Link: http://www.nytimes. com/2008/ 11/02/business/ 02flare.html? emc=tnt&tntemail1=y
November 2, 2008
Lighting Up the Night, and a Legal Battle
By JONATHAN D. GLATER
North Ogden, Utah
KENDALL DYE remembers precisely when he found the e-mail message that caused him to question his employer, ATK Thiokol, the aerospace and military contracting giant. He was working at home on a Saturday morning in 2005, poring over dozens of files.
The e-mail message showed that ATK was warned years earlier that a military flare it produced might endanger American soldiers using it.
"I thought, oh my God," Mr. Dye recalls. "I couldn't believe that we knew."
As far as he could tell, the company had ignored the warning.
At the time, Mr. Dye, an engineer at ATK, was investigating the safety of flares that his company sold to the United States Army and Air Force. What he found led him to file a lawsuit contending that ATK cheated taxpayers by selling fragile flares and, by doing so, knowingly put soldiers at risk.
The flares aren't the small, hand-held versions seen in war movies, but 3-foot-long, 36-pound aluminum tubes packed with propellant that burn at more than 3,600 degrees Fahrenheit, hot enough to melt steel.
When attached to parachutes, the tubes are released from the air and burn for several minutes, bathing a square mile of battlefield in bright or infrared light.
They are essential tools in the United States arsenal. Early versions of the devices were used in Vietnam, and they have been used on tens of thousands of combat missions since then, according to ATK.
They are so powerful that if one were to ignite accidentally — which, according to Mr. Dye, was possible — it could set off nearby ordnance, burn a hole in the hull of a warship or melt through the skin of an airplane high in the sky, according to his lawyers.
At a time when the country is fighting two wars and has more than 180,000 troops deployed in Iraq and Afghanistan, Mr. Dye's contentions may raise anew questions about the reliability of military contractors and the safety of their products.
Lawyers for ATK, which was acquired by Alliant Techsystems of Eden Prairie, Minn., in 2001 and is now called ATK Launch Systems, contend that the company did nothing wrong. They say that the flares have injured no one — an assertion no one has disproved. The ATK flares have also been redesigned since Mr. Dye first raised his concerns.
"ATK is proud of the fact that we provide the nation's armed forces with systems that consistently perform exactly to design in the battlefield, " the company says in a statement. Although the Justice Department has signed on as a plaintiff in Mr. Dye's suit — which seeks to recover tens of millions of dollars paid for thousands upon thousands of flares — ATK says the suit is baseless.
"ATK has determined the allegations made by the Department of Justice in the ongoing lawsuit to be wholly without merit," the company says.
But Mr. Dye has a different opinion. "Ethics and values got thrown out the window when there was a lot of money at stake," he says.
The Defense Department pays more than $408 billion for goods and services. Watchdog groups and some lawmakers have raised concerns about the government's ability to monitor all that spending. A report to Congress in March by the department's own inspector general warned of an "increasing gap between resources and oversight, which results in a corresponding increase in risk for fraud, waste and abuse."
Should the government win at trial in the suit against ATK, it may be entitled to recover three times its damages; Mr. Dye's lawyers estimate that the total could reach well into the hundreds of millions of dollars.
And the fact that the government chose to join Mr. Dye's suit — the Justice Department is not obligated to take up whistle-blower claims — suggests that the case is a strong one, said Danielle Brian, executive director of the Project on Government Oversight, a Washington watchdog group.
"It means that the government believes that the company knew that they were providing faulty products," Ms. Brian said. "This isn't a mistake. It's willfully making money off endangering soldiers. I can't imagine anything worse."
FOR decades, ATK has sold versions of its flares not only to the United States government, but also to the armed forces of other countries, including Canada, Italy, Colombia and Spain. The devices cost at least $700 each, and contracts for bulk purchases totaled millions of dollars.
In the late 1990s, military buyers complained that too often, the flares failed to ignite. ATK, which has a huge complex in the open spaces of northern Utah, permitted a team of engineering students at Utah State University to design an improved igniter. (The relationship developed after the university approached ATK seeking real-world projects for its students; the company, like others in the industry, often joined with universities to conduct research.)
Because the ignition mechanism was a relatively simple, mechanical device that used no proprietary technology, ATK officials thought that the project offered a low-risk learning experience.
The students, under the supervision of their professors, came up with a system that used the force of a flare's opening parachute to snap a polycarbonate plastic bar, about half an inch long and a tenth of an inch thick. When the plastic broke, it activated a series of reactions that ignited the propellant. The students never tested the new system to see whether the flares might ignite if they were dropped or accidentally jostled; they couldn't conduct such a test because they did not have access to complete, live flares. Specifications called for the flares to be able to withstand a fall of 10 feet without igniting.
ATK didn't perform those so-called drop tests, either. The company contends that the flares had been used for a long time without any problems, and so neither the company nor its customers were concerned about accidental ignition. The company began shipping flares with the new igniter in 2000, according to government court filings.
