A quality-assurance engineer at PMI, a SpaceX supplier has been charged after it was discovered he had falsified inspection reports of flight critical components. SpaceX has since terminated their relationship with PMI forcing the precision machining supplier to close its doors.

The investigation into PMI Industries LLC began in January 2018 at the direction of SpaceX. James Smalley, a PMI quality-assurance engineer was arrested by the FBI earlier this week after it was discovered he had falsified 38 source inspection reports for components shipped to SpaceX. The falsified reports are believed to have affected 76 mission-critical components for no fewer than 10 missions including seven for NASA and two for the US Air Force.

Following the revelation, SpaceX immediately terminated its business with the supplier which accounted for approximately $200,000 per month. PMI has subsequently been forced to close and layoff its 35 employees.

Smalley is currently in custody awaiting trial. He faces 10 years in prison and a $250,000 fine.

“James Smalley took the act of forgery to a new level,” said FBI Buffalo Special Agent-in-Charge Gary Loeffert. “A potentially catastrophic level with the potential to not only cost millions of dollars but also jeopardize years of irreplicable work.”

This is the second high-profile instance of fraud in the launch services industry this year. In May, it was revealed that a NASA contractor, Sapa Profiles had supplied the agency with substandard materials that directly resulted in the failure of two missions costing the agency more than $700 million.





