Dowty Woodville Polymer Engineering, the subsidiary based in Burton-on-Trent, is 'currently under investigation by the Defense Criminal Investigative Service in Germany for possible overcharging on some of our contracts,' an Air Force official declared.
Companies that are proved to have overcharged the US government lose the right to bid for further business in Washington, and face severe fines under US criminal law. Their executives can also be prosecuted, according to a Defense Department investigator.
The Ministry of Defence confirmed the investigation is under way. A US government employee confirmed that it is proceeding.
'I learned of the investigation two days ago,' Glenda Gentry, a contracting officer at the US Air Logistics Command centre at Tinker Air Force Base in Oklahoma City, Oklahoma, said last week.
Ms Gentry and other sources who have confirmed the investigation stressed that it is preliminary, and that no conclusions have yet been drawn.
'We have always enjoyed a good business relationship with Dowty,' the Air Force official declared. 'We will continue to conduct business as usual until after the investigation is complete.'
A spokesman for the TI Group said that Dowty Woodville Polymer received an order from the US Air Force for more B-1B bomber components last week.
The company makes inflatable seals for the B-1B that cover the gap created in the aircraft's fuselage when its wings swing back after take-off.
Documents seen by the Independent on Sunday give details of one contract between Dowty Woodville Polymer and the US Air Force. In this contract, numbered F346011-89-C-2841, the company undertook in 1990 to supply the US Air Force with 76 sets of B-1B wing seals.
The proposal for this contract, dated 23 April 1990 and co-signed by Dowty Woodville Polymer's general manager and finance director, states that the manufacture of each set of wing seals requires 1,488 hours of labour.
A note written some eight months earlier by the company's health and safety officer, a Mr B Chamberlain, says that the manufacture of a set of B- 1B wing seals requires 474.74 hours of labour.
On his note, Mr Chamberlain commented that his calculation was 'based on working at 100 per cent performance and includes 15 per cent relaxation allowance to cater for personal needs, basic fatigue allowance, cigarette breaks, etc'.
Dowty Woodville Polymer refused to discuss the contract, or the reasons for the apparent discrepancy on hours. It is not yet clear whether this particular contract is subject to investigation, and observers pointed out that it is perfectly possible the difference in hours could be accounted for by a change in manufacturing specifications or other factors.
Asked about the investigation last week, Richard Walker, a senior executive at Dowty Woodville Polymer, said: 'I'm amazed. What you're telling me comes as complete news . . . I have nothing to say, really, because I have not been informed of this investigation.'
Mr Walker declined to comment on the amount of labour required to manufacture B-1B wing seals. 'I can neither confirm nor deny the numbers you're mentioning, because of their commercial sensitivity,' he said.
TI acquired Dowty, an aerospace products company, in a hostile pounds 520m takeover last June. Dowty acquired Woodville Polymer Engineering, specialising in radar-absorbing 'stealth' defence materials, from the US company Colt Industries in 1987 for pounds 35.9m in cash.
Woodville Polymer originally developed the technology to make wing flaps for the Tornado, the Anglo-German-Spanish jet fighter. The company pays the Tornado industrial programme a royalty on its sales of wing seals in the US.
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