s engineering

review to Denise Fox, Roll and the RAC Engineering Team:

RAC witnessed only normal forming process on (1) part. RAC to return (1) obvious scrap part to TECT for rework and Engineering test. RAC to observe rework activity for the Engineering test specimens.

213. On March 22, 2007, Perry and Julie Duff coordinated with TECT‘s Brady

Lawrence in an attempt to schedule the remaining RAC Engineering Process

Review activities. RAC selected S/N‘s 0382, 0384 and 0452 for the review.

4. Don Minge found that TECT knowingly shipped and RAC/HBC knowingly accepted spars that were hand formed

214. Denise Fox, TECT‘s Program Manager for the Raytheon contracts, gave Minge a

spreadsheet (the ―Fox Spreadsheet‖)that she used to track 48 spars of Part

Number 133-100051-3 and 42 spars of Part Number 43 133-100052-3 rejected by

Raytheon dating to early 2004 and 2005 and which detailed the reasons for the

nonconforming parts, i.e. gaps, tapering gaps, out of contour conditions, mis-

formed areas, bent, wavy, low areas and bowing conditions which were all

indicative and representative of TECT‘s continuing unauthorized hand-forming

practices. The Fox Spreadsheet provides a snapshot of activity at TECT and HBC

to rework and to return, and to accept or scrap those spars as of September 2006.

215. Minge, as part of his investigation, reviewed a number of TECT documents that

elucidate the history and disposition of the rejected spars on the Fox Spreadsheet.

He reviewed Job Travelers. There is a Job Traveler for every lot of parts. A lot is


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comprised of a range of assigned serial numbers for the parts within the lot.

Using the serial number, it is possible to trace through TECT‘s documentation the

history and disposition of a specific part. The Job Traveler describes each

sequential step in the manufacturing process for the lot.

216. Minge also reviewed Variance Requests, Defect Tags, shipping documents and

Quality Alert Notification Forms to better understand whether the rejected spars

on Fox‘s spreadsheet were reworked by TECT and accepted by Raytheon,

dispositioned by Raytheon as ―use as is,‖ or dispositioned as ―scrap.‖

217. As for the 48 rejected spars of Part Number 133-100051-3 on the Fox

Spreadsheet, Minge concluded that TECT reworked and Raytheon eventually

accepted 34 spars (Serial Numbers ## 0291, 0343, 0347, 0350, 0351, 0362,

0363, 0365, 0369, 0374, 0387, 0395, 0396, 0405, 0414, 0436, 0442, 0451, 0452,

0453, 0454, 0456, 0457, 0458, 0460, 0462, 0463, 0464, 0465, 0466, 0467, 0468,

0469 and 0471), 9 spars were scrapped (Serial Numbers ## 0422, 0430, 0444,

0478, 0488, 0490, 0491, 0492 and 0499), 4 spars were unresolved (Serial

Numbers ## 0420, 0446, 0455 and 0538) and 1 spar showed conflicting

information as being both closed and scrapped (Serial Number # 0461).

218. As for the 41 rejected spars of Part Number 133-100052-3, Minge concluded

that TECT reworked and Raytheon eventually accepted 33 spars (Serial

Numbers ## 0208, 0276, 0279, 0299, 0303, 0304, 0306, 0308, 0309, 0313, 0314,

0317, 0327, 0332, 0338, 0344, 0369, 0374, 0390, 0391, 0392, 0393, 0394, 0395,

0396, 0397, 0398, 0399, 0400, 0402, 0403, 0405 and 0442), 1 spar was accepted

Use As Is by Raytheon (Serial Numbers ## 0388), 6 spars were scrapped (Serial


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Numbers ## 0294, 0300, 0361, 0382, 0384 and 0429), and 1 spar was open and

unresolved (Serial Number # 0375).

219. Several serialized parts which are included among the parts shown on the Fox

Spreadsheet are illustrative of HBC‘s knowing use of hand-formed spars and

deserve special discussion. Within Paragraph 187 above there is a reference to

Serial Number # 0388, Part Number 133-100052-3, which was hand-formed by

TECT, rejected by Raytheon, resubmitted by TECT and eventually accepted by

Raytheon for use ―as is.‖ Here is the history of the disposition of this part:

a. On September 21, 2005, Raytheon rejected Serial Number # 0388. Raytheon‘s

Quality Notification Form, QN #20059914, notes that: (1) the part had a tapering gap

that measured from .032 at L/H Rib 15 to .009 at L/H Rib 11 to .008 at Rib 1 to .009 at

R/H Rib 11 to .007 at R/H Rib 15 between the -3 and the jig locators; and (2) there were

3 gouges on the -3 that measured .160 long x .059 wide x .005 deep, .140 long x .054

wide x .004 deep, and .300 long x .044 wide x .003 deep. Raytheon wrote on the form,

―Again this is not acceptable for RAC to gamble on trying to make work and then have a

failure at our expense.‖

b. On November 30, 2005, Serial Number # 0388 was returned to TECT as ―Not

Acceptable for Production.‖

c. TECT reworked and resubmitted Serial Number # 0338 to Raytheon.

d. On April 6, 2006, Phil Perry, Raytheon quality engineer, requested that TECT

check the Serial Number # 0388 using the Raytheon-supplied check fixture and then

resubmit the spar to Raytheon on a Variance Request.


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e. On November 8, 2006, TECT returned Serial Number # 0388 to Raytheon for

review on Miscellaneous Shipper # 1727.

f. On January 7, 2007, Raytheon prepared QN #200695301 for the re-submittal of

several parts, including Serial Number # 0388, for final engineering disposition.

Raytheon changed the designation on Serial Number # 0388 from unacceptable to

use as is.

220. Here is the history of the disposition of Serial Number # 0299, Part Number 133-

100052-3, which serialized part is mentioned at ¶ 184 above:

a. On May 20, 2004, Raytheon rejected Serial Number # 0299 on QN #200478186

for tapering gaps and returned the part to TECT.

b. TECT reworked Serial Number # 0299 on Job Traveler #09882R298 as

referenced on TECT Defect Non Conformance Tag #35377. TECT‘s internal documents

show that the rework consisted, among of things, of hand-forming the part to fit the check

fixture.

c. This rework occurred before Raytheon provided the rework process instructions

Serial Number # 0299 on QN # 200544987, dated March 5, 2005.

d. After receiving Raytheon‘s instructions, TECT realized that those instructions

required parts to undergo eddy current inspection for cracks. TECT had not subjected the

referenced parts to this process. So on March 15, 2005, TECT prepared Defect Non

Conformance Tag # 35377 and a new rework Job Traveler # 09882D5362 for an eddy

current inspection.

e. Eddy current inspection is one of several non-destructive test methods that use the

principal of ―electromagnetism‖ as the basis for conducting examinations. Defects such


82

as cracks are detected when they disrupt the path of eddy currents and weaken their

strength. Eddy current tests are best used for detecting surface cracks; such testing may

not detect cracks within an object or reduced resistance to stress-corrosion cracking.

e. On April 21, 2005, Serial Number # 0299 was eddy current inspected by Metal

Finishing Co., Certification #569428.

f. On October 14, 2005, Serial Number # 0299 was shipped to Raytheon.

g. Minge saw no subsequent QNs or any record that the part was returned to TECT.

The Fox Spreadsheet shows these parts as ―closed,‖ which Minge understood to mean

―accepted‖ by Raytheon for use on planes.

221. Here is the history and disposition of Serial Numbers # 0398, 0399, 0400, 0402,

0403 and 0405, Part Number 133-100052-3, which serialized parts are mentioned

at ¶ 189 above:

a. On October 27, 2005, on Job Traveler # 24926-S TECT noted final acceptance of

Serial Numbers # 0398, 0399, 0400, 0402, 0403 and 0405 at step # 140 by stamp # MI

41.

b. On October 27, 2005, Raytheon Source Inspection rejected Serial Numbers #

0398, 0399, 0400, 0402, 0403 and 0405 due to contour problems with the parts when

they were loaded into the Raytheon check fixture at TECT.

c. On October 28, 2005, TECT submitted the parts on Variance Requests # 056563

and 056564. TECT also created an internal Defect Non Conformance Tag #47388 for all

six parts.

d. Raytheon created Quality Alert Notification Forms ( #200610459 and

200610460) for the six parts.


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e. On November 4, 2005, DCMA‘s representative at Raytheon rejected Raytheon‘s

disposition at Activity 0004 on both QNs, stating, ―DCMA, request C/A [corrective

action]. We are releasing spar caps for fit check only. Do not use caps without Gov.

concurrence first.‖

f. However, on November 7, 2005 TECT had shipped the parts to Raytheon on

Packing Slips #33880 and 33881.

g. Minge saw no subsequent QNs or any records that the parts were returned to

TECT. The spreadsheet prepared by Denise Fox shows these parts as ―closed.‖ , which

Minge understood to mean accepted by HBC for use of plans.

222. Here is the history and disposition of Serial Numbers # 0394 and 0397, Part

Number 133-100052-3, which serialized parts are mentioned at ¶ 174 above:

a. On April 26, 2005, TECT issued Job Traveler # 24926 for the manufacture of

seventeen parts (Part Number 133-100052-3), including serial Numbers # 0394 and 0397.

a. On October 21, 2005, Pat Blackwell, TECT Wellington‘s Operations Manager, e-

mailed David Nolletti, TECT Aerospace Vice President and General Manager, and other

TECT employees. Blackwell wrote: ―RAC has requested a visit to walk the JPATS

process flow - the spec for fracture critical parts is very demanding and we have some

areas of concern… RAC will also send a team to review the ongoing check fixture

issues.‖

b. On November 15, 2005, RAC issued Corrective Action #200614451 (A) & (B)

for 133-100051-3 and 133-100052-3 respectively to TECT stating: ―Discrepancies seem

to have come from some form of hand forming by the supplier. Request C/A statement

from the supplier concerning noted condition.‖ TECT‘s response was due December 20,


84

2005.

c. On November 21, 2005, there was a meeting between TECT and Raytheon.

During the meeting, four parts were check fit in RAC‘s assembly jig, including Serial

Numbers # 0394 and 0397, and none of the parts conformed to the assembly jig. TECT‘s

minutes of the meeting state: ―We do not want to hand form parts by bending to fit the

check fixture. Surfaces must be straight between the dihedral bends in order to fit

correctly on the assembly jig.‖

d. On November 29, 2005, TECT reworked Serial Numbers # 0394 and 0397 using

Job Traveler #24926-S1.

e. TECT submitted Serial Numbers # 0394 and 0397 to Raytheon on a Variance

Request as a result of a deviation at the Raytheon supplied check fixture.

f. On December 7, 2005, Raytheon issued QN #200620858 allowing TECT to ship

Serial Numbers # 0394 and 0397 and Raytheon to use the parts. The parts were shipped

on packing slip #35445.

g. The spreadsheet prepared by Denise Fox shows these parts as ―closed.‖, which

Minge understood to mean accepted for us on airplanes.

