> And from there it was relayed to the US Navy, which then fined the company. Which is how it should work.

US Navy should take the step further; terminate the contract and blacklist the company permanently (include the board of directors to ensure no hopping between companies to take advantage). Blacklist should be shared with federal agencies. This would be more effective for the company not to fuck around with it and cut off that "it is business as usual" mentality. The benefits of this is accountability.

Which is the same as killing the company. If the executives are going to be permanently jobless and destitute, then there's a strong temptation to try to cover things up, which is the worst case scenario for the Navy.

ETA: in some ways, the Navy might have reasons to prefer this contractor in the future, because the issue seems to have been caused by a lazy rogue employee and the company seems to have strong enough ethical/internal standards that the Navy can reasonably expect issues to be brought to their attention.

> Which is the same as killing the company. If the executives are going to be permanently jobless and destitute, then there's a strong temptation to try to cover things up, which is the worst case scenario for the Navy.

My response might be harsh but tough shit for the company. If the company made a choice to fraud the government, then they should be accountable for their decision. The board of directors is fully responsible for every action of their company including their employees actions as the employee are in capacity and representative of the company. If the employee went rogue/lazy then it is the company due diligence to ensure that every data is verified and correct as the company is still responsible for everything.

They simply can fire the employee and could keep fudging the data. Whelps the company did it again, gee whiz. They can fire the another employee and say it is all good. This mentality is why companies are pushing the boundaries with the governments and still can blame on their employee and get away from the accountability.

I think the point of the post above is that if a company faces a death-or-lie scenario, they're incentivized to put as much effort as possible into covering things up. Whereas if there's some leniency, they're more incentivized to cooperate and be forward about things.

In that case drop criminal charges left and right. It's still illegal to commit treason right?

We do drop criminal charges left and right in order to bring forth information. We have whistleblower protections; we have immunity in exchange for testimony.

The world isn’t black and white.

That level of accountability is very expensive however - you might find yourself wishing for the good old days when government toilet seats only cost $600.

> lazy rogue employee

Are we talking about the same individual? The one named in the article is "Director of Metallurgy". When you're in a position like that, you represent the company, especially for work orders.

> terminate the contract and blacklist the company permanently (include the board of directors to ensure no hopping between companies to take advantage).

Here, Bradken acquired a foundry that had been faking test results for decades before; eventually discovered it, and reported it to the Navy once they did. Giving Bradken the death penalty out of this seems absurd.

(Not all of Bradken's actions post-discovery were perfect, and it did take them several years post-acquisition before they detected the ongoing fraud-- so there was definitely a failure here, but...).

That provides a lot of incentive to bribe employees from your competitors to falsify data ... totally destroys their company and they can't even create a new company to compete!

And that in turn puts a very good incentive on companies to design systems where a single employee can't falsify the data!

This is why smart firms require employees to take vacation, and lock out computer access during that time. Many control frauds, particularly in accounting, are discovered when one employee is out and can not cover it up. Much of this would not get started if there is forced disconnect time.

I bribe TWO employees at my competitor ...

Independent validation.

It's not unheard of in manufacturing for random parts to be selected for testing to ensure compliance. In fact, I'd be surprise if this supplier could get away with the same fraud with GM or Ford. One of the side effects of having suppliers design just barely adequate parts is the need to rigorously test that those parts cut only the maximally necessary corners, and not one more.

Yes, this is the real solution, not over the top punishment for suppliers.

and TWO employees at your competitor can point at you for bribing if they get caught.

