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S. Hrg. 104-312 AVIATION SAFETY: DO UNAPPROVED PARTS POSE A SAFETY RISK? Y 4. G 74/9: S. HRG. 104-312 Aviatioi Safety: Do Unapproved Part... HEARING BEFORE THE SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT AND THE DISTRICT OF COLUMBIA OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED FOURTH CONGRESS FIRST SESSION MAY 24, 1995 Printed for the use of the Committee on Governmental Affairs V**-, S. Hrg. 104-312 AVIATION SAFETY: DO UNAPPROVED PARTS POSE A SAFETY RISK? HEARING BEFORE THE SUBCOMMITTEE ON OVERSIGHT OP GOVERNMENT MANAGEMENT AND THE DISTRICT OF COLUMBIA OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED FOURTH CONGRESS FIRST SESSION MAY 24, 1995 Printed for the use of the Committee on Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 91-020cc WASHINGTON : 1996 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-052236-6 COMMITTEE ON GOVERNMENTAL AFFAIRS WILLIAM V. ROTH, JR., Delaware, Chairman TED STEVENS, Alaska JOHN GLENN, Ohio WILLIAM S. COHEN, Maine SAM NUNN, Georgia FRED THOMPSON, Tennessee CARL LEVIN, Michigan THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas CHARLES E. GRASSLEY, Iowa JOSEPH I. LIEBERMAN, Connecticut JOHN McCAIN, Arizona DANIEL K. AKAKA, Hawaii BOB SMITH, New Hampshire BYRON L. DORGAN, North Dakota Franklin G. Polk, StaffDirector and ChiefCounsel Leonard Weiss, Minority StaffDirector Michal Sue Prosser, ChiefClerk SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT AND THE DISTRICT OF COLUMBIA WILLIAM S. COHEN, Maine, Chairman FRED THOMPSON, Tennessee CARL LEVIN, Michigan THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas JCOHAHRNLMEcSCAEI.NG,RAArSiSzLonEaY, Iowa JDOASNEIPELH KI..LAIKEABKEAR,MAHaNw,aiCionnecticut Kim Corthell, StaffDirector Paul Brubaker, Deputy StaffDirector Linda J. Gustitus, Minority StaffDirector Frankie de Vergie, ChiefClerk (II) CONTENTS Opening statements: Page Senator Cohen 1 Senator Levin 7 SenatorLieberman 10 WITNESSES Wednesday, May 24, 1995 Hon. A. Mary Schiavo, Inspector General, U.S. Department ofTransportation, accompanied by Raymond J. DeCarli, Assistant Inspector General for Au- diting; Todd J. Zinser, Deputy Assistant Inspector General for Investiga- tions; Harry Schaefer, Assistant Special Agent-in-Charge; and Lawrence W. Weintrob, Deputy Assistant Inspector General 14 Thomas T. Kubic, Section Chief, Criminal Investigative Division, Federal Bureau ofInvestigation 22 Gabriel Kish, former Repair Station Owner 40 Harry Schaefer, Assistant Special Agent-in-Charge, Office of Inspector Gen- eral, U.S. Department ofTransportation 44 CMhiecshtaeerl PFa.uRliBouexa,chV,icJre.,Porensibdeehnatl,foEfngAienreoesrpiancge,IMnadiusnttreineasnAcseso&ciaMtaitoenriel, Air 45 Transport Association ofAmerica 45 Walter S. Coleman, President, Regional Airline Association 45 Edward J. Glueckler, President, Airline SuppliersAssociation 45 James Frisbee, Aviation Consultant 45 Hon. David R. Hinson, Administrator, Federal Aviation Administration; accompanied by Anthony J. Broderick, Associate Administrator for Regulation and Certification and William J. White, Director ofFlight Standards 55 Alphabetical List of Witnesses Beach, Chester Paul Jr.: Testimony 45 Prepared statement 137 Coleman, Walter S.: Testimony 45 Prepared statement 174 Frisbee, James M.: Testimony 45 Prepared statement 192 Glueckler, Edward J.: Testimony 45 Prepared statement ." 178 Hinson, Hon. David R.: Testimony 55 Prepared statement 212 Kish, Gabriel: Testimony 40 Prepared statement 130 Kubic, Thomas T.: Testimony 22 Prepared statement 112 Rioux, Michael F.: Testimony 45 Prepared statement 159 (III) IV Page Schaefer, Harry: Testimony 44 Prepared statement 132 Schiavo, Hon. A. Mary: Testimony 14 Prepared statement 69 APPENDIX Prepared statements ofwitnesses in order ofappearance 69 Additional statements submitted for the record: Howard B. Davidow, President, Aviation Consultants 233 Edward W. Stimpson, President, General Aviation Manufacturers Asso- ciation 242 Jack Johnson, President, Professional Airways Systems Specialists 246 Frank L. Jensen, Jr., President of the Helicopter Association Inter- national 253 Additional questions for the Record: Senator Cohen to the FAA and responses (Attachments 1-4 retained in Subcommittee files) 260 Senator Cohen to the AirTransportAssociation and responses 282 Senator Levin to the Department of Transportation Inspector General and responses 283 Senator Levin to the Aerospace Industries Association and responses 313 RegionalAirline Association response to questions from Senator Levin 316 Senator Levin to the Airline Suppliers Association and response 317 Supplement to Testimony Regarding Aviation Parts, Inspector General, U.S. Department ofTransportation, May 24, 1995 324 AVIATION SAFETY: DO UNAPPROVED PARTS POSE A SAFETY RISK? WEDNESDAY, MAY 24, 1995 U.S. Senate, Subcommittee on Oversight of Government Management and the District of Columbia, Committee on Governmental Affairs, Washington, DC. The Subcommittee met, pursuant to notice, at 9:30 a.m., in room SD-342, Dirksen Senate Office Building, Hon. William S. Cohen, Chairman ofthe Subcommittee, presiding. Present: Senators Cohen, Levin, and Lieberman. Staff Present: Kim Corthell, Staff Director; Paul Brubaker, Dep- uty Staff Director; Frankie deVergie, Chief Clerk; Don Mullinax, Legislative Assistant with the Majority Staff; Andrea Gerber, Staff Assistant with the Majority Staff; Linda Gustitus, Minority Staff Director and Chief Counsel; Elise