Internal Northrop audits and documents appear to contradict key points of testimony that a company executive made to Congress in defense of the firm's performance in the troubled MX missile guidance system program.
When Northrop executives were called before Congress this summer to answer critics and explain why the company was four months behind schedule in deliveries, they described allegations that the missile was flawed as "nonsense."
But Northrop auditors, in addition to an Air Force scientific advisory board, have substantiated in written reports at least some of the allegations made by whistle-blowers that Northrop's manufacturing procedures are disorganized and its products are technically suspect.
One draft audit discloses that at least seven MX guidance systems contained parts that did not meet specifications and 11 other systems contain unidentified parts that lack any documentation. The audit repeatedly finds that "employee discipline and managerial emphasis . . . is lacking."
Another audit seems to refute Northrop statements that parts purchased through a fictitious company set up with a quarter of a million dollars of Northrop "petty cash" never ended up inside missile guidance sets. The audit said at least six groups of parts that were used inside guidance systems were never inspected and came from unapproved suppliers. They were purchased through a highly irregular organization, known as Liaison Engineering Services, that was set up by Northrop employees to buy parts.
The auditor who investigated the MX program and who wrote some of the reports, Northrop senior auditor and project leader T. F. Shielke, has gone into hiding and was the subject Tuesday of an FBI search. Shielke told The Times in an earlier interview that Northrop management attempted to suppress his findings and discredit his work.
"They don't want to fix anything," he said. "The bottom line is that I became very discouraged and almost disgusted with Northrop's attitude toward its responsibility."
Meanwhile, the audits are expected to be part of a congressional hearing this morning when Northrop Vice Chairman Frank Lynch will be called to testify before the House Energy and Commerce Committee's oversight and investigation subcommittee.
Rep. John Dingell (D-Mich.), the subcommittee chairman, said in an interview: "Northrop is going to have to claim either fraud or incompetence, I am not sure which. There is an unfortunate third choice that is the worst of all worlds. That is that they are both."
Shielke had been expected to testify before the subcommittee until he disappeared last week. Dingell asked the Justice Department on Monday to conduct a Federal Bureau of Investigation search for him.
Shielke had originally provided the documents to Herbert Hafif, a Claremont attorney who is suing Northrop under the federal False Claims Act. Hafif then provided the documents to the subcommittee, The Times and CBS News' "60 Minutes."
Hafif said Tuesday that he had been in telephone contact with Shielke and that he "refuses to come forth at the present time until the concerns for his safety have been met."
Shielke was hired by Northrop in June, 1986, and assigned to audit the operations of Northrop Electronics Division, he said. Before that, he was an auditor for about 16 years at Lockheed, he said.
Defective Metal Challenged
In October, 1986, he and two other Lockheed auditors filed a still pending lawsuit that alleged Lockheed used defective metal in the C-5B aircraft. Shortly afterward, Northrop assigned him to conduct various audits on its MX program, according to Robert Kilborne, an attorney working with Hafif.
Four key audits and memos, along with personal handwritten notes from Shielke of audit committee staff meetings, were obtained by The Times from Hafif. Of the four audits, two were written or directed by Shielke and two were authored by other individuals at Northrop.
The audits leaked by Shielke address problems in Northrop electronics clean rooms, lack of traceability of critical electronic circuits, the activities of the fictitious companies and problems in manufacturing inspection procedures.
Northrop officials questioned the completeness of one particular audit, involving the alleged lack of traceability, noting that it was undated, unsigned and had never been sent to senior management.
A Northrop spokesman said the draft "fails to mention" that the parts in question were properly reviewed by a formal Northrop materiel review board and the Air Force. He said the Air Force specifically approved the use of the parts in 1986 and 1987. Such approvals are sometimes granted under waivers and deviations.
In addition, he said the guidance sets involved in the audit have recorded 33,000 hours of operations with a failure rate that is 10% better than planned.