Opinion ID: 2974343
Heading Depth: 3
Heading Rank: 1

Heading: T-38 Talon Speed Brakes

Text: Count 1 of the indictment involved a 2003 contract between Mr. Oh and the Government calling for Oh to provide the military with forty-six aircraft speed brakes for the T-38 Talon. These were brakes that Mr. Oh had left over from two earlier contracts. The Government alleged that Mr. Oh represented and certified that the speed brakes complied with Government specifications despite his knowing that they did not. The Government further alleged that the speed brakes had been rejected earlier as non-conforming, and that Mr. Oh resold them to the Government over a decade later, trying to pass them off as conforming parts. The history of these particular speed brakes goes back to 1988, when Mr. Oh received two Government contracts to supply the Air Force with speed brakes for its training jet, the T-38 Talon (“The T-38 contracts”). The first contract required Mr. Oh to produce the left speed brakes at an approximate total cost of $670,000, and the second contract was for production of the right speed brakes for approximately $700,000. Mr. Oh subcontracted with Cast Right, a Texas-based company, to produce the brakes. Cast Right produced the speed brakes casting, and Euclid Machine’s former quality manager, Boyd Taylor, examined them. Taylor could not measure the brake’s contour and began developing a computer program to do so. Taylor never completed the program, but was able to take preliminary measurements that showed the brakes to be “consistently out of tolerance,” that is, they did not meet the Government specifications. Taylor informed Mr. Oh of the findings before shipping the parts to the Air Force. Euclid Machine then asked for certification from Cast Right, and Cast Right 4 complied. However, Taylor still could not confirm that the parts met the Government specifications and refused to “sign off” on the parts’ being “accurate.” Taylor testified that Mr. Oh responded to the problem by saying, “well, we’ll use a certificate of conformance of Cast Right to prove that the parts were correct.” Mr. Oh then assigned Taylor to the company’s “inspection room” to finish the computer program that he had started. Shortly thereafter, Taylor was fired. In 1991, Euclid Machine prepared to ship the speed brakes to the Air Force. The company completed the DD-250 forms indicating that a Government quality assurance specialist had inspected and signed off on the parts. Jim Hartman, one of the Government’s quality assurance specialists, testified that he signed off on some of these forms in January 1991. He stated that in early 1991 he arrived at Euclid Machine intending to meet with Taylor to verify the contour data on the speed brakes. When Hartman arrived, Mr. Oh told him that Taylor was no longer with the company. Hartman stated that he still wanted to validate the contour data and that he knew Taylor had been creating software to test the brakes’ contour data. Hartman testified that Mr. Oh responded that Taylor had been upset and had “wiped out the software.” Taylor, however, denied wiping out the software and testified that he had left it with Euclid Machine. In any event, without the computer program, Hartman signed off on the DD-250 report, relying on the certification provided by Cast Right. The DD-250 report enabled Euclid Machine to ship the speed brakes to the Air Force. Euclid Machine began shipping the T-38 speed brakes to Kelly Air Force Base (KAFB) in 1991. After Euclid Machine had shipped approximately 70% of the speed brakes for which the Government had contracted, KAFB filed a product quality deficiency report (“PQD report”) stating that it was rejecting the speed brakes because they did not fit properly. Hartman provided Mr. Oh with the PQD report and made repeated attempts to persuade Oh to evaluate the brakes and to 5 resolve the problem, but Mr. Oh refused, insisting that the brakes conformed to the contract specifications. Hartman testified that, in his experience, this was very unusual for a contractor. KAFB then agreed to host a meeting with Mr. Oh so that, together, the parties could determine the source of the problem. Hartman and Mr. Oh’s brother, Dustin Oh, attended the meeting, which, according to Hartman, began with Air Force officials’ asking Dustin Oh to explain how Euclid Machine had inspected the product and found it within specifications. Dustin Oh refused to answer, stating that he was there to get answers from them, not to give answers. Air Force officials then showed Dustin Oh how they had inspected and tested the product and found it unacceptable. They again asked Dustin Oh to explain how Euclid Machine had reached the opposite conclusion, but Oh refused to cooperate. After this meeting, despite having already received and paid for 70% of the non-conforming speed brakes, the Air Force terminated the contract for convenience and kept the parts already received, allowing Mr. Oh to keep the money already paid. The Government refused to accept or pay for any additional parts under the contract on grounds that the parts did not conform to contract specifications. Some years later, the Air Force sold to Alamo Aircraft six of the speed brakes that Mr. Oh had provided KAFB under the 1988 contract. At trial, the parties stipulated that the Government sold these parts to Alamo Aircraft as “surplus,” thereby indicating that the brakes in fact met Government specifications. The Government conceded that the “surplus” label was a mistake. In 2002, Alamo Aircraft sold these same brakes back to the Government. Mr. Oh learned of this transaction, contacted Alamo Aircraft, confirmed that the Government had sold the parts as surplus and that Alamo Aircraft then sold them back to the Government as good parts. 6 In 2003, the Air Force solicited new contract bids for T-38 speed brakes. With an inventory of speed brakes that the Air Force had rejected in the early 1990s, Mr. Oh submitted a bid to supply forty-six speed brakes for $2300 each, and stated that he could deliver the parts in forty-five days. Charles Hall, a Government procurement agent, testified that the only other bid from an approved manufacturer was for $15,000 per part, and that they could not be delivered for two hundred and seventy days. Hall asked Mr. Oh how he could provide the parts so quickly, and Mr. Oh replied that the parts were remnants of the 1988 contract. At Hall’s request, Mr. Oh provided the contract number from the 1988 contract and faxed to Hall the original DD-250 forms for the 1988 parts. The DD-250 forms that Mr. Oh sent Hall represented that Euclid Machine had manufactured and delivered several sets of air brakes, and that they had been inspected and accepted by the DCMA in February 1990 and January 1991. Hall testified that he took this to mean that they were good parts. Hall also testified that the DD-250s represented that Mr. Oh offered the parts as good material. The Government investigated the earlier T-38 contract and discovered two minor quality deficiency reports, and a technician researched the contract history and found no negative remarks as to quality. Only later did the Government discover that these parts suffered from the same contour nonconformance problems as the earlier speed brakes.