The Air Force tested the flares for reliability at Eglin Air Force Base in Florida in June 2000, launching them from warplanes. The flares ignited 97 percent of the time, exceeding the Air Force's goal. But the Air Force did not perform tests to see whether the flares might accidentally ignite if dropped.
Citing pending litigation, an Air Force spokesman declined to comment.
Lawyers for ATK contend that the armed forces waived tests that would have determined whether the flares could meet the 10-foot standard. They have further argued that without the results of those tests, the government could not claim that the flares were flawed.
The first report of a potential problem surfaced in 2005, after the United States government and the armed forces of other countries had been buying the redesigned flares for five years. The Navy, evaluating whether to buy the devices, simulated accidentally dropping the flares, letting them fall from 40 feet. They ignited on hitting the ground. Flares also ignited after falling 30 feet and 20 feet, the Navy found.
Yet it was still possible that the flares met the 10-foot standard even if they did not meet the Navy's more stringent 40-foot requirement. It was up to Mr. Dye, who had recently been named manager of ATK's flare program in Utah, to figure out what was going on.
Mr. Dye, 54, a tall man with gray hair and a neatly trimmed mustache, was a 21-year veteran at ATK. He joined one of the company's predecessors after finishing college and after a three-year stint in the Army as a mechanic. Fixing things suited his temperament: methodical, logical, exacting.
First, he said, he asked an engineer to analyze how much of a fall that critical piece of plastic in the igniter could survive. Mr. Dye thought that perhaps the plastic could be strengthened to meet the Navy's requirement. Instead, he was stunned by the answer he says he got from the engineer: it could snap after a fall of 11 inches — not 11 feet, but 11 inches.
Mr. Dye decided to test the flares directly; the company says he never sought approval to conduct the tests and didn't document the results properly.
According to court documents, on Nov. 9, 2005, he and several colleagues took five flares to a testing site in ATK's complex.
They dropped a flare from 10 feet. It ignited.
They dropped a flare from five feet. It ignited, too.
By the end of the day, Mr. Dye and a safety engineer had warned employees to keep clear of the flares. Production stopped.
That afternoon, the company convened a "war room" of about a dozen experts to investigate the flares, Mr. Dye said, and he was part of the team. No formal notice was given to buyers of the flares; ATK asserts that a company official informally advised an Air Force representative.
No one, Mr. Dye said, wanted him to perform any more tests. In his view, there were simple questions that ATK had to answer to identify the extent of the problem. For starters, if the company's contracts for years had required flares to survive a 10-foot drop test, he said, "Did we do the test or did we not do the test?"
No one, he said, seemed to know. Two days after his drop tests, Mr. Dye asked a secretary for the keys to the office where copies of contracts were kept. He took the files covering the period shortly before and after the introduction of the new igniter and brought them to the windowless conference room where the team was working.
Mr. Dye says he remembered saying, "We need to get to the bottom of what happened."
At the end of the day, he carried the files to his pickup for the 45-minute drive from the desert to his house, and, that night, he started reading.
MR. DYE and his wife of 24 years, Elizabeth, live here in North Ogden, about 50 miles north of Salt Lake City.
The house is remarkably neat, orderly and full of evidence of Mr. Dye's disciplined, project-oriented approach to life. He built wood-edged glass boxes for three dolls on a shelf above one doorway. Behind the house sits the hot tub that he installed. In the garage, he keeps the power drill, saw and other tools that he uses for those projects.
And on that Saturday in 2005, his project was reviewing the files related to the flare program.
Among the documents was a printout of an e-mail message sent in 2000 by Ray W. Beus, then the ATK test engineer assigned to evaluate and report to his supervisors about an aspect of the student-designed igniter. In the message, Mr. Beus warned about a "more realistic scenario, which might present a significant hazard to equipment/personnel : If the flare assembly receives a significant impact (i.e., dropped) I can foresee" the plastic restraint in the igniter breaking, he wrote, "resulting in complete ignition of the flare."
Mr. Beus recommended performing drop tests to gauge the safety of the flares with the new igniter. Then he added, "You can relax, rest assured I did not include this comment/recommendat ion in the memo although I would like to have."
But according to the government, no drop tests had been performed and the company had not passed along Mr. Beus's concerns or recommendation to the Air Force. (In 2003, the company conducted an "abbreviated" test of a single flare, according to the government, but the test controlled the angle at which the flare hit the ground.)
Mr. Beus still works at ATK, according to the company. ATK declined to make him available for an interview, citing the pending litigation, and Mr. Beus did not return phone calls.
After finding the e-mail message, Mr. Dye said he called his supervisor, Robert Winter, the director of flare and decoy programs. "He listened to me read it," Mr. Dye said, referring to the message. "There was like a pause, and he said, `Keep that close to your chest.' I knew what he meant: don't tell anybody."
