FBI Adventure: Florida
FBI Adventure: Florida
Kennedy Space Center Repairs
Briefing: In 1993, the Jacksonville Division of the FBI received an anonymous tip that a certain company (Company A) had committed fraud against the government by bid-rigging a contract awarded by the National Aeronautics & Space Administration (NASA) at the Kennedy Space Center. According to the tip, Company A had purposely submitted false and inflated bills and committed outright theft on the contract.
To establish the basis for this case, we need to look back to 1992. At that time, Congress passed legislation mandating that a substantial percentage of federal government contracts be awarded to small disadvantaged businesses and/or small woman-owned businesses.
The new legislation hurt Company A’s chance of winning the NASA contract—it was neither a small disadvantaged business nor a small woman-owned business. That’s when the owners of Company A had an idea of how they could comply with the “small woman-owned business requirement” of the law. They created a fake company called Company B and installed their wives as sole employees and officers. The plan? Once Company B won a contract, it would hire Company A as a subcontractor to perform the actual work.
It was soon announced that quotes were being solicited for repairs to Launch Pad 39A, the launch pad for NASA’s Space Shuttle Fleet. Being near the Atlantic Ocean, corrosion and constant use required the entire structure to be sandblasted, repaired, rewired, and cleaned at an estimated cost of $3.2 million. This meant repairing what was essentially a giant jungle gym the size of a twenty-story building!
Company B submitted the lowest bid, matching NASA’s estimate perfectly. In fact, the company matched the costs of the different parts of the project exactly, line by line. A coincidence? Sources said that Company B obtained the estimate from someone on the inside.
Once the company began its work it realized it couldn’t make a profit, so it began to inflate work costs. Company B claimed more resources were needed to complete the job on time, eventually submitting a total of approximately $10 million in claims, about 90 percent more than the amount of its original bid.
Regional Facts
Location:
Country: United States
State: Florida. The Kennedy Space Center is on the Atlantic Coast in Brevard County in central Florida.
Area in Space Center: Launch Complex 39. The Launch Pad under investigation, 39A, is located 18,000 feet from the main area of Launch Complex 39. That distance is more than 50 football fields.
Climate (weather example from July 21, 2014):
Temperature: Maximum of 89 degrees Fahrenheit, minimum of 75 degrees Fahrenheit.
Wind: Southeast at 8 miles an hour.
Launch Pad Facts:
Shape: Launch Pad 39A, and an almost identical Launch Pad 39B, are roughly octagonal in shape.
Distance Between Pads: The distance between Pads 39A and 39B is nearly 8,700 feet. This distance equals 24 football fields.
Repair Facts: The repair of Launch Pad 39A used more than 13,000 gallons of paint. This much paint would fill the inside of a railroad car. A total of 1,800 tons of sand were used in sandblasting the Launch Pad.
Other Facts:
Both Launch Pads are extremely close to water on raised pads. Launch Pad 39A is 48 feet above sea level and Pad 39B is 55 feet above sea level.
Each Pad’s base contains 68,000 cubic yards of concrete.
There is approximately 1.25 million feet of tubing and piping in the Launch 39 Complex. This is enough to reach from Orlando to Miami, Florida.
Map of the Region
Brevard County, Florida, where the Kennedy Space Center is located. Map courtesy of Florida’s Department of Transportation.
Photo of Launch Complex 39. In the distance, towards the Atlantic Ocean, are Launch Pad 39A (on the right) and 39B (on the left). Photo courtesy of the National Aeronautics & Space Administration.
Photo of actual Launch Pad 39B. Launch Pad 39A from the investigation looks very similar. Photo courtesy of the National Aeronautics & Space Administration.
Mission Status
During the investigation, invoices discovered by investigators revealed charges to the Space Shuttle project for non-related items and home building materials. Investigators then discovered that Company B’s Project Manager was building a personal residence and had charged many of the material costs to the NASA project.
To make matters worse, once the project was supposedly completed, NASA discovered that sand from all the sandblasting had contaminated the “clean room” used by the shuttle astronauts. Not only did this cost NASA more money, but it also meant that the Shuttle had to be moved to an alternate launch pad for its mission to repair the Hubble Space Telescope. (A repair of the Hubble Telescope is pictured right).
The FBI and NASA joined forces, and their efforts ultimately resulted in the first violation of a major fraud statute prosecuted in the Middle District of Florida. The wives finally admitted that they were placed as the heads of Company B for the sole purpose of obtaining contracts for their husbands’ company. After six years of extensive investigation and negotiations, Company B agreed to plead guilty to the violation of major fraud and was fined over $1 million.