AMