The US Justice Department is investigating export and import procedures at Honeywell International after the firm included Chinese parts in equipment it built for the F-35 fighter jet, three sources familiar with the matter said.
Reuters had reported that the Pentagon twice waived laws banning Chinese-built components in US weapons in 2012 and 2013 for parts supplied by Honeywell for the US$392 billion Lockheed Martin Corp F-35 programme.
New details have now emerged about one of those waivers, which involved simple thermal sensors that Honeywell initially produced in Scotland before moving that production line to China in 2009 and 2010. The other waivers involved high-performance magnets built in China and elsewhere.
Federal agents from the Defence Criminal Investigative Service, a law enforcement arm of the Pentagon, are working with prosecutors on the case, a person briefed on the matter said. The DCIS and the Pentagon declined to comment.
The precise nature of the investigation could not be confirmed. Typically, however, DCIS export investigations focus on whether a company violated the Arms Control Export Act by sending overseas products or technical specifications for items on the US Munitions List without first obtaining a US government license. The sensors and F-35 specifications in this case may be subject to the US Munitions List. In terms of import violations, DCIS often investigates whether companies have engaged in fraud by misleading the Pentagon as to the origin of foreign parts.
The case throws a spotlight on the reliance of American companies, even in sensitive areas, on China as a manufacturing base for basic components. In the past 20 years, much production has been shifted out of the United States to lower cost areas, particularly China.
The sensors are part of the power thermal management system that Honeywell builds to cool the F-35, start its engines and pressurize the cabin, said Joe DellaVedova, spokesman for the Pentagon's F-35 program office.
Honeywell spokesman Scott Sayres said the company decided in late 2012 - after consulting with Lockheed and the Pentagon - to move production of the sensors used on the F-35 from China to a plant in Boyne City, Michigan. It funded the move at its own cost, he said.
Sayres said the sensors were part of a basic circuit card used in products sold commercially around the world.
"We firmly believe Honeywell has complied with all applicable US laws and regulations relating to the manufacture of the component in China," Sayres said.
One of the three sources familiar with the probe, who were not authorized to speak publicly, said that it was focused on Honeywell's processes and procedures, rather than the components involved.
They were seen as low-risk items that did not pose any security risk for the F-35 program.
Honeywell's Sayres declined to comment on the Justice Department probe.
Honeywell decided to move the sensor production to China to save money, and simplify its supply line, he said.
The Government Accountability Office (GAO), the investigative arm of Congress, is also looking into the sensor issue and two others involving the F-35, as part of a report due on March 1.
DellaVedova, the spokesman for the F-35 program office, said the thermal sensors were simple parts that did not include any software and were not programmable. He said there was no security risk associated with use of the sensors.
He said all the Chinese-built sensors would eventually be replaced on the F-35s, but the process had not yet been completed. He had no immediate information on how many Chinese-built sensors had been installed on the planes.
"This will all be taken care of," DellaVedova said.