The company quickly settled for $25.6 million. “A sight that ‘almost works’ is not acceptable,” said Naval Criminal Investigative Service Director Andrew Traver in a news release the day the settlement was announced.

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But more than four months later, the equipment has not been recalled or replaced, say current service members and military officials. Instead, it is still used by some units under Special Operations Command (SOCOM), according to Navy Cmdr. Matthew Allen, a spokesman for SOCOM. Units under SOCOM include Navy SEALs, Army Green Berets, Marine Corps Special Operation units, Delta Force and SEAL Team Six. The Marine Corps is also continuing to use thousands of the sights, said a Marine Corps spokesman, Maj. Tony Semelroth.

The company says it has fixed most of the problems raised in its dispute with the government — except for the one that could be the most serious, based on the government’s allegations.

That problem, known as thermal drift because it is weather-related, can cause the holographic weapon sight, or HWS, to be off target by six to 12 inches when a shooter is 300 feet away from a target, a common distance in a combat zone, according to the government’s lawsuit. Missing a target by as much as a foot can be disastrous for a soldier since it can be the difference between landing a fatal shot and missing the target.

In the lawsuit, an unnamed employee at the manufacturer was quoted as saying of this particular defect: “This is likely one of the worst types of failure, since most users won’t notice the problem until their life is on the line.”

The defect tends to surface when the sight is exposed to extreme temperatures, both hot and cold, according to the company — a norm in some combat environments such as Afghanistan, where wide changes in temperature are common.

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The website of L-3’s EOTech unit, which is responsible for the sight, acknowledges that the thermal-drift problem has not been resolved. “There is no repair currently available to eliminate thermal drift,” EOTech’s website reads. “If your HWS experiences a degree of thermal drift that is unacceptable to you . . . please contact EOTech . . . to obtain a refund of the purchase price.”

“We believe that many of our customers are satisfied with the performance of their holographic weapon sights,” said Jason Maloni, a spokesman for EOTech, in an email. Maloni added that the company stands by its products and that it is pleased with the progress it is making toward remedying the thermal drift issue.

The Pentagon acknowledges that some troops are using this particular sight. “We take this matter very seriously and pledge an unshakable commitment to the safety and well-being of our U.S. forces,” said Air Force Lt. Col. Eric Badger, a Pentagon spokesman.

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SOCOM spokesman Allen said the sights are “only used in a role where the limitations of the equipment are not in conflict with the safety or effectiveness of our warfighters.”

But others have moved more swiftly to remove the sights altogether. In December, just weeks after EOTech settled its lawsuit with the U.S. government, the Denver police department issued a department-wide memo to pull the sights off its rifles immediately.

A series of problems

Complaints about the sight and its various models date back to the mid-2000s, soon after the Pentagon began regularly purchasing the equipment, a small rectangular device that sits on top of the rifle and projects holographic crosshairs over the target to help the shooter aim.

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In winter 2007, when the company tried to secure a contract with the Norwegian military, the Norwegians found that in temperatures below 20 degrees, the sight began to fail, court documents assert. The crosshairs would expand and distort, causing the sight to be inaccurate.

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EOTech tried to fix the cold-weather issue but never told the Pentagon, which had by then purchased large quantities of the sight, according to the U.S. government’s lawsuit.

Around this time, court records allege, a sales and marketing employee wrote an email to EOTech’s co-founder voicing concern that the company was not properly disclosing the cold-weather defect.

“Is it worth risking one person’s life on this? What if there is a guy in the mountains in Afghanistan, and he brings up his sight . . . on the enemy who has the drop on him with an AK[?],” the employee wrote. “He takes aim as quickly as possible and puts a shot that misses wide due to the distortion of the reticle [the crosshairs]. He’s dead a fraction of a second later. . . . This is a dramatic example, but this is the risk that is posed the longer the end-user is unaware of the risk.”

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In spring 2008, EOTech presented the problem to the U.S. military and said it had a solution, according to the lawsuit.

In its proposal, the company stated that EOTech “has not received a single report of a problem from the field regarding optical performance of the sight at cold temperature” and failed to mention that the Norwegians had rejected the sights because the issue could put their soldiers’ lives at risk, according to the government’s complaint. The firm claimed that the fix was undertaken on the company’s own initiative, the lawsuit said.

Meanwhile, another problem was emerging with the sight — this one having to do with its performance in humid climates.