223. Here is the history and disposition of Serial Number # 0452, Part Number 133-100052-3,

which serialized part is mentioned at ¶¶ 203, 204, and 207 above:

a. On September 27, 2006, TECT shipped to Raytheon Serial Number # 0452 on

packing slip #46854.

b. On October 9, 2006, Raytheon rejected Serial Number # 0452 and issued QN

#200704820, which identified a mis-formed area on the dihedral of the vertical leg. The

disposition was: ―Return to supplier as Scrap. Part is not acceptable for rework.‖


85

c. Raytheon issued Corrective Action (―C/A‖) #200709299 as a result of this

rejection. In the C/A, Phil Perry reminded TECT that it had been previously counseled

about hand-forming issues in a different corrective action (C/A 200614451). Perry noted

that 133-100052-3 was a Fracture Critical part.

d. On October 31, 2006, Perry requested specific manufacturing process information

relating to Serial Number # 0452. Raytheon reviewed TECT‘s Job Traveler for Serial

Number # 0452. Raytheon admonished TECT that the BS25339 Hot Forming

specification is called out on the Job Traveler, even though this fracture critical part

should not be hot formed.

d. On November 20, 2006, TECT submitted its response to C/A #200709299.

TECT said:

DIRECT CAUSE OF CONDITION: Form dies and pusher/rocker block did not hold part adequately causing vertical stem to WRINKLE.

CONTRIBUTING CAUSES OF CONDITION: Part missed straightening

operation during HAND FORMING.

DIRECT CORRECTIVE ACTION TAKEN: . . .submitted request for repair to RAC Engineering to straighten part that was dispositioned Scrap.

CORRECTIVE ACTION FOR CONTRIBUTING CAUSES: Initiated work

instruction to supplement traveler. Effectivity 11/10/06

e. On December 7, 2006, Phil Perry wrote an e-mail to TECT‘s David Roll

concerning Serial Number # 0452: ―Meeting today raised engineering concerns

involving current manufacturing processes and methods used to form the spar

caps…Destructive testing to determine residual stresses may be required…This activity

may grow to include the 133-100051-3 also.‖

f. In a February 14, 2007 e-mail Phil Perry advised TECT that Raytheon


86

Engineering wanted to witness the rework process for Serial Number # 0452.

g. On February 14, 2007, TECT documented a ―Temporary Disposition‖ from QN

#200704820 for Serial Number # 0452 on Defect Non Conformance Tag # RMA1050,

noting that the disposition required Raytheon to witness the rework process.

h. In early April 2007, Phil Perry notified TECT of a planned formal review by

Raytheon Engineering of the rework forming process for three serial numbers, including

Serial Number # 0452.

i. On April 24, 2007, TECT issued Job Traveler #35279R1050 for the rework of

Serial Number # 0452.

j. On May 3, 2007, Phil Perry, accompanied by Peter Gould, HBC Head Structures

Engineer JPATS, and Byron Colcher, HBC Process Engineering JPATS, arrived at TECT

to view the rework process for the JPATS spars. The HBC engineers told Minge, and

other TECT employees who accompanied Minge, that they wanted to first verify that

three spars rejected by HBC, including Serial Number # 0452, were non-conforming

using the HBC-provided check fixture. They said that the discrepancies of the three parts

represented ―marginal, bad and worst‖ conditions. Serial Number # 0452, identified as

the ―worst‖ part, was loaded in the check fixture. TECT and HBC agreed that the part

was non-conforming. Next, HBC asked to witness the rework of Serial Number # 0452

back to engineering drawing requirements. TECT, without success, attempted to rework

Serial Number # 0452 to remove a bowed condition using an Enterpac press with 5,000

pounds maximum pressure—an authorized process. HBC did not witness any effort to

rework any of the parts using hand-forming techniques.

k. From May 21, 2007 through June 6, 2007, Minge exchanged e-mails with Phil


87

Perry concerning data from the attempt to rework Serial Number # 0452 on May 3, 2007.

l. On May 30, 2007, TECT received authorization from HBC to ―go ahead and

proceed with the forming of the 101-120127-19 parts in order to complete the matched

sets which include the existing -33 and -35 parts that have already been through the hot

form operation.‖ HBC noted that ―parts will need to be submitted on variation requests

until HBC engineering has completed the linking of engineering, specifications and

material work out.‖

5. HBC’s visit to TECT in May of 2007 and the follow-up investigation

224. In early April 2007, Perry notified TECT of a planned formal review by RAC

Engineering of the rework forming process for three serial numbers, including

S/N 0452, for JPATS spar Part Number 133-100052-3.

225. On April 17, 2007 a group of TECT Wellington employees met to discuss the

rework process for the JPATS spars and to prepare for the RAC Engineering

Team‘s review. Kenny McEntire (―McEntire‖), supervisor of the form shop, told

the group, including Kiehl, that JPATS wing spars (Part Numbers 133-100051-3

and 52-3) were being ―reworked‖ with a sledgehammer, a process he referred to

as ―benching.‖ Kiehl attended the meeting in his role as Engineering Manager.

Among others, TECT‘s Plant Manager, Gary Giles, and a manufacturing

consultant to TECT, George Voorhees, attended the meeting. Kiehl was shocked

that a sledgehammer was used, as that kind of impact would be unacceptable on a

critical or fracture critical part and would violate the above specifications. He

expressed his concern to others at the meeting. When asked who instructed the


88

shop employees to use a hammer on fracture critical parts, McEntire responded

that ―they had always done it this way.‖

226. Kiehl called Minge at home that night and reported what he had learned during

the April 17 meeting. Minge was not aware of the use of a hammer on critical or

fracture critical parts. Minge told Kiehl to go to the shop floor and start

investigating whether sledgehammers were used on JPATS spars (Part Numbers

133-100051-3 and 52-3).

227. Over the next few days, Minge, Kiehl and Roll conducted their own investigation

and confirmed what McEntire had said. Kiehl asked employees on all shifts how

they reworked the JPATS spars. They responded that pry bars and sometimes

hammers were used to form the parts so that they would fit into the check fixture.

228. After Kiehl told Minge what he was told by employees in the shop, Kiehl, Minge

and Roll went together to the shop floor to inspect the JPATS spars. In the shop,

while standing near the RAC-supplied JPATS check fixture, Kiehl heard a loud

banging noise and saw an employee hitting King Air spars (parts number 101-

120127-33 and -35) with a hammer.

229. Minge, in the presence of Kiehl and Roll, interviewed one of the operators, Robert

Higginbotham (―Higginbotham‖), about the process he used to remove the

wrinkles from the King Air spars. At Higginbotham‘s work station there was an

order on a wheeled rack that was still hot from the hot forming process. Minge

asked Higginbotham to demonstrate exactly what he would do to the parts to

remove the wrinkles. In a mock demonstration, Higginbotham showed and

described how he would take a part off the rack, place it on a table adjacent to the


89

stretch forming machine and set it on blocks at the HBC check fixture. Minge

asked Higginbotham what he would do next. Higginbotham pointed to an

aluminum hammer lying on the machine. Higginbotham stated, ―I take that non-

metallic aluminum hammer over there and I commence to bashin‘ the part.‖

Minge was shocked by what he heard. Higginbotham then pointed to a coworker,

flexed his bicep muscle and stated, ―He can‘t do it as good as me.‖ There was a

part on the blocks that he had reworked using this process.

230. Minge, Roll and Kiehl saw that the parts that had been hit with a hammer showed

dents and hammer marks. They took pictures of the parts with Minge‘s cell

phone. They also photographed the hammer and the wrinkled parts on the

wheeled rack.

231. Minge asked Higginbotham how long this process had been used to remove the

wrinkles on the spars. Higginbotham responded that, as far as he knew, it had

been used as long as Wellington had made the parts.

232. Minge and Kiehl reviewed TECT‘s Job Traveler. Every lot of parts is

accompanied by a Job Traveler and each step in the process is to be performed

sequentially. The form is to be signed or stamped (if by an inspector) as each step

is completed. The Job Traveler for the King Air spars (parts number 101-120127-

33 and -35) described the step in which the employee had used a hammer as

―Bench as Required.‖ The next step on the Job Traveler was ―Blend benching

marks as required.‖ None of the documentation traveling with the spars provided

employees with rework instructions or workmanship criteria to ensure products

met drawing specifications and contractual requirements.


90

233. The Job Traveler for JPATS spars Part Numbers 51-1, 51-3, 52-1 and 52-3

suffered the same deficiency and both violated AS 9100 Section 7.5.1.1 titled

―Production Documentation‖. The Job Travelers also violated BS25116, Rev. 8,

3.9 which applied to Part Number 133-100052-1 and 52-3. HBC knew of the Job

Travelers‘ inadequacies and the unauthorized hand-forming/benching of the

manufactured spars that were sold to the United States.

234. Alarmed, Kiehl placed all King Air spars (Part Numbers 101-120127-33 and -35)

that had been formed in the shop, including those he had witnessed being

―bashed‖ that day, on Engineering Hold to prevent them from being shipped to

any customers. Kiehl and Minge told the shop to stop using hammers on airplane

parts. Kiehl and Minge agreed that because of the serious far reaching

ramifications of what they had seen and had been told, they would seek guidance

from HBC Engineering before removing the Engineering Hold.

235. Kiehl told Chuck Gumbert, TECT Wellington‘s General Manager, Voohrees and

Giles on April 23, 2007 what Kiehl and Minge had observed. Kiehl assumed

HBC Engineering was unaware of the shop floor ―bashing.‖ Kiehl suggested

working with HBC Engineering to establish and implement necessary corrective

actions to ensure compliance with drawing specifications and contractual

requirements. Both Gumbert and Voorhees asked Kiehl whether he had created

any documentation about the ―bashing‖ he had observed.

236. On April 27, 2007 Kiehl and Minge again discussed with Gumbert what both had

seen and heard and been told on the shop floor.


91

237. Initially, Gumbert told them that they were mistaken and that the term ―benching‖

did not mean use of a hammer; it meant grinding. When both reported that they

had seen a hammer and that Kiehl had seen it being used, Gumbert commented

that at least there were no pictures of hammered parts. Minge told Gumbert that

he had used his cell phone camera to take pictures that documented what he saw.

Both Minge and Kiehl suggested that customers, including HBC, would need to

be informed that the critical and fracture critical parts had been treated

inappropriately because hammering was ―impact loading.‖ At that time, Kiehl

and Minge believed that HBC did not know that impact loading was taking place

on King Air and JPATS spars. Since then, Kiehl and Minge have learned that

HBC employees, including Mark Murray and others, were aware of TECT

Defendants‘ unauthorized manufacturing processes of spars and allowed the spars

to be placed on aircraft sold to the Government.