The NYT article about this same issue (https://www.nytimes.com/2021/11/08/us/metallurgist-navy-fals...) mentions that Bradken is "the Navy's leading supplier of cast, high-yield steel used for naval submarines." Without knowing the intricacies of the cast of suppliers for submarine parts, it's a safe bet that blacklisting Bradken would set back a _lot_ of naval construction projects by a significant amount. I imagine that dampens the enthusiasm within the Navy for crucifying Bradken as an example for the rest of 'em. If I were a competing foundry, and I had seen this coming and was in a position to show up this week with detailed quotes and delivery dates for replacements for Bradken's upcoming work, that might be a huge win for me. My guess is that there's a way for another company to 'pull' the Navy out of this massive logjam, but the Navy can't easily 'push' itself out.

reasonable if it's a systemic failure, but the company did notify the US Navy when it found out (though deflected the actual cause). sounds more like a rogue employee.

disproportionately severe penalties will have the opposite effect in future cases- as people will do more to hide faults than reporting them.

This happened at an aerospace company I worked for. Someone didn't read the paperwork closely and missed a critical yet very benign step in running a job. Engineer receives an angry wtf email from the customer which explained that because this detail was missed, the entire lot had to be scrapped. The engineer knew all too well the legal ramifications of lying so he directly told the customer "oops. our bad." This bypassed management causing a shit storm as there was no way to "smooth it over" once he admitted fault. Customer sued the company and they had to pay big $$$ to pay for the scrapped lot. Engineer was senior so all that happened was a chewing by the CEO.

As someone who works in the manufacturing of steel components for marine use, the most surprising thing for me is that there's no mention of any quality-system auditor being involved. Did the auditor miss this? Is there no auditor? If so, why was their customer (the prime contractor) willing to tolerate this? Why were the company's insurers willing to tolerate it?

No doubt the metallurgist was grossly irresponsible here, but I do wonder whether they might be making a song and dance about this one aspect to distract from a whole chain of careless practice.

Depending on how records were kept, it could have been incredibly easy to falsify the records even with an auditor checking them over. The fraud went back to the 80s so I'm sure many of those records were paper-only and continued to be paper-only for many years later. There's only so much time for an auditor to pull every string. If they don't suspect fraud in the first place, they probably aren't going to find it if it's not obvious. The fraud may have been as simple as her saying she performed a test, making up results, and writing down a list of equipment used along with calibration dates. An inspector looks at the results, sees everything is in spec, looks at the equipment list and sees it's all in calibration, everything checks out but she never performed the test to begin with. Maybe she got caught because someone found that the equipment was in use for other tests at the time she said she performed them or that the equipment was used for a much shorter time than when others ran the same test. When I test something and use calibrated equipment or tools, no one is actually checking to make sure I actually used those specific items. Quality systems kind of fall apart when people straight up lie. They work well to catch mistakes or nonconformances but a straight up lie is hard to detect unless you enforce witness signatures.

The QA is extensive. https://en.wikipedia.org/wiki/SUBSAFE

If you sell me a defective product, I'd expect some restitution, even if you in good faith told me the product was defective. A 10 million dollar fine is probably small compared to what the Navy will need to pay to deal with bad steel.

Had they not told the navy in good faith once they knew about the issue, the execs at the company would be facing jailtime just like the employee.

I'm sure that contractors have stiffed the Navy in bad faith in the past, and I'm also sure that most of the stiffing never resulted in penalties.

But, yeah, of course there's a incentive and risk landscape that executives considered when choosing whether to report or not. I'm curious about that process and also the process by which the Navy determined the fine amount. Did they take into consideration how it'd affect the company's books and levy a fine that'd amount to a slap on the wrist?

Regarding institutional incentives, it’s like this - company self-reports, is able to consider itself a victim of the person - that they were defrauded just like the Navy. They may or may not be bringing their own action against the former employee, but have every incentive to even bring something token just to get the ruling and make their victim status official. If they can be classified as a victim of the same fraud (by court, by DOJ) they can’t be held liable for the fraud. There may be some other liability the company has exposure to but this would take care of the lions share of it. Self-reporting in this framework is far better than incentivizing a cover-up. Company will likely still have an asterisk by their name insofar as contracts are concerned and have to spend a metric ton paying the audit grifters.