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Despite EOTech advertising that some of its sights were waterproof after being submerged 66 feet underwater, the sights — through faulty seals — would accumulate moisture, causing the glass around the crosshairs to fog and the crosshairs themselves to dim, according to the lawsuit. Even though EOTech knew about the issue for years, as alleged in court records, the company did not tell the U.S. military until March 2013 during a contract review and after a video on YouTube appeared that showed the crosshairs fading.

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In July 2014, the company told the Pentagon it had fixed this other problem as well. In the run-up to the announcement, however, there were still worries inside the company, according to the lawsuit.

A project manager relayed concerns from an employee to EOTech’s president, according to court records, saying, “[The employee] is concerned that as an operator goes through that door in combat that the device will fail causing the operator to be killed or wounded.”

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In both cases — with the cold-weather problem and with the humidity issue — EOTech said the “fixes” were upgrades to a sight it claimed had already met the military’s specifications, according to the lawsuit.

But a year later, the FBI, which was also using the sights, stumbled on yet another issue with the equipment after conducting tests in its ballistic research facility.

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Unlike the problem discovered by the Norwegians, the crosshairs did not change shape. Nor did it dim as with the humidity problem. Instead, hot or cold temperatures were causing the reticle to move, unbeknown to the user.

With help from the U.S. Navy’s Crane division, the FBI presented EOTech with evidence of the problem, called thermal drift. In November, the U.S. government sued the company for fraud. The company settled on the same day the lawsuit was filed.

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A disclaimer included with the equipment after the settlement acknowledges the thermal-drift issue. A month later, EOTech president Paul Mangano, who was also named in the government’s lawsuit, resigned from the company. Mangano declined to comment for this article.

Marines still use the sights

By this time, the sights were widely in use by the U.S. military. Since 2001, according to publicly available contract data, EOTech has been paid about $24 million in the purchasing of the sights. Every branch of service, including the Coast Guard, has purchased them.

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The item is so ubiquitous that the Twitter account of the Navy SEALs, who are still using the sight, features a picture of a person holding a rifle mounted with the EOTech product.

According to Marine Corps spokesman Semelroth, the Marine Corps continues to use 6,000 of the sights purchased between 2007 and 2012 — the years in which some of the most serious issues were found with the sights.

“At this time, the Marine Corps has not been directed nor does it intend to dispose of these systems unless defects are discovered that jeopardize our Marines’ safety or negatively impacts their abilities to accomplish the mission,” Semelroth said in an email.

Toward the end of last year, SOCOM issued a military-wide “Safety of Use Message” that highlighted the limitations of the sight, noting that the military was “developing a bridging strategy” for the equipment.

According to Allen, SOCOM is evaluating other sights, including a potentially improved version of the EOTech for a long-term replacement for SOCOM’s close-combat sight requirements. Semelroth said the Marine Corps is conducting a similar search and running “a series of tests on its EOTech inventory to confirm performance meets or exceeds the equipment requirement.”

State Department security teams also use the sight at U.S. consulates and embassies around the world, though they do not use the sight exclusively, according to Aaron Testa, a State Department Diplomatic Security spokesman.

According to Testa, the State Department Diplomatic Security Service “is in the process of procuring replacements for those EOTech optics we have deemed necessary to replace.”

Following the lawsuit’s settlement, EOTech has also not issued a recall.

Anthony Tai, an EOTech co-founder who later served as the chief technology officer of the company until 2011, said that the company should have recalled the sight. As one of its original designers, Tai was consulted on a number of the equipment’s issues prior to his departure from the company, according to the lawsuit.

“But you recall it and then what?” said Tai, who still occasionally consults for the company and said the firm has struggled to resolve the problem. “You need to replace it with something that has all the problems fixed. No point in replacing it with the same thing.”

EOTech’s sights are just one of many publicly available products that accomplish the same task. And some other government agencies have already gotten rid of the holographic weapons sights.

During an October visit to the FBI’s armory, agency personnel were seen disposing of the sights in bulk. The FBI, which declined to comment, uses sights manufactured by Aimpoint.

Allen said EOTech is not fulfilling any new contracts with the military’s Special Operations forces. But EOTech has not been prohibited from “submitting for future business.”

Julie Tate and Steven Rich contributed to this report.

This story has been updated to clarify remarks by Cmdr. Matthew Allen, a spokesman for SOCOM.