J. Bean, Minority Counsel; and Scott Parr, Legislative Fellow with the Minority Staff. OPENING STATEMENT OF SENATOR COHEN Senator Cohen. The Committee will come to order. Good morning. Early in this century, the thought of moving 600 miles an hour, 6 miles above the Earth, was pure science fiction. Today, it is an accepted part ofour professional and personal lives. The popularity ofair travel has climbed steadily since the Wright Brothers first took off from Kitty Hawk. All of us who travel the Nation's airways take comfort in the thought that flying in the United States is safe and well regulated. We take comfort in knowing that statistically air travel is the safest form oftravel. The pur- pose oftoday's hearing is to make sure that it stays that way. In order to ensure the continuation of safe air travel, we have given the FAA the responsibility to ensure that parts installed on aircraft are manufactured by FAA-certified facilities and meet critical performance standards. Before parts can be installed, they must have identifying marks or documentation showing that the process by which they were manufactured or repaired meets FAA's approval. Unapproved parts are those that have not been manufactured or repaired in accordance with these FAA regulations. They include counterfeit parts, parts with fraudulent documentation, and parts manufactured without FAA production authority or without proper quality assurance. (l) FAA's approval is, in essence, the Government's "Good House- keeping Seal of Approval" for the aircraft parts. As with the Good Housekeeping Seal, it means nothing if standards are not fully en- forced. The Subcommittee has been investigating whether the parts being used by our Nation's air carriers and general aviation aircraft and helicopters are, in fact, legitimately produced, sold, and installed. Regrettably, the Subcommittee has learned that unapproved parts are a growing problem, that the FAA has not done an adequate job in identifying and curbing the use of these parts, and that they do pose a safety problem. While there may not be agreement this morning on the extent to which unapproved parts pose a safety risk, one thing I think is un- deniable. Unapproved parts are finding their way into parts bins, repair stations, and aircraft all across the country. Not even the Presidential helicopter is exempt from suspected unapproved parts. In 1994, an FAA investigation identified two parts brokers selling counterfeit helicopter parts. An FAA inspector identified this part as being one used on the Presidential helicopter, as well as other military helicopters, and recommended warning those responsible for maintaining these aircraft to take heed. I intend to ask the FAA Administrator, Mr. Hinson, about the outcome ofthis particular case. As recently as 3 weeks ago, top FAA officials told the Sub- committee that the issue of suspected unapproved parts has been exaggerated and is largely a paperwork issue. The officials ex- plained that most of these parts are airworthy, not critical, and in some cases were manufactured by the same companies that produce approved parts. They just do not have the required documentation. This attitude, I must say, is of concern to me. To dismiss this issue as a paperwork problem demonstrates the FAA's failure to appreciate that the integrity of its regulatory function rests on the reliability of paperwork. In fact, FAA's own inspectors handbook states, "The FAA considers the falsification ofrecords, logs or docu- ments to be among the most serious violations. Such actions war- rant the most severe sanctions." The handbook also states, and again I am quoting, "noncompli- ance with recordkeeping requirements also strikes at the very heart of our system of monitoring and ensuring compliance with safety standards. Often, without a record indicating compliance, the FAA and the air carrier have no other means to be assured that compliance has in fact been achieved." Improper or missing paper has serious implications for the aviation parts industry, and certainly it compromises the integrity of the regulatory system that is designed to assure compliance with safety standards. Without proper documentation, there is little assurance that a part is airworthy. While the counterfeit watch sold by the local street vendor may, indeed, tell time, I think we would all agree that mechanically it is by no means the same as that of the name brand. And although you can make the argument that there is no problem with unapproved parts as long as they work, I seriously doubt that anyone would knowingly travel on a plane powered by a jet engine that is the aeronautical equivalent ofa fake Rolex. In support of its contention that unapproved parts do not pose a significant safety threat, the FAA points to statistics which pur- port to show the relatively small number of suspected unapproved parts in aviation inventories. For a number ofreasons, these statistics are understated and, therefore, in my opinion, of questionable value. First, there is no mandatory requirement for parts manufacturers, brokers, repair stations, or air carriers to report suspected unapproved parts. Consequently, the FAA cannot and should not sug- gest that its statistics demonstrate the true magnitude ofthe unapproved parts in aviation inventories. Second, the usefulness of FAA statistics may also be limited given the number of confidential sources that have told the Sub- committee that some major airline employees have been instructed by management not to report suspected unapproved parts to the FAA. Confidential sources have also told the Subcommittee that FAA inspectors themselves have been known to withhold reports of suspected unapproved parts submitted by air carriers and repair stations. These inspectors fear criticism from their FAA superiors for not discovering the parts themselves sooner. Finally, the FAA's numbers are simply misleading. The FAA's database shows that 1,224 reports of suspected unapproved parts have been received since October of 1991. While that may not sound like a great deal considering the millions and billions of parts in aviation inventories, the number does not tell the whole story. Each single report may refer to thousands of individual parts. For example, one recent report from south Florida involved at least 100,000 parts. These parts were considered safety-critical because they were for aircraft brake systems. Moreover, the FAA numbers do not fully explain the gravity of the situation. Twenty-nine percent of the reports of suspected unapproved parts had the potential to cause a catastrophic component failure or directly affect the safety ofthe aircraft. Critical aircraft parts which are bought and sold with improper, forged, or missing documentation represent more than a paperwork problem. Indeed, the entire integrity of the parts distribution system is rooted in the validity and reliability of identifying informa- tion that is required by the FAA. Yet the Subcommittee's investigation shows that this documentation is easily faked and, according to many sources, the odds of getting caught by the FAA are vir- tually non-existent. We are going to hear from a witness today who was convicted of conspiring to defraud customers by selling them falsely certified parts. He will describe how he was able to falsify maintenance doc- uments and identification plates for unapproved parts so these parts, some of which were junk, could be resold to air carriers. He did all ofthis with no fear ofdetection from the FAA. Even my own staff got into the act. One of my staff members purchased these scrapped jet engine blades. I have a little package of them here. These particular blades were purchased from a junk dealer in Miami. In fact, he bought the very blades that are in the bag being held here and also are shown in the photograph on the wall. The bag had a red tag on it, and it should be noted that that red tag identifies the blades as "unserviceable." To the naked eye, these particular blades simply look like used parts. Before selling the blades, the scrap yard owner removed the red tag so the parts could not be traced back to the local repair station from which he had purchased them, and today we are going to hear testimony that will confirm that, once removed from the bag, this blade could be furnished with false documentation and easily resold to a repair station or an air carrier. The scrap yard dealer, once convinced my staff were not members of the press, but unaware that they were, in fact, Senate in- vestigators, said, "I know some of you boys rework these things, but that is not my concern." He also told them he had been buying unserviceable parts from about five separate repair stations for the past 20 years. Although scrap dealers are not doing anything illegal by reselling used and un-airworthy parts, they are fully aware of the value of the parts and certainly the less than benign intentions of those who are buying them. If manufacturers, repair stations, and air- lines would properly mutilate scrap parts prior to disposing of them, the parts would only be worth the value of the metal. While the FAA has issued a circular giving guidance on how to properly dispose ofscrap, the circular is advisory only. After today's hearing, no one should doubt how lucrative selling unapproved parts can be. For instance, this part that I held up before is a jet engine blade that can be used on 727s and on DC-9s. Some ofthese parts new sell for roughly $1,500 each. This was purchased for $1.30. This particular part, if it is cleaned up or refur- bished for a small fraction of the original cost, can then be placed, with or without false documentation, back into the aviation inven- tory. If this part were installed on an aircraft, it could easily fail and cause a catastrophic engine failure, and the best-case scenario is that the pilot could shut down the one engine and land the plan safely with only one engine functioning appropriately. The worst case is that the engine could catch on fire and cause the plane to crash. In other words, a multi-million dollar plane con- taining millions of parts could be put in serious jeopardy simply by the failure of a blade like this one costing a little more than a dollar. During the Subcommittee's investigation, we discussed this issue with a number ofpeople who have direct knowledge ofthe problem. We also interviewed scores of aviation experts and others in the industry who told us that not only are unapproved parts a problem, but that they are a "present danger to the public safety." It would be irresponsible to ignore evidence of safety problems and fail to act. I am concerned that the FAA to date has been more reactive than proactive on the issue. We should not have to wait for a major catastrophe to convince the FAA to aggressively ad- dress the problem ofunapproved parts. The simple fact is that we do not really know the extent to which unapproved parts are being used on our aircraft. And not knowing