238. Kiehl and George Voorhees advised John Kelley of HBC that TECT required

engineering assistance on the King Air spars. Kelley replied that HBC would

discuss this during a scheduled visit to TECT on May 3, 2007, the purpose of

which was to view rework of JPATS spars.

239. On April 30, 2007, Kiehl sent an e-mail message to Phil Perry and Julie Duff

advising of problems with the rework forming process and that, as a result, parts

were on Engineering Hold. Kiehl wrote,

On p/n 101-120127 there is a callout to hot form per BS 25339. The 101-120127‘s are made from alloy 7050 and this alloy is not covered under the BS 25339. Included in the BS spec is PS54240 which allows for forming alloy 7050 in-house at RAC only.


92

The other problem we have is that per section GG we have 4 waves some with over .04 from crest to valley. We can change the process to machine this area after form so we will have 0.0 crest to valley. But the print allows rework / straightening after machining but the spec BS25339 strictly forbids rejoggling due to excessive depth (wave valley to wave crest?) I have these parts on hold until we can resolve and they are going critical soon. Sorry to hit you with this after we have been making these for 20 + years but I have been investigating many for the processes and any discrepancies I am working to resolve.

240. HBC was scheduled to observe rework on the JPATS wing spar (Part Numbers

133-100051-3 and 52-3) on May 3, 2007. Kiehl asked HBC to have an engineer

among the HBC team.

241. On May 1, 2007, Kiehl sent the following e-mail to Ken McEntire regarding HBC‘s visit on May 3:

Have you been able to successfully perfect the spar rework procedure using the interpack [sic]? They will also be looking at the 127 spars that had the waviness. Possibly rework may be one hot (hot will require a preheat of the dies or tools contacting the part) & one cold….. Currently there is no allowable rework on these so I have asked for help as we have never seen this condition before. Don‘t rework many pieces as I fear that any rework will be cause for rejection…per their spec. The metalergist [sic] & QE will most likely ask many questions so we need to prepare for this.

242. The night before the HBC visit, another contractor, Vought, called and told Roll

that a spar (Part Number 17P476074-502-901) had failed a residual stress test.

Roll told Kiehl who called Gumbert on his cell phone and asked Gumbert to call

him immediately because of concerns about the strength of the spar. Gumbert did

not return his call.

243. HBC arrived at TECT in the morning of Thursday, May 3, 2007 to review the


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rework process for the JPATS spars. Phil Perry was accompanied by Peter

Gould, HBC Head Structures Engineer JPATS, and Byron Colcher, HBC Process

Engineering JPATS. Kiehl was told in advance that these engineers would

forward any findings on the 127-33‘s and -35s to Michael Londigan, HBC

Process Engineer King Air. Minge and Kiehl accompanied the HBC engineers to

an inspection of the process for rework of the JPATS spars (Part Numbers 133-

100051-3 and 52-3). None of the nonconforming JPATS spars was successfully

reworked in HBC‘s presence. HBC did not review or witness TECT‘s rework

forming methodologies and processes used to make the parts fit the check fixture

(other than trying to remove a bowed condition on a JPATS 52-3, s/n 0452) as

they claimed they would do prior to the visit. At the time, Minge and Kiehl

believed that HBC was unaware of the deficiencies in TECT‘s non-compliant

manufacturing processes. In fact, HBC employees, including Mark Murray and

others, were aware that the spars were being formed in conflict with drawings,


244. During the May 3 visit, Minge and Kiehl asked HBC to review the King Air -127

spars that were on Engineering Hold. The HBC Engineers agreed to do this, but

stated they would have to pass the information on to the appropriate HBC King

Air Process Engineers. After reviewing the wrinkled condition of the King Air

parts, HBC asked how the wrinkles were removed. Kiehl told them that the parts

were ―benched.‖ In addition, he told them that TECT used the same process on

the JPATS spars. Minge and Kiehl advised HBC that the King Air parts were

7050 aluminum and that TECT had no authorization to hot form them per


94

BS25339. HBC asked how long this had been done and Minge and Kiehl replied

that they believed it was as long as Wellington had been producing the parts. As

they were leaving the shop, the HBC engineers stated that it was situations like

this that could affect the entire King Air fleet and cause people to lose a lot of

sleep. Everyone agreed the King Air parts should remain on Engineering Hold

until HBC and TECT resolved the problem. Perry asked Minge and Roll to visit

the HBC JPATS assembly line the next day to look at a part that was out of

contour causing a gap during the assembly process. Minge and Roll agreed to do

this.

245. HBC failed to perform proper supplier surveillance activities to ensure products

manufactured by TECT Defendants met contractual requirements as required by

the Government contracts and FAA regulations, FAR Part 21, Subpart G, and

AIR-200, AC No. 21-20B, titled ―Supplier Surveillance Procedures.‖

246. HBC failed to take appropriate root cause corrective actions with TECT

Defendants to preclude continuing violations of contractual requirements.

247. The TECT Defendants had attempted to conceal its unauthorized rework and

impact loading (―benching‖) on part number 133-100052-3(and its predecessor

52-1) in violation of BS25116, Rev. 8, ¶ 3.9.

248. HBC was aware of the improper and unauthorized manufacturing methods used

on the JPATS spars and of the spars non-compliance with the drawing

specifications and contractual requirements and, despite the parts‘ deficiencies,

accepted the parts and placed them on the JPATS airplanes.

6. Mid-investigation, Kiehl is disciplined for allegedly falling asleep in a sales meeting


95

249. On May 3, during the outbriefing with the HBC visitors about quality issues Kiehl

believed may be fraudulent, Kiehl was paged and asked to go to Gumbert‘s office.

When Kiehl arrived Gumbert suspended him for two days for allegedly falling

asleep in a sales meeting earlier that morning. Gumbert told Kiehl that he was

going to think over the weekend about whether Kiehl still had a job. Kiehl was

not allowed to go to his office. Gumbert said that he would lock it up for him.

When Kiehl was last in his office, his laptop was there. Gumbert said that they

would discuss Kiehl‘s future employment on the following Monday.

250. On May 4, 2007, Minge and Roll visited the HBC JPATS assembly line with

Perry. They saw the gap discrepancy mentioned by Perry. Also, they mentioned

that TECT was waiting for HBC Engineering to address the issue of hot forming

the King Air parts, Part Numbers 101-120127-33 and -35. Minge and Roll agreed

to continue with the Engineering Hold pending guidance from HBC‘s engineers.

251. During the May 4 tour, Roll received a call from McGee about the Engineering

Hold on the King Air parts. Roll told McGee that they were working with HBC

Engineering on the issue. Roll then handed the phone to Minge. McGee told

Minge that some -127 parts had just returned from outside processing and that

Gumbert had instructed him to ship the parts that day. McGee asked whether the

Engineering Hold had been lifted and Minge confirmed that the hold was still in

place. Several minutes later, Gumbert called Roll. They discussed the

Engineering Hold. Gumbert told Roll that the parts were in shipping and that he

wanted them shipped by noon. Minge told Roll that he would not allow non-

conforming parts to be shipped to HBC.


96

252. Minge called Kiehl, who was at home because of the suspension. Minge asked

Kiehl whether he had removed the Engineering Hold. Kiehl denied it. Minge told

Kiehl that Gumbert was trying to ship the wing spars.

253. Minge drove to the Wellington facility and placed rejection tags on the 101-

120127-33 and -35 so that they would not be shipped. Gumbert told Minge that

the rejection tags meant Gumbert would not ―hit his numbers.‖ Later that

afternoon, Minge defended his decision and told Denise Fox, TECT Program

Manager, Gumbert and Vorhees that when HBC requested official submission of

the parts to HBC Material Review Board for evaluation, he would be required to

disclose to HBC that a hammer was used to remove wrinkles from King Air spars.

Minge thought at that time that HBC was not aware of the improper formation of

the JPATS and King Air spars. Since then, Minge and Kiehl have learned that

HBC employees, including Mark Murray and others, were aware that the

manufacturing processes and the spars manufactured by TECT did not meet the

drawing specifications and contractual requirements. Minge told the other TECT

employees that he would tell HBC the truth because he ―was not going to prison‖

for anyone.

254. Kiehl, after speaking to Minge, called Bill Jones, HBC‘s Director of

Manufacturing Engineering, to say that TECT might ship parts that were on

Engineering Hold. Kiehl told Jones that the parts had been reworked with a

hammer. Jones told Kiehl that if HBC received the parts he would quarantine

them.

255. Kiehl then sent the following e-mail message to Gumbert: ―I do not know how to


97

respond to HawkerBeech‘s questions regarding spars. Who do you want to direct

them to; as resolution is on hold.‖

7. Kiehl is fired and harassed for investigating the false information the TECT Defendants had been supplying

256. Early in the morning of Monday, May 7, 2007, when Kiehl reported to Chuck

Gumbert after his suspension, he referred to himself as ―your whistleblower.‖

Kiehl had a good faith belief that TECT Defendants‘ activities violated the False

Claims Act Gumbert did not respond, other than to say he was busy with an e-

mail. Kiehl went to his own office and noticed his laptop was not there. He

assumed that Gumbert had taken it. Later in the morning, Gumbert and the

Human Resources manager, Linda Coleman, told Kiehl that Gumbert had decided

over the last four days that falling asleep in a meeting was a ―heinous offense‖

and that TECT Defendants were firing him for it. Kiehl was terminated in

retaliation for his protected activity under the False Claims Act, including but not

limited to his investigation of the nonconforming spars even after management

discouraged it, for placing the -127 King Air parts on Engineering Hold, for

suggesting he was a whistleblower, for his communications with HBC about the -

127 King Air parts. His termination was to retaliate against him for his

investigation and plan to report TECT Defendants‘ False Claims activities and to

intimidate his fellow employees.

257. After he was fired, Kiehl was not allowed to go to his office. Gumbert said he

would have Kiehl‘s personal belongings delivered to him.


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258. Within three days, TECT Wellington filed suit in Sumner County district court

against Kiehl. In the suit TECT requested a restraining order and injunction that

would prohibit Kiehl from communicating with his former coworkers or anyone

else (including the Government or HBC) about TECT Wellington‘s ―operations,

activities or business.‖ The lawsuit also included five separate causes of action

and accused him of theft and disloyalty and divulging trade secrets and asked for

damages in excess of $75,000.

259. Ostensibly because of its lawsuit against Kiehl, TECT Wellington instructed other

employees who were involved with the wing spar quality issues with HBC and

had contact with Kiehl to write a time line of everything they knew about the

quality problems, including the part bashing and about Kiehl. They were

instructed to forward to management all e-mails sent to and received from Kiehl.

They were also instructed to report to HR if they were contacted by Kiehl. Roll

was then called in and told that management had reviewed his time line. He was

told that his time line was too detailed and made Gumbert look bad. The purpose

of the time line request and the instruction not to talk to Kiehl was to intimidate

the remaining employees and to prevent Kiehl‘s from reporting TECT

Defendants‘ false claims to the Government or to HBC. This caused Kiehl severe

emotional distress.

260. While the Sumner County lawsuit was pending, Kiehl interviewed for a job and

was told that the company would like to hire him, but it was afraid to do so while

he was in litigation with TECT Aerospace. Kiehl‘s job search efforts were


99

significantly curtailed by the litigation as well. This caused Kiehl severe and

extreme mental distress.

261. After a short time, TECT Wellington voluntarily dismissed the lawsuit.

8. Minge continues to advocate that the false statements about the wing spar’s manufacture must be disclosed

262. On May 7, 2007, there was a conference call with HBC. Participating in the call

for TECT were Minge, Roll, Gary Giles, plant manager, Fred Wiedower, the

production control manager, and Denise Fox. On the call for HBC were, Perry,

Michael Londagin, HBC King Air Process Engineer, and HBC‘s Dave Harvey.

HBC asked why Kiehl was not joining the call. Giles responded that Kiehl was

―no longer there.‖ There was a discussion about the nonconforming King Air

spars. HBC requested that those spars (Part Numbers -33 and -35) be submitted

to the HBC Material Review Board for evaluation by their engineers using

Variation Requests forms (hereinafter ―VRs‖).

263. By established practice and procedure, when a part was rejected the part should

have been tagged with a reject tag. The reject tag would describe the discrepancy

that caused the rejection in detail so that the HBC Liaison Engineers could decide

whether to rework, scrap or repair the nonconforming part. The part would be

held in the DMR cage at TECT until HBC Engineering told TECT what to with

the part.

264. When a part had been rejected, TECT Defendants should have written and

submitted a VR using the HBC website portal. HBC Engineering staff would


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review the VR. If the part was a JPATS fracture critical part, HBC was required

to provide DCMA the relevant nonconformance documentation for their review

and approval, or disapproval, of HBC‘s disposition.

265. During the May 7 conference call, HBC mentioned that it might conduct

destructive testing of parts.

266. Following the conference call, Minge told Giles, and Wiedower, and Roll that he

felt he had to ―disclose everything to Raytheon‖ and ―do what was required‖

because the situation was serious enough to involve the FAA and could affect the

King Air fleet. He said he was ―not going to prison for TECT.‖ Minge had a

good faith belief that TECT Defendants‘ activities violated the False Claims Act.

267. On May 10, 2007, Minge received a copy of the following e-mail from Roll to

Fox: ―This morning I received a call from Phil Perry. Phil has been ‗queued

back‘ from the Engineer regarding the subject part numbers and VRs . . . he said

the Engineer wanted to know why TECT is hot-forming the parts?‖

268. On May 10, 2007, Minge and McGee called Perry. Minge suggested that HBC

conduct destructive testing on older parts as well. Perry agreed with this and said

he would recommend it to Londagin, but that Perry did not know whether any of

the older parts were available for testing.

269. On May 11, 2007, Minge and McGee advised Perry that there were 3 older -127‘s

that had been submitted to HBC for disposition and on which an HBC response

was pending. They suggested that those parts be considered for testing. Perry

thanked them and said that HBC Engineering was meeting at 2:00 that afternoon


101

and they might want Minge to join the meeting by telephone. Minge agreed to do

this, but he never received a call.

270. Minge was in his TECT Wichita office the morning of May 15, 2007 when he

received a telephone call from Gumbert stating that HBC had arrived to conduct

an unannounced audit of TECT Wellington‘s manufacturing process for the King

Air spars (Part numbers 101-120127-33 and -35). Minge promised to come to

Wellington as soon as he could.

271. That same morning, Roll sent the following e-mail message to Minge: ―I spoke

with Mike Martin, Form shop, regarding how materials which have been hot

formed are being handled, currently. Mike works with Mr. Higginbotham. Mike

told how they used to beat the parts but that after the hammers were taken away

the process for straightening wrinkles caused by forming is to use a ‗Wrinkle

Bar,‘ as much as possible. He said after they have straightened the wrinkles as

good as they can, the parts go to the Debur shop where the parts are deburred

where he is sure some of the wrinkles become less noticeable.‖

272. Minge arrived at the Wellington plant around noon on May 15. He met with Roll

and then the two of them met with Giles. Giles said that HBC wanted to

interview shop personnel as to how they removed wrinkles in the parts. Giles

noted that if he was asked he would say that the wrinkles had been removed by

placing an aluminum block on wrinkles and striking the block with the aluminum

hammer. Giles asked Minge what he would say if asked about the process.

Minge said that he would tell the truth and he and Giles had a heated discussion.


102

273. Minge went into the ―Red Room‖ and introduced himself to the HBC Team,

comprised of Perry, Rick Friesen, NDT Specialist, and John Sattler, QE and Audit

Team Leader. Michael Londagin, King Air Process Engineer, and Julie Duff

HBC Buyer had been part of the team but they had returned to HBC before Minge

arrived. As part of the audit, the HBC team interviewed the shop workers. Each

worker gave an almost verbatim answer to questions about rework on the King

Air spars that described using a hammer and an aluminum block to remove the

wrinkles in the parts. Employees did not reveal having ―bashed‖ parts directly

with an aluminum hammer during rework. Following the interviews, Sattler

stated that based on what the operators had said, the description in the VRs as to

how the wrinkles were handled was misleading. Minge then told Sattler that he

had written the VRs in question and that they accurately stated what the operators

had demonstrated and described to him. Minge then told Sattler what he had

learned from an operator. Sattler told Minge that he was trying to find a way to

help TECT and to sell the existing process to HBC Engineering. Minge

questioned whether impact loading of the spars, with or without a block, was

permitted by the BS25339 specification.

274. HBC returned to the Wellington plant on May 16, 2007 to view the hot forming

and wrinkle removal processes. Sattler, Londagin, Giles, McIntire and Minge

went out on the shop floor while Perry, Friesen and Roll reviewed the -127 job

routers, hot forming temperature logs and other records. While Sattler and

Londagin were on the floor, a part was made that had wrinkles and a shop worker

held an aluminum block against it and hit the block with a hammer. A total of six


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findings were issued by HBC with multiple violations within each finding. Sattler

conceded that the VRs in question were properly written by Minge and that

striking the parts was in violation of the BS25339 specification.

275. During the May 16 visit, Michael Londigan worked with a TECT shop employee

and developed a process to use a press to smooth the wrinkles in King Air spars

(Part Numbers 101-120127-33 and -35). HBC told Kenny McEntire to create a

written work instruction for straightening wrinkles with a press rather than with a

hammer and submit it to HBC for engineering approval.

276. During the evening of May 16, Minge told Kiehl that he felt that Perry and Sattler

were trying to minimize the fact that TECT Defendants were using hammers to

form spars. Minge told Kiehl of Sattler‘s statement on May 15 that he thought he

could sell TECT‘s process to HBC Engineering.

277. On May 17, 2007 Kiehl called Londagin, who Kiehl knew from his days at RAC.

Kiehl told Londagin about what Minge had told him about Perry and Sattler.

Kiehl was concerned that HBC was trying to sweep the issue under the rug.

Londagin stated to Kiehl, ―Well, someone way up in HBC Quality said to make

this all go away!‖

278. During the May 17 call, Kiehl told Londagin he was very upset that he blew the

whistle to HBC, that he lost his job as a result, and that HBC wanted to cover it

up. Kiehl then told Londagin that the TECT Defendants were lying about their

use of hammers in the rework process and that he had photographs to prove this.

279. Kiehl then e-mailed those photographs to Londagin and copied the e-mail to Bill

Jones.


104

280. Kiehl also spoke to Bill Jones on May 17. Jones was upset that Kiehl had e-

mailed him the photographs and said that he needed to find Kiehl a job.

281. On May 17, 2007, Minge sent Perry an e-mail asking him to confirm Minge‘s

interpretation as discussed with HBC during the May 16 audit outbriefing that

TECT could not hot form parts unless it was called out on the engineering

drawing and the drawing referenced the appropriate RAC/HBC specification.

282. On May 17, 2007, HBC issued QN Notification Overviews for the -127 King Air

spars that Minge red tagged on May 4, 2007. HBC noted: ―Parts are made from

7050 aluminum extrusion. Parts were not formed per BS 25339 Rev. A and

reworked per an approved process. BS 25339 Rev. A, page 4, para. 3.3 does not

allow 7050 aluminum to be hot formed. As a result of the hot forming process,

parts were hand formed (reworked) using an aluminum mallet and blocks to

remove deformation. This violates BS 25339 Rev. A, para. 3.3.6 by impact

loading parts.‖ TECT Defendants had mistakenly used the term ―approved‖

rather than ―unapproved‖ on the initial VR‘s submitted to HBC for these spars.

TECT QA noticed the mistake and the QM Notification Overview was

subsequently revised and corrected to read, ―reworked per an UNAPPROVED

(rather than approved) process.‖

283. On May 18, 2007, Minge received HBC‘s Final Audit Report from Sattler.

284. On May 31, 2007, Minge received a telephone call from Rick Friesen of HBC.

Friesen said he could not reconcile the data on the -127 temperature logs with the

job routers. The temperature logs in some cases omitted required time and

temperature information. In other cases there was inconsistent logging of data by


105

shop personnel. And in other cases data on the logs could not be adequately

traced back to the appropriate job router and part quantities. Friesen scheduled a

meeting at TECT on June 6, 2007 with Minge and Roll to discuss this.

9. Minge is fired

285. Though Kiehl was no longer employed by TECT Wellington, he and Minge were

still investigating TECT Defendants in order to compile evidence to report TECT

Defendants for violating the False Claims Act. After Minge received the written

audit report from HBC, he discussed with Kiehl potentially reporting TECT

Wellington‘s False Claim violation and during that discussion, he gave Kiehl a

copy of the audit report.

286. Eventually, through discovery in the lawsuit it maliciously filed against Kiehl,

TECT Wellington learned on May 23 that Kiehl had a copy of the HBC audit

report. When asked where he got it, Kiehl honestly reported that Minge had given

it to him. TECT Aerospace did not confront Minge or further investigate for three

more weeks.

287. Almost three weeks after learning of the disclosure of the audit report, TECT

Aerospace fired Minge. It claimed in his termination letter that the reason he was

fired was because it had learned of the disclosure of the audit report to Kiehl three

weeks earlier.

288. Defendants TECT knew that Minge and Kiehl had been advocating reporting

TECT Wellington‘s fraud and violation of the False Claims Act to the

Government and/or to HBC.


106

F. False claims for payment and false records or documents presented to the United States for JPATS and King Air aircraft

289. Defense Federal Acquisition Regulation (―DFAR‖) Subpart 204.7108-204.7109

requires the use of billing instructions in contracts issued by the DoD. The

associated clauses address how contractors should submit invoices for payment

and what information must be included on the invoices to receive payment. When

a contractor has completed work required by contract it submits an invoice either

in electronic format in accordance with DFAR Subpart 232.7003, in hard copy

format in the form of DD Form 1149 (only as permitted under the terms of older

contract awards), or on the contractor‘s own invoice form if it has been deemed

acceptable by the contracting activity, administering office, DCMA, and/or the

Defense Finance and Accounting Service (―DFAS‖). DFAR Subpart 232.10,

provides that payment will be made by the ―contractor entitlement date, if any,

specified in the contract, or 14 days after receipt by the designated billing office

of a proper request for payment, whichever is later.‖ If requests for payment are

submitted by a contractor in electronic format, DFAR Subpart 232.70 requires

that all ―supporting documentation necessary for payment, such as receiving

reports, contracts, contract modifications, and required certifications, also shall be

processed in electronic form.‖ As of July 1, 2005 DFAS no longer accepts or pays

paper invoices.

290. RAC/HBC was required to submit invoices in accordance with the FAR and

DFAR provisions in order to receive payment. Upon information and belief,

RAC/HBC submitted invoices to DCMA or DFAS (with copies being provided to


107

the contracting authorities at the Department of the Navy and the Department of

the Air Force), the invoices were reviewed along with supporting documentation

required from RAC/HBC, and then were forwarded to DFAS for payment to

RAC/HBC. By submitting the invoices for payment, when the subject aircraft

contained unverified or nonconforming spars, RAC/HBC submitted false claims

to the Government by failing to disclose material information about the

nonconformities and deviations from contract specifications, which were essential

elements to the Government‘s decision to pay RAC/HBC. In addition, by

submitting invoices for payment, when the subject aircraft contained unverified or

nonconforming spars, RAC/HBC further provided false implied certifications of

compliance with applicable contract terms, specifications, statutes, rules and/or

regulations as alleged herein.

291. At the time of the delivery to the Government of each T 6A trainer aircraft and

King Air aircraft RAC/HBC submitted the a Material Inspection and Receiving

Report (―MIRR‖), Form DD 250, as noted above, an invoice-supporting

document that the DoD requires on contracts for supplies and services. In the

boxes provided in the form RAC/HBC inserted the contract number, invoice

number, shipment number, date of shipment, the name of the federal contracting

authority that would make payment and an identification of DCMA Wichita as the

agency to which the delivery was made. In addition, in each Form DD 250

RAC/HBC would insert a description of the delivered aircraft by program

identifier, lot number, serial number and tail number. RAC/HBC would state the

unit prices and should the balance due from the Government. The text box at


108

Item 21 Contract Quality Assurance in the form required RAC/HBC to check a

box within the box certifying that the delivered aircraft ―conform to contract,

except as noted herein or on supporting documents.‖ Receipt of a completed Form

DD 250 from RAC/HBC for each delivered aircraft was a condition precedent to

the Government‘s acceptance of and payment for the aircraft.

292. RAC/ HBC expressly and/or impliedly certified to the Government on the Form

DD 250s for each T-6A aircraft and King Air aircraft delivered to the

Government that the aircraft, identified by contract, invoice, serial number and

tail number, conformed to the applicable contract, except as noted on the form.

By so doing, when RAC/HBC invoiced the Government for delivered T6A and

King Air aircraft, defendants expressly certified that, in compliance with the

contract documents, drawings, specifications and federal regulations, they had

established and had used a repeatable manufacturing process designed to assure

that fracture critical and flight critical wing spars for use on these FAA Type

Certified aircraft were made to the original design data in all respects and had

undergone rigorous testing and quality assurance procedures, even though they

knew they had not complied and even though the forms completed by RAC/HBC

failed to specifically note that the wing spars did not comply with the contracts,

though in a few instances other nonconformances not related to the wing spars

were noted on the forms and sums of money were withheld as a result of such

nonconformances. . Thus, every payment request submitted by RAC/HBC falsely

certified its compliance with the contracts. Defendants thereby knowingly made

or used, or caused to be made or used, a false record or statement that RAC/HBC


109

knowingly presented, or caused to be presented, to an officer or employee of the

Government or a member of the Armed Forces of the United States for payment

or approval of a false or fraudulent claim.

293. By way of example, and not for the purposes of limitation, HBC prepared Form

DD 250s for the following JPATS T-6A aircraft that were received, accepted and

paid for by the United States, all of which falsely certified that the aircraft

conformed to the contracts, without noting that the wing spars were not

manufactured in accordance with the original design data and had not undergone

rigorous testing and quality assurance procedures:

a. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial

Number 06-3813 (PT-368), Contract No. F33657-01-C-0022, Invoice No.

041897, Shipment No. TSD 1277, which was shipped to the United States on June

5, 2007. HBC submitted the aircraft for receipt and payment based on a DD Form

250 it had completed. Only one exception to the required quality assurance

certification is noted in Block 16: ―engine blades.‖ The Government accepted the

plane as evidenced by the mark in the acceptance box within Block 21. The

Government logged the acceptance of the DD 250 on June 12, 2007 and noted on

the form that it paid for the aircraft on July 9, 2007.

b. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial




250 it had completed. Only one exception to the required quality assurance


110





c. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial



14, 2007. HBC submitted the aircraft for receipt and payment based on a DD

Form 250 it had completed. Only one exception to the required quality assurance



Government logged the acceptance of the DD 250 on June 15, 2007.

d. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial









e. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial



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Government logged the acceptance of the DD 250 on June 28, 2007,

f. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







Government logged the acceptance of the DD 250 on June 28, 2007.

g. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial


041930, Shipment No. TSD 1444, which was shipped to the United States on

March 7, 2008. HBC submitted the aircraft for receipt and payment based on a

DD Form 250 it had completed. Only one exception to the required quality

assurance certification is noted in Block 16: ―fuselage skin cracks.‖ The

Government accepted the plane as evidenced by the mark in the acceptance box

within Block 21. The Government logged the acceptance of the DD 250 on

March 10, 2008.


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h. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 10, 2008.

i. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 10, 2008.

j. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial






113




March 10, 2008.

k. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 10, 2008.

l. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 10, 2008.


114

m. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 17, 2008.

n. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







within Block 21.

o. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







115


within Block 21.

p. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







within Block 21.

q. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







within Block 21.

r. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial






116




March 24, 2008.

s. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 24, 2008.

t. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 24, 2008.


117

u. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 24, 2008.

v. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








March 24, 2008.

w. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial






118




March 24, 2008.

v. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial



April 14, 2008. HBC submitted the aircraft for receipt and payment based on a

DD Form 250 it had completed. Only two exceptions to the required quality

assurance certification are noted in Block 16: ―fuselage skin cracks‖ and ―engine

propeller oil sleeve touchdown.‖ The Government accepted the plane as

evidenced by the mark in the acceptance box within Block 21.

x. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








y. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial




119





evidenced by the mark in the acceptance box within Block 21. The Government

logged the acceptance of the DD 250 on April 17, 2008.

z. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








aa. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







evidenced by the mark in the acceptance box within Block 21. The Government

logged the acceptance of the DD 250 on April 17, 2008.


120

bb. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








cc. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








dd. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial







121



ee. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








ff. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial


042257, Shipment No. TSD 1539, which was shipped to the United States on May


250 it had completed. Only two exceptions to the required quality assurance

certification are noted in Block 16: ―fuselage skin cracks‖ and ―engine propeller

oil sleeve touchdown.‖ The Government accepted the plane as evidenced by the

mark in the acceptance box within Block 21.

gg. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial






122




hh. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








ii. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








jj. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial





123





kk. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial




Form 250 it had completed. Only two exceptions to the required quality




ll. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








mm. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial




124






nn. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








oo. JPATS T-6A Production Aircraft (Lot 13)—FY06—USAF, Serial








294. By way of further examples, and not for the purposes of limitation, HBC prepared

Form DD 250s for the following King Air aircraft that were received, accepted


125

and paid for by the United States, all of which falsely certified that the wing spars

in the aircraft conformed to the contracts:

a. Light Transport Aircraft (LTA), Serial Number FL-251, Tail No. 521,

ACRN: AB, Contract No. FA8620-07-C-4022, Invoice No. 042090, Shipment

No. TSD 00001, which was shipped to the United States on December 14, 2007.

HBC submitted the aircraft for receipt and payment based on a DD Form 250

(which also served as the ―original invoice‖) it had completed. No exceptions to

the quality assurance certification are noted in Block 16. A corrected DD Form

250 was thereafter submitted, showing Contract No. FA8620-07-D-4010, Invoice

No. 42089. No exceptions to the quality assurance certification are noted in Block

16. The Government accepted the plane as evidenced by the mark in the

acceptance box within Block 21.

b. Intelligence, Surveillance & Reconnaissance (ISR) Aircraft, Serial

Number FL-222, Tail No. 522, ACRN: AA, Contract No. FA8620-07-C-4022,

Invoice No. 042318, Shipment No. TSD 00002, which was shipped to the United

States on June 12, 2008. HBC submitted the aircraft for receipt and payment

based on a DD Form 250 it had completed. No exceptions to the quality

assurance certification are noted in Block 16. In addition, on May 13, 2008, HBC

prepared and submitted to the Government a written ―Certificate of

Conformance‖ for the aircraft, again certifying that the aircraft conformed ―in all

respects with the contract requirements, including the specifications, drawings . .

.‖ A corrected DD Form 250 was thereafter submitted, showing Contract No.

FA8620-07-C-4010, Invoice No. 42319. No exceptions to the quality assurance


126

certification are noted in Block 16. The corrected DD Form 250 is stamped

―original invoice.‖ The Government accepted the plane as evidenced by the mark

in the acceptance box within Block 21.

c. Intelligence, Surveillance & Reconnaissance (ISR) Aircraft, Serial



States on June 27, 2008. HBC submitted the aircraft for receipt and payment


assurance certification are noted in Block 16. A corrected DD Form 250 was

thereafter submitted, showing Contract No. FA8620-07-C-4010, Invoice No.

42377. No exceptions to the quality assurance certification are noted in Block 16.

The corrected DD Form 250 is stamped ―original invoice.‖ The Government

accepted the plane as evidenced by the mark in the acceptance box within Block

21.

d. Intelligence, Surveillance & Reconnaissance (ISR) Aircraft, Serial



States on August 29, 2008. HBC submitted the aircraft for receipt and payment





The corrected DD Form 250 is stamped ―original invoice.‖ The Government


127

accepted the plane as evidenced by the mark in the acceptance box within Block

21.

e. Intelligence, Surveillance & Reconnaissance (ISR) Aircraft, Serial



States on October 22, 2008. HBC submitted the aircraft for receipt and payment





The Government accepted the plane as evidenced by the mark in the acceptance

box within Block 21.

f. Intelligence, Surveillance & Reconnaissance (ISR) Aircraft, Serial



States on November 20, 2008. HBC submitted the aircraft for receipt and

payment based on a DD Form 250 it had completed. No exceptions to the quality




The Government accepted the plane as evidenced by the mark in the acceptance

box within Block 21.

295. Each DD250 is a separate claim for the purposes of the False Claims Act.


128

296. Defendants also impliedly certified their compliance with the contracts.

a. Defendants knowingly failed to perform material requirements of the

contracts, yet sought and received payments as if they had fully performed

without disclosing their nonperformance when such information would have been

material to the government‘s decision to pay.

b. The DFARS require defendants to affirmatively certify that they had

complied with the contracts; therefore, their failure to comply with the DFARS is,

in and of itself, a false statement to the government.

c. The FAA regulations required that for each delivered plane RAC/HBC

had to inspect and test the plane and certify on FAA Form 8130 conformance to

the Type Certificate and the Production Certificate in order to obtain an

Airworthiness Certificate. In addition to FAA certification, the Air Force had the

responsibility for the airworthiness certification approval. MIL-HBDK-516B,

Department of Defense Handbook Airworthiness Certificaiton Criteria, pp. 1-2

(Sept. 26, 2005). The certification materials used by the military include the

contractor‘s DD Form 250. Id. at 24. By certifying that each delivered plane

conformed to the Type Certificate, without disclosing that defendants‘

manufacturing process and quality control systems could not ensure conformance

when such information would have been material to the government‘s decision to

pay RAC/HBC, Defendants impliedly certified their compliance with the

contracts.

297. As noted above, on every invoice for delivered parts and as required by DFARS,

Defendants TECT presented RAC/HBC with certificates of conformance that Part


129

Numbers 133-100051-3 and 52-3 (and their predecessors 51-1 and 52-1) were

manufactured in accordance with all specifications and contractual requirements.

RAC/HBC required that TECT Defendants provide a certificate of conformance

so that RAC/HBC could get its claim paid or approved by the United States.

Because Part Numbers 133-100051-3 and 52-3 and previous Part Numbers 51-1

and 52-1 were not manufactured in accordance with the drawing specifications

and contractual requirements, the certificates of conformance and any documents

created in reliance on them were false. Defendants TECT either knew they were

false or were deliberately ignorant of their falsity or acted in reckless disregard of

the documents‘ falsity. RAC/HBC knew that representation was false or acted in

deliberate ignorance of its falsity or acted in reckless disregard of the

representations‘ falsity. TECT Defendants caused RAC/HBC to present false

claims for payment to the United States or, alternatively, both TECT Defendants

and RAC/HBC caused RAC/HBC to present false claims for payment to the

United States.

298. Upon information and belief, Defendants TECT presented RAC/HBC with

certificates of conformance that parts number 101-120127-33 and -35 were

manufactured in accordance with all specifications and contractual requirements.

RAC/HBC required that TECT Defendants provide a certificate of conformance

so that RAC/HBC could get its claim paid or approved by the United States.

Because parts number 101-120127-33 and -35 were not manufactured in

accordance with all drawings, specifications and contractual requirements, the

certificates of conformance and all documents created in reliance upon them were


130

false. Defendants TECT either knew they were false or were deliberately

ignorant of their falsity or acted in reckless disregard of the documents‘ falsity.

RAC/HBC knew that representation was false or acted in deliberate ignorance of

its falsity or acted in reckless disregard of the representations‘ falsity. TECT

Defendants caused RAC/HBC to present false claims for payment to the United

States or, alternatively, both TECT Defendants and RAC/HBC caused RAC/HBC

to present false claims for payment to the United States.

299. In the alternative, even if Defendants did not explicitly certify to the United States

contract quality assurance and conformance with the contract documents, because

Defendants knowingly failed to perform material requirements of their contracts

as described above, yet sought or received payment as if they had fully performed

their contracts without disclosing the nonperformance, they presented false

claims to the United States for each JPATs and King Air aircraft delivered by

RAC/HBC to the United States. Defendants‘ submission of payment requests

represented an implied certification of their continuing adherence to the

requirements for contract quality assurance and conformance with the contract

documents.

G. Defendants’ cover-up of their fraudulent practices

300. Defendants, individually and collectively, knowingly and intentionally deceived

the United States. They submitted false claims for aircraft that were

manufactured without complying with drawings, engineering specifications,

manufacturing specifications and contractual requirements and they covered-up

their wrongdoing. Those violations put military pilots at risk of personal injury or


131

death and increased the risk that the aircraft themselves would be destroyed or

damaged. Defendants‘ concealed their noncompliance by, among other things,

avoiding scrutiny by the DCMA contracting officer.

301. The cover-up includes but is not limited to the following:

(a) Knowing violations of HBC‘s drawing specification requirements. (i)

HBC drawing specification requirements for T6 and King Air aircraft,

BS25339 (Hot Bending or Forming of Aluminum Alloys) Rev. A, section

3.2.6, prohibit impact loading, including striking a part with a hammer or

other object, in the manufacturing process for parts that have been hot formed

per this specification. (ii) BS25116 (Fracture Critical and Durability Critical

Parts Control Requirements) Rev. 8, section 3.9 provides, ―Any component

variance of a Fracture Critical part or raw material must be coordinated

through RAC (HBC) MRB Liaison Engineering and DADT Engineering for

approval.‖ (iii) Section 3.10 of BS25116 provides, ―Any disposition to use

or rework critical parts will be coordinated through the HBC DADT

Engineering group for evaluation and approval. Such dispositions will be

evaluated and formally documented in a Structural Substantiation Report (by

HBC) . . . Liaison Engineering will be responsible for appropriately

annotating the MRB Quality Assurance Report to indicate that such

coordination has been accomplished or substantiation and disposition already

exists (with the source referenced).‖ (iv) After the hot forming process for

JPATS part number 133-1000051-3 and King Air part numbers 101-120127-

33 & -35, if the part failed to fit against the locators on the HBC provided


132

check fixture (hereinafter ―nonconforming part[s]‖), TECT reworked the part

using pry bars (―wrinkle sticks‖), small pneumatic hand grinders (―dotco‘s‖)

and hammers until the part conformed to the check fixture.

(b) Refusal to document nonconforming parts and their rework. (i) For

nonconforming parts the areas of nonconformance on each part should have

been documented on a TECT Defect Non Conformance Tag. (ii) The tagged

nonconforming part should have been segregated from the remaining lot of

parts on the job router by placing the part in a designated MRB Bond Area.

(iii) TECT Defendants‘ MRT (Material Review Team), made up of

Engineering, Manufacturing, Quality and the MRB Coordinator, should have

reviewed the nonconforming part, the Defect Non Conformance Tag and

directed the TECT MRB Coordinator to submit the nonconformance

documentation to RAC or HBC for an approved disposition. (iv) TECT's

MRB Coordinator should have entered the information about the

nonconforming part in RAC‘s or HBC's electronic VR (Variance Report) and

submitted to RAC‘s or HBC‘s MRB Liaison Engineers for disposition and

instructions on how to rework the nonconformities to drawing requirements.

(v) Upon receiving the VR from TECT, RAC or HBC should have

transferred the information to a QN (Quality Notification). RAC‘s or HBC's

MRB Liaison Engineering group should have then reviewed the

discrepancies, forwarded any QN's for Fracture Critical parts to DADT

Engineering as required, and developed approved rework instructions for the

noted discrepancies. (vi) For all Fracture Critical nonconforming parts, RAC


133

or HBC should have forwarded the disposition to DCMA for review and

approval. (vii) After DCMA approval, the approved disposition documented

on the QN should have been forwarded to TECT. (viii) Upon receiving the

approved disposition from RAC or HBC, TECT Defendants should have

documented the approved rework instructions on the respective Defect Non

Conformance Tag. (ix) TECT Defendants should have then issued a rework

job router outlining and documenting the approved rework instructions. (x)

TECT Defendants should have then released the nonconforming part in

question from the Bond Area along with the released rework job router(s) and

Defect Tag(s) to the shop floor for the required rework to be performed. (xi)

Each operation on the rework router should have been signed off by the

operator performing the operation and stamped off by Quality inspector at the

designated inspection operations indicating the previous rework operations

were acceptable including conformance to the RAC or HBC provided check

fixture. (xii) Upon acceptable completion of all rework operations on the

rework job router, the nonconforming part should have been sent to an RAC

or HBC approved process house for penetrant inspection, prime and paint as

noted on the rework job router. (xiii) Upon completion of the outside

processing, the nonconforming part would be returned to TECT. (xiv) Upon

receipt at TECT, the nonconforming part would be inspected and all

processing certification would be reviewed for compliance by Receiving

Inspection. (xv) The nonconforming part would then be part marked per the

rework job router, final inspected and the part issued to stock. (xvi) JPATS


134

Part Numbers 133-1000051-3 and 52-3 and King Air Part Numbers 101-

120127-33 and -35 are required to be RAC or HBC source inspected at TECT

utilizing the RAC or HBC provided check fixture prior to shipment to HBC.

(xvii) TECT Defendants performed rework on hot formed and Facture

Critical nonconforming parts without following the above described

processes. (xviii) As a consequence, DCMA was denied any opportunity to

review and approve TECT Defendants‘ rework of nonconforming parts.

(xix) At all times material, RAC and HBC were aware of TECT Defendants‘

unauthorized rework of nonconforming parts. (xx) Furthermore, even in

instances when RAC‘s or HBC‘s MRB was involved in the dispositioning of

nonconforming conditions on spars rejected at RAC or HBC, not all

dispositions for Fracture Critical spars were forwarded to DCMA for review

and Approval as required. (xxi) Additionally, HBC's Mark Murray reviewed

and changed numerous HBC Liaison Engineering dispositions to ―Use As Is‖

which allowed suspect spars to be installed in JPATS and King Air aircraft.

(c) Shipping nonconforming parts without RAC/HBC Material Review

Board actions having been completed.

(d) Failing to maintain a system of nonconformity level reporting for the

purpose of demonstrating continuous improvements to the product quality.

(e) Failing to take prompt and effective action to correct and prevent

recurrence of all nonconformities in parts, inclusive of those that occur at

TECT Defendants.


135

(f) Failing to notify DCMA representatives of the opportunity to be included

in RAC/HBC‘s MRB process for the parts in question.

(g) Destroying the hammers TECT Defendants used in the rework process.

(h) Coaching of TECT employees by TECT's team leader Richard Schnier

prior to RAC/HBC‘s audit and by HBC‘s Sattler prior to the FAA

audit/review at TECT.

(i) The acts of RAC/HBC‘s Murray described above.

(j) TECT Defendants presentation of false certificates of conformance to

RAC/HBC.

H. Government Investigation

302. Minge‘s and Kiehl‘s investigations during the last several months of their

employment at TECT Defendants led to their reports to the Government about

TECT‘s failure to adhere to quality standards and RAC/HBC‘s quality oversight

failures and both entities‘ failure to disclose to the Government the shortcomings

discussed in the paragraphs above. In July 2007, Defense Criminal Investigation

Service (―DCIS‖) and DCMA opened an investigation of Defendants‘ activities.

Furthermore, HBC has disclosed in its SEC filings that in July 2007, the FAA

informed HBC that it had initiated an investigation concerning T-6A trainers and

certain special mission King Air aircraft sold to the Government. HBC

participated in the FAA investigation. Deliveries of JPATS aircraft ceased

between June 2007 and March 2008. On June 17, 2008, the U.S. Attorney‘s

Office for the District of Kansas notified HBC that the FAA had referred a civil


136

penalty matter arising out of its investigation to the U.S. Attorney‘s Office for

enforcement. The FAA had recommended fines against HBC of at least $2.5

million because of the quality issues described above. Deliveries of JPATS were

interrupted again between June 2008 and January 2009 because of the issues

reported by Minge and Kiehl.

IX. Count 1: Knowingly False Statements to Get a False or Fraudulent Claim Paid or Approved, in Violation of the False Claims Act, 31 U.SC. § 3729(a)(1)

303. Qui Tam Plaintiffs re-allege, and fully incorporate herein by reference, paragraphs

1 through 280 herein.

304. Pursuant to 31 U.S.C. §3730, Plaintiffs have standing to bring this claim on behalf

of the United States.

305. Defendant RAC/HBC entered into contracts with the United States to

manufacture aircraft in accordance with its internal quality and manufacturing

processes, FAR and DFARS regulations, and FAA regulations. Defendant

RAC/HBC was bound by its contract to adhere to those processes and regulations.

Defendant RAC/HBC subcontracted with the TECT Defendants for the

manufacture of wing spars for the subject aircraft. Pursuant to those subcontracts,

the TECT Defendants were bound to adhere to certain processes and standards

flowed down from RAC/HBC, as well as its own internal processes, and all

applicable regulations. For the reasons stated above, Defendants did not adhere to

their contracts when they knowingly and recklessly deviated from the required

processes in manufacturing the subject aircraft for the United States. They

delivered nonconforming planes to the United States. And they did so without

notifying the Government that they had deviated from the those processes in


137

manufacturing the planes. Nevertheless, they sought full payment under the

contracts. Because federal regulations and the contracts between RAC/HBC and

the United States specifically require compliance with these processes it was a

condition of payment by the Government. Defendants violated the False Claims

Act (31 U.S.C. § 3729(a)(1) when they knowingly presented or causied to be

presented, to one or more officers, employees or agents of the United States, false

and fraudulent claims for payment or approval without meeting the conditions for

payment, to the damage of the treasury of the United States.

306. Hand-forming spars at TECT was not some aberrant act by a rogue employee; it

was one of the sequential steps in the manufacturing instructions. The next

sequential step called for ―blending‖ e.g., covering up, any marks on the piece left

by hand-forming it. TECT used hammers, pry bars and grinders to force spars to

fit the ―check fixture‖ supplied by RAC or HBC. TECT has done this, and

RAC/HBC has known of it, since at least 1997.

307. Hand-forming spars was a prohibited process and Defendants knew this. The

Department of Defense ―Guide for Achieving Reliability, Availability, and

Maintainability,‖ § 2.4.1, p. 2-23 (August 3, 2005) states, ―[m]anufacturing must

be a controlled process that does not adversely affect the item with production

defects.‖ 14 C.F.R. 25.605 provides that ―the methods of fabrication must

produce a consistently sound structure.‖ The applicable Air Force standard, DOD

MIL-HDBK-1587 (USAF), ―Materials and Process Requirements for Air Force

Weapons Systems,‖ § 5.1.2.2, explicitly prohibits forming and straightening

processes which result in residual stresses, loss of strength and corrosion


138

sensitivity. The applicable FAA standard, DOT/FAA/AR-MMPDS-01, ―Metallic

Materials Properties Development and Standardization (MMPDS)‖ §3.2.3.0

(January 2003), for allowable material strength properties and design values for

aircraft certification, notes that the 2024-T3511 aluminum alloy used for the

lower spars have experienced in-service failures due to latent inter-granular

conditions ―caused by stresses produced by any combination of sources including

. . . straightening, forming . . . these stresses may be tension or compression as

well as the stresses due to the Poisson effect, because the actual failures are

caused by resulting sustained shear stresses.‖ Most importantly, RAC/HBC‘s

design specification BS25339 prohibits striking a spar with a hammer or other

object. Even HBC concedes that such irregular and uncontrolled hand-work

―inherently adds risk of induced defects. Reforming could cause isolated

problems (macro and micro cracks)…additional mechanical damage…exposed

open grain…and residual stress from reforming in critical areas.‖ These problems

are known to result in the loss of strength and corrosion sensitivity of the 2024-

T3511 alloy and the premature failure of the material in-service due to sustained

shear stresses.

308. Hot forming spars without ―artificial age hardening‖ after forming was also a

prohibited process and Defendants knew this as well. TECT‘s manufacturing

instructions and job travelers allow the lower spars to be hot formed without

artificial age hardening to the original design temper, even though HBC‘s design

specifications allow hot forming the 2024-T3511 alloy only when the engineering

drawing provides for ―artificial age hardening‖ after hot forming. TECT‘s job


139

travelers, therefore, violated HBC‘s specifications and HBC knew this. Heating

the 2024-T3 alloys for short periods can impair their resistance to stress-corrosion

cracking. ASM International, ASM Handbook Corrosion Materials, Volume 13B

(2005); see also DOD MIL-HDBK-729, Military Standardization Handbook-

Corrosion and Corrosion Prevention-Metals, (November 21, 1983).

309. RAC/HBC could ―only tender for acceptance those items that conform to the

requirements of this contract.‖ FAR 52.212-4 (a). The Government had the right

to rely on RAC‘s/HBC‘s implied assurances that the aircraft they tendered for

acceptance conformed to the contract requirements in all respects. FAR 12.402.

In addition, as described above, there was a detailed written certification regimen

that required RAC/HBC to give these assurances by completing various

Government forms that the aircraft they delivered to the United States conformed

to the contracts and the applicable regulations. These forms included: (a)

Material Inspection and Receiving Report, DD Form 250, pursuant to which the

United States accepted the aircraft based upon presentation of the form by

RAC/HBC and the representation in the form that the aircraft ―conform[s] to

contract except as noted herein or on supporting documents,‖ with no notation in

the Box provided for the contractor‘s use that the wing spars were manufactured

in a manner that was non-conforming to the contracts, internal processes and

applicable regulations; (b) FAA Form 8130-6, Application for U.S. Airworthiness

Certificate, which requires the certifier, either RAC/HBC or a purchaser relying

on RAC‘s/HBC‘s representation of conformity, to complete the box, ―the aircraft

does not meet the applicable airworthiness requirements as follow[s];‖ (c) FAA


140

Form 8130-9, Statement of Conformity, in which the ―signature of Certifier,‖

meaning the designated representative of the manufacturer, on such forms

certifies that the aircraft was manufactured in accordance with its Type

Certificates; (d) FAA Form 8130-2, Conformity Certificate-Military Aircraft and

FAA Form 8130-31, Statement of Conformity—Military Aircraft, in which

RAC/HBC certified that the aircraft had been manufactured in conformity with

the data forming the basis for Type Certificate, without noting in the Box

provided for the contractor‘s use that the wing spars were manufactured in a

manner that was non-conforming to the contracts, internal processes and

applicable regulations; and (e) the certifications needed by to obtain the Type and

Manufacturing Certificates, which required FAC/HBC to certify its systems and

procedures, including its quality system, and ensure conformity therewith.

310. RAC/HBC violated § 3792(a)(2) and (a)(3) when it expressly and/or impliedly

certified on the these forms that each JPATS and King Air aircraft delivered to the

Government was manufactured in conformance with the contract documents and

applicable regulations, without noting that the wing spars supplied by the TECT

Defendants were manufactured in a manner that was non-conforming to the

contracts, internal processes and applicable regulations The Government had

bargained for the confidence that comes with a reliably manufactured aircraft that

has been subjected to rigorous quality assurance procedures. For the reasons

detailed above, the manufacturing and quality assurance processes at RAC/HBC

and at TECT were non-compliant with the contracts and federal regulations and

were known to be so by Defendants. Supplying planes with wing spars without


141

the contractually required manufacturing, quality assurance and testing processes

are per se non-conforming. Thus, every certification of conformance to the

contracts was, in and of itself, a false statement to the government.

311. The United States required that these forms be received and processed by the

Government as a condition to payment. Thus, every certification of conformance

to the contracts was, in and of itself, a false claim for payment to the Government

in violation of 31 U.S.C. § 3792(a)(2) and (a)(3).

312. The TECT Defendants violated 31 U.S.C. § 3792(a)(2) and (a)(3) when TECT

submitted to RAC/HBC invoices with false statements of conformity to the

contracts.

313. Defendants also impliedly certified their compliance with the contracts in the

following respects: (a) Defendants knowingly failed to perform material

requirements of the contracts, yet sought and received payments as if they had

fully performed without disclosing their nonperformance when such information

would have been material to the government‘s decision to pay; (b) the DFARS

require Defendants to affirmatively certify that they had complied with the

contracts; therefore, their failure to comply with the DFARS is, in and of itself, a

false statement to the government; (c) the FAA regulations required that for each

delivered plane RAC/HBC had to inspect and test the plane and certify on FAA

Form 8130 conformance to the Type Certificate and the Production Certificate in

order to obtain an Airworthiness Certificate and by certifying that each delivered

plane conformed to the Type Certificate, without disclosing that Defendants‘

manufacturing process and quality control systems could not ensure conformance


142

when such information would have been material to the government‘s decision to

pay. Thus, Defendants violated § 3792(a)(2) and (a)(3).

314. When Defendants requested, received and retained payments received from the

United States under the programs and for the work described above, Defendants

knew they were ineligible to receive those payments because of their intentional

violations of contractual design and manufacturing specifications as described

above. Defendants know that compliance with the contractual design and

manufacturing specifications is a core prerequisite for their right to request and

receive payment from the United States.

315. Defendants TECT, and each of them, had knowledge of the wrongful acts

described above and, therefore, were directly involved in presenting or causing to

present false claims to the United States. Furthermore, Turbine Engine

Components Technologies Corporation and TECT Aerospace assumed a duty to

supervise manufacturing processes at TECT Wellington and ensure compliance

with AS9100 and 14 CFR part 21.139 and FAA Advisory Circular 21-20B, ¶ 5.a.

In the alternative, and on information and belief, Turbine Engine Components

Technologies Corporation and TECT Aerospace are liable for the wrongful acts

of TECT Wellington, on the theories of agency, ratification, single enterprise,

aiding and abetting or alter ego.

316. As a proximate result of the wrongful acts of the TECT Defendants, RAC and

HBC, and each of them, the United States has been damaged in a sum according

to proof and for attorney‘s fees, costs, and interest according to proof.

WHEREFORE, Qui Tam Plaintiffs request the following relief:


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1. Judgment in favor of the United States of America against all Defendants,

jointly and severally, for the claims involving the JPATS and King Air programs

by reason of the violations of the False Claims Act as set forth above, in an

amount equal to three times the amount of damages the United States has

sustained because of Defendants' actions, plus a civil penalty of Eleven Thousand

Dollars ($11,000.00) for each violation., pursuant to 31 U.S.C. § 3729(a);

2. Award to Relators, as the Qui Tam plaintiffs, of the maximum amount

allowed pursuant to 31 U.S.C. § 3730(d) of the Federal False Claims Act on the

United States‘ recovery;

3. Award to Relators of all reasonable expenses which the Court finds to

have been necessarily incurred, plus reasonable attorneys‘ fees and costs;

4. Punitive damages on all causes of action, to the extent allowable by law;

and

5. Such other and further relief at law or equity as the Court deems proper.

X. Count 2: Knowingly False Records or Statements to Get a False or Fraudulent Claim Paid or Approved, in Violation of the False

Claims Act, 31 U.S.C. §3729(a)(2)



318. By virtue of the acts described above, Defendants have knowingly made, used or

caused to be made or used, a false record or statement to get a false or fraudulent

claim paid or approved by the United States, in contravention of the False Claims

Act (31 U.S.C. § 3729(a)(2)), to the damage of the treasury of the United States of

America, by causing it to pay out money it was not obligated to pay.


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319. When Defendants requested, received and retained payments received from the

United States under the programs and for the work described above, Defendants

knew they were ineligible to receive those payments because of their intentional

violations of contractual design and manufacturing specifications as described

above. Defendants know that compliance with the contractual design and

manufacturing specifications is a core prerequisite for their right to request and

receive payment from the United States.


described above and, therefore, were directly involved in making, using, or

causing to be made or used a false record or statement in support of false claims

to the United States. Furthermore, Turbine Engine Components Technologies

Corporation and TECT Aerospace assumed a duty to supervise manufacturing

processes at TECT Wellington and ensure compliance with AS9100 and 14 CFR

part 21.139 and FAA Advisory Circular 21-20B, ¶ 5.a. In the alternative, and on

information and belief, Turbine Engine Components Technologies Corporation

and TECT Aerospace are liable for the wrongful acts of TECT Wellington, on the

theories of agency, ratification, single enterprise, aiding and abetting or alter ego.

321. As a proximate result of the wrongful acts of the TECT Defendants, RAC and

HBC, and each of them, with respect to the JPATS and King Air programs, the

United States has suffered damages and incurred costs included but not limited to

attorney‘s fees, costs, and interest.



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jointly and severally, for the claims involving the JPATS and King Air programs,



sustained because of Defendants‘actions, plus a civil penalty of Eleven Thousand

Dollars ($11,000.00), for each violation pursuant to 31 U.S.C. § 3729(a);

2. Award to Relators, as the Qui Tam Plaintiffs, of the maximum amount






and

5. Such other and further relief at law or in equity as the Court deems proper.

XI. Count 3: Civil Conspiracy to Make Knowingly False Statements to Get a False or Fraudulent Claim Paid or Approved, and/or to Make

Knowingly False Records or Statements to Get a False or Fraudulent Claim Paid or Approved, in Violation of the False Claims Act, 31 U.SC. § 3729(a)(3)



333. As described in Counts 1 and 2 herein, with respect to the JPATS and King Air

programs the United States was harmed by the knowing false and fraudulent

claims for payment or approval, in contravention of the False Claims Act (31

U.S.C. § 3729(a)(3)).


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334. Defendants each had an independent duty to the United States not to engage in

said conduct.

335. The acts of Defendants, and each of them, were in furtherance of a conspiracy to

violate a legal duty owed to the United States for their own financial gain.

336. With respect to the JPATS and King Air programs, the TECT Defendants, RAC

and HBC, and each of them, were aware that they were engaged in the wrongful

acts described above in contravention of the False Claims Act and that they

agreed with one another and intended that the acts be committed.

337. The TECT Defendants, RAC and HBC at all times did the acts and things herein

alleged pursuant to, and in furtherance of, the conspiracy and agreement alleged

above.

338. The TECT Defendants, RAC and HBC are responsible for the harm to the United

States because they were part of a conspiracy to commit those wrongful acts in

contravention of the of the False Claims Act (31 U.S.C. § 3729(a)(3)).


described above and, therefore, were collectively involved in furthering the

conspiracy by their direct involvement in presenting or causing to present false

claims and in making, using, or causing to be made or used a false record or

statement in support of false claims to the United States. In the alternative, and

on information and belief, Turbine Engine Components Technologies Corporation

and TECT Aerospace are liable for the wrongful acts of TECT Wellington, on the

theories of agency, ratification, aiding and abetting, single enterprise or alter ego.


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340. As a proximate result of the wrongful acts of Defendants, and each of them,

Plaintiff has been damaged in a sum according to proof and for attorney‘s fees,

costs, and interest according to proof.



jointly and severally, for the claims involving the JPATS and King Air programs,



sustained because of Defendants‘ actions, plus a civil penalty of Eleven Thousand

Dollars ($11,000.00), for each violation, plus three times the amount of damages

which the United States has sustained, pursuant to 31 U.S.C. § 3729(a);

2. Award to Relators, as the Qui Tam Plaintiffs, of the maximum amount






and

5. Such other and further relief at law or in equity as the Court deems proper.

XII. Count 4: Claims of Minge and Kiehl Individually against TECT Defendants for Violation of the False Claims Act’s Prohibition

against Retaliation

341. Plaintiffs re-allege, and fully incorporate herein by reference, paragraphs 1

through 280 herein.


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342. As individuals, Minge and Kiehl individually have claims against all TECT

Defendants for retaliating against them in violation of 31 U.S.C. §3730(h).

343. Kiehl was suspended and discharged by TECT Wellington and discriminated

against in the terms and conditions of his employment and harassed during and

after his employment because of lawful acts he did in furtherance of this False

Claims Act action. Statements made by TECT Wellington were a pretext for its

retaliatory intent.

344. Minge was discharged by TECT Aerospace, Inc. and discriminated against in the

terms and conditions of his employment because of lawful acts he did in

furtherance of this False Claims Act action. TECT Aerospace, Inc.‘s alleged

reasons for its employment decisions were pretext for its retaliatory intent.


described above and directly participated in discharging and retaliating against

Minge and Kiehl in violation of 31 U.S.C. §3730(h), therefore, are jointly and

severally liable to them. In the alternative, and on information and belief, the

TECT Defendants, and each of them, are liable for the wrongful acts described

above, on the theories of agency, ratification, aiding and abetting, single

enterprise or alter ego.

WHEREFORE, Minge and Kiehl individually pray judgment against the TECT

Defendants, jointly and severally, for all relief necessary to make them whole, including

but not limited to, reinstatement or front pay, back pay, compensatory damages, punitive

damages, special damages, attorneys fees and costs and all other relief that the court

deems just and equitable.


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XIII. Count 5: Claims by Minge and Kiehl Individually in the Alternative for State Law Tort of Retaliatory Discipline and Discharge


through 280 herein.

347. Minge and Kiehl were discharged as described in paragraphs 190 and 191, in an

effort to prevent them from investigating and reporting safety hazards and fraud

and potentially criminal activity.

348. The State of Kansas has a public policy of encouraging and protecting employees

who report serious safety hazards and potentially criminal activity in good faith.

349. Discharging Minge and disciplining and discharging Kiehl was in violation of this

public policy.

350. The intentional retaliatory discharge of Minge and Kiehl and discipline of Kiehl

justifies the award of punitive damages.


described above and directly participated in discharging and retaliating against

Minge and Kiehl and, therefore, are jointly and severally liable to them. In the

alternative, and on information and belief, the TECT Defendants, and each of

them, are liable for the wrongful acts described above, on the theories of agency,

ratification, aiding and abetting, single enterprise or alter ego.

WHEREFORE, Minge and Kiehl individually pray for judgment against the

TECT Defendants, jointly and severally, for back pay, front pay, compensatory damages,

attorney fees, costs, punitive damages and all other such relief the court deems just and

equitable.

XIV. Count 6: Claim of Kiehl Individually for the Tort of Outrage


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through 280 herein.

353. Defendant TECT‘s conduct in filing a baseless lawsuit in an effort to intimidate

Kiehl and to order him not to report fraudulent and dangerous manufacturing

practices to the Government and/or HBC and to intimidate the remainder of its

workforce was intentional and/or willful, wanton and reckless and extreme and

outrageous. Falsely accusing Kiehl of theft of a laptop computer and theft of

trade secrets and other tortuous activity in order to intimidate him and other

employees was intentional and/or willful, wanton, and reckless and extreme and

outrageous.

354. As a result of Defendant TECT‘s extreme and outrageous conduct Kiehl suffered

severe and extreme mental distress as well as loss of a job opportunity.

WHEREFORE, Kiehl prays for judgment against the TECT Defendants, jointly

and severally, for actual and punitive damages for Defendant TECT‘s outrageous

behavior, for attorney fees and for all other relief the court deems just and equitable.

REQUEST FOR JURY TRIAL

Comes now Kiehl and Minge, both individually and on behalf of the United States

and requests a jury trial on all issues.

s/ F. James Robinson, Jr. Gaye B. Tibbets, #13240 F. James Robinson, #11589


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DESIGNATION FOR PLACE OF TRIAL Comes now Kiehl and Minge, both individually and on behalf of the United States

requests the place of trial as United States District Court, District of Kansas in Wichita,

Kansas.

/s F. James Robinson, Jr. Gaye B. Tibbets, #13240 F. James Robinson, #11589


12-11873-smb Doc 628 Filed 09/27/12 Entered 09/27/12 15:54 ... · 12-11873-smb Doc 628-1 Filed...

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Transcript of 12-11873-smb Doc 628 Filed 09/27/12 Entered 09/27/12 15:54 ... · 12-11873-smb Doc 628-1 Filed...