ATK has strongly denied that anyone at the company told Mr. Dye to keep quiet. The company, again citing the pending litigation, did not make Mr. Winter available for an interview, and he did not return calls to his office.
Over that weekend, Mr. Dye said, he continued reviewing files but found nothing as significant as the Beus e-mail message. Unable to sleep, Mr. Dye rose well before dawn on Monday, loaded the box of files into his truck and headed back to ATK's complex.
At the office, he assembled copies of documents to distribute to everyone in the war room. Mr. Dye said he did not share Mr. Beus's email message because Mr. Winter had told him not to.
The ATK team was not focused on determining just how fragile the flares were, Mr. Dye said. Instead, he said, his colleagues looked to see whether a third-party supplier might have modified the flares and thus introduced a defect.
"They went to the end of that road," Mr. Dye said, "and the buck could not be passed." ATK denies that the company tried to avoid responsibility.
A week after Mr. Dye first conducted the drop tests, ATK sent a letter to customers, advising them that the flares "may be more sensitive" than specifications allowed, if dropped.
Mr. Dye was furious. "I objected to that letter," he said. "It had no mention of an 11-inch possibility. "
A few weeks later, the Army and the Air Force notified ATK that they would not accept 6,085 flares that had been manufactured and awaited delivery. (The company says it retrofitted the flares on its own dime, modifying the igniter, and delivered them. ATK says the modified flares met the 10-foot requirement. )
In the weeks after he found the Beus memo, Mr. Dye said, he grew increasingly concerned that the company was not going to fix flares equipped with the igniter he had tested. He decided to find a way to tell the government what he had found, and, on the Web, he learned of the False Claims Act.
That federal law permits private individuals to sue on behalf of the United States if they believe that they have inside knowledge of fraud against the government. At first, the lawsuits are kept secret, under court seal, while investigators look into the accusations and decide whether to join the case. If the government intervenes and recovers money, the whistle-blower can receive up to 30 percent of the amount.
Mr. Dye also found the Web site for Phillips & Cohen, a law firm specializing in whistle-blower cases. He filled out an online application and asked for representation.
"I felt like the only avenue I had was to go outside," Mr. Dye says. He said that he was not motivated by money, and when asked what he would do if he received millions from the lawsuit, he paused for a moment and then said he would like a snowmobile.
Eric R. Havian, a lawyer at the firm who is representing Mr. Dye, said he could not recall another case involving such large dollar amounts that had evidence like the Beus e-mail message. "You don't see those kinds of documents very often," he says.
The law firm filed a complaint under seal in April 2006. Within a month, despite Mr. Havian's warnings that no lawsuit was a sure thing, Mr. Dye notified ATK that he intended to quit.
"I just couldn't go out and play the game of looking my bosses in the eye," Mr. Dye said, even though no one at the company then knew that he was working with the government.
The Justice Department investigated Mr. Dye's case and decided to join it just over a year later. Justice Department lawyers declined to comment on the ATK case. But the agency's subsequent examinations of ATK's flare program turned up more unsettling information, according to court documents.
For example, the government contends that when ATK began shipping flares with the new igniter in 2000, the company did not advise one customer, the Canadian government, of the change. (ATK says the Canadian government was notified.)
The government also contends that when the Canadian government asked about the igniter, an ATK official responded that the igniter was the standard in the United States and had been tested by the Air Force. But the Air Force tests at the Eglin base had not yet taken place at the time the flares were delivered and in any event did not include a 10-foot drop test, the lawyers wrote.
In negotiations with the United States Army over additional flare purchases, the company cited the sale to Canada "as evidence of the flare design suitability, " Justice Department lawyers wrote. In this way, the lawyers contended, ATK misled the Army into waiving testing requirements. ATK responded that there was no deception.
ATK appears ready to wage war in court and has challenged each claim made by the government. The company has asserted that because the government waived the drop test, it could not claim that the flares would have failed. And in court arguments in May, an ATK lawyer dismissed the significance of the Beus e-mail message.
"It doesn't say that the flares fail to meet a performance spec or any other contract requirement or even that he thinks they do," said Edward J. Shapiro, a partner at Latham & Watkins, which represents ATK. "He doesn't say there is a contractually required test that wasn't performed. He doesn't say there is a contractually required test or, for that matter, any other test that was performed improperly."
IT is not clear how many of the thousands of flares at issue in the lawsuit are still in use around the world; the United States Army stopped using them, according to Justice Department lawyers, and the Air Force restricted them to "emergency combat use." Lawyers for Mr. Dye say the government has mothballed at least 40,000 flares.
So far, ATK has retrofitted igniters in 14 flares that were sold to Chile and about 5,000 sold to Canada, according to a spokesman. And the company has offered to retrofit at cost the igniters in tens of thousands of flares sold to the United States government. The trial is set to begin in 2010.
