Micronics Files for Bankruptcy; Firm’s Parent Blames U.S.

Micronics International, the Brea defense firm that closed two weeks ago when the Defense Department refused to accept delivery of its missile-firing mechanisms, filed for bankruptcy Monday.

The firm’s parent company, Precision Aerotech Inc. of La Jolla, blamed the Pentagon for the Micronics shutdown and its Chapter 11 reorganization petition, filed in U.S. Bankruptcy Court in Santa Ana.

Precision Aerotech also said it would file a $20-million claim against the Defense Department for damages resulting the Micronics shutdown. Filing a claim is a prerequisite to filing a lawsuit against a government agency.

Last month, the Defense Contract Administration Service, which administers contracts for the military and oversees contract and quality compliance, stated that the Pentagon would no longer accept deliveries of the $4,500 mechanism because tests had shown the component to be faulty.

That decision led to Precision Aerotech’s shutting down Micronics on Aug. 29 and laying off more than 100 employees. The firm was working on a $38-million defense contract when it closed.

G. Addison Appleby, Precision Aerotech chairman and chief executive, could not be reached for comment Monday. In previous statements, Precision Aerotech officials have accused the government of unfairly harassing the company.

Defense Contract Administration Service spokeswoman Gay Maund denied the Precision Aerotech charges.

“The government regrets that the company has taken such action,” Maund said. “We have been trying to work with them to help them meet specifications. If they could do that, we would still want their products. It was never our intention to close them.” But, she said, the firm has “not been fulfilling the terms of the contract.”

Firing Mechanisms

Micronics was the sole supplier to the Pentagon of the firing mechanism used in the Phoenix, Sidewinder, Sparrow and other missile systems. The component, called a fuse, is used to trigger a missile’s launch and also to prevent it from firing prematurely.

The rejection of the Micronics component, Maund said, will temporarily interrupt the production of such missile systems while the Defense Department looks for other contractors to supply the device.

The Pentagon became disenchanted with Micronics in recent years after enduring production delays and receiving faulty products, Defense Contract Administration Service officials said. Last fall, the Defense Department initiated a criminal investigation of the company to determine whether it used a substandard production process in manufacturing the missile component. The investigation is pending, Maund said.

The Navy was forced to scrap 500 Phoenix air-to-air missiles worth $425 million last year because of faulty components from Micronics, according to the General Accounting Office.

Micronics officials have consistently denied charges of shoddy workmanship. Rather, the company has blamed the Naval Air Systems Command for forcing Micronics to manufacture the missile component from what they describe as the command’s faulty plans.

Micronics officials have stated that they advised the command to correct what they saw as more than 30 design flaws but that their recommendations were ignored or rejected. Correcting design flaws while manufacturing the device slowed production, company officials have said.