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Engineer Charged With Bid-Rigging at U.S. Navy's Propeller Foundry

Propeller casting
Casting is the first step in the propeller manufacturing process at NFPC, followed by machining on a vertical turning center (USN file image)

Published Sep 13, 2023 9:48 PM by The Maritime Executive

Federal prosecutors have indicted a former engineering staffmember at the Naval Foundry and Propeller Center (NFPC) for allegedly rigging bid tenders to favor one company - and seeking employment at that company at the same time. The company went on to secure $26 million in U.S. Navy business, according to charging documents first reported by The Daily Beast. 

Mechanical engineer Nicole Kristen Schuster worked at the Philadelphia NFPC facility from 2015-20, and she worked on projects for the future Columbia-class ballistic missile submarine program and the Virginia-class attack sub. According to an affadavit submitted by the Naval Criminal Investigative Service (NCIS), Schuster was unhappy in this post, and told her colleagues that she would prefer to work for one of NFPC's suppliers - a Milan-based manufacturer of machine tools. 

In 2016, Schuster helped initiate a federal acquisition process to buy a new vertical turning center and gantry milling machine for use at NFPC. These gigantic, high-spec lathes are worth millions of dollars, and are purpose-built for making giant propellers - in this case, up to 25 feet in diameter.

An example of a gigantic vertical turning center, used for precision manufacturing of propellers

The request had to go through formal purchasing processes at the Defense Logistics Agency. In an email to a sales representative of the Italian supplier, Schuster said that she wrote the specs for the tender to match the supplier's product, and hoped to "influence the final choice of machine based on our technical review." 

In an update she sent the firm in 2017, she said that she had almost "everyone on board with the plan for the next VTC and to sole source to" the Milan-based company. She also texted a colleague to say that "as long as the Italians get the VTC I'm happy."

In 2017, the Italian firm won an $11 million contract for one VTC for this tender. 

During the same time period, Schuster emailed an employee at the Italian manufacturer to inquire about whether there were any open positions, according to email records retrieved by NCIS. Investigators interviewed colleagues of Schuster's at NFPC, and one individual said that Schuster "wanted to be in the good graces of the Italian companies to travel to Italy" and had "absolutely" tried to get a job with the Milan-based manufacturer in question. 

In September 2019, Schuster got in contact with colleagues in Bangor about another VTC procurement contract. She asked these colleagues for the details of a bid submission from a competing firm, an unnamed Swiss company - then sent this competitor's proprietary bid package to the Italian supplier. It included confidential information on past bids, pricing, manufacturing processes, and other information for official use only. After receiving this information, the Italian supplier submitted a bid lower than the Swiss firm's proposal and won the contract for a total of about $15 million.

For transferring this bid package, Schuster has been charged with unlawful disclosure of procurement information. She never obtained a job with the Italian supplier, and up until the time of the indictment, she remained employed by the Navy at Puget Sound Naval Shipyard.