ST. PETERSBURG — With questions swirling a day after the federal raid of Conax Florida Corp., U.S. Rep. C.W. Bill Young on Thursday withdrew support for a $4 million funding request for the defense contractor.
The move puts some distance between Conax and Young, who has secured $28.5 million in federal "earmarks" for the company since 2005.
Young's spokesman said he did not pursue the money during a key budget hearing in Washington because of the investigation, the scope and nature of which remain unclear.
"They decided they would see what develops with what (investigators) are looking at," spokesman Harry Glenn said.
Conax was open for business Thursday, one day after federal agents raided its St. Petersburg complex on 75th Street N. On Wednesday, agents with the Defense Criminal Investigative Service and several other agencies searched the building and carried out boxes and files. They would not comment on what prompted the raid or what they found.
Conax, the official legal name of Cobham Life Support Systems, is a division of British defense firm Cobham. Cobham released a statement Thursday to its investors on its Web site.
"Initial indications are that the investigation is focusing on the specifications, manufacture and origin of parts used in the manufacture of products supplied to the U.S. government," the statement said.
It went on to say that the company is cooperating fully and that the investigation could take some time.
The $4 million "earmark" request Young, R-Indian Shores, had supported was for a "belt tensioning" restraint system for Air Force aircraft platforms. Conax produces life-support and personal-survival equipment for the military and NASA. Last year, it generated $96 million in revenue, representing just more than 3 percent of Cobham's total revenue.
Young is the ranking Republican on the House Defense Appropriations Committee, which met in private Thursday morning to work out details for the 2010 budget. His clout would have almost certainly ensured inclusion of the request, which he supported, had it not been for the investigation.
Young told the St. Petersburg Times on Wednesday that he was not sure what authorities were looking for but that the company had performed well in the past.
Products created for the government have to follow strict specifications that are identified during the bidding process and then spelled out in a contract. If a contractor supplies a product such as a computer that fails to meet one of the requirements like having 10 chips instead of a dozen, it doesn't automatically trigger a federal raid, said former Tampa defense contractor Robert Castro. The government could just alert the seller and tell it to correct the mistake before legal action is taken, he said.
In the Conax investigation, based on the number of agencies involved, "it leads one to believe that this is something far more serious than just an oversight," Castro said.
American Data & Computer Products, Castro's now-defunct company, went out of business because of a debacle involving what Castro believes to be counterfeit switches installed in several U.S. submarines.
"It's one thing to counterfeit a DVD or purse in New York's Chinatown," he said. "It's a different thing when you have something counterfeited being installed in sensitive operational equipment."
If a company didn't recognize it was dealing with counterfeit parts, then sometimes it can get off the hook, said lawyer David Sugden, who deals with copyright and counterfeiting issues as the managing partner for Call, Jensen & Ferrell in Southern California.
"If the government concludes that the company was acting in good faith, and they did not know, the government may simply require them to replace the counterfeit goods with genuine goods, and perhaps the matter will end there," he said.
However, Sugden pointed out, when it comes to counterfeit products that affect safety, it could become a bigger deal.
"If we have a company that is manufacturing vehicles such as airplanes, and there are counterfeit products, it puts into question the entire integrity of the product," he said.
Contractors who work with the military have to adhere to contracts but also follow a strict set of guidelines called the Federal Acquisition Regulation, which are issued by the General Services Administration.
Nicole Norfleet can be reached at firstname.lastname@example.org or (727) 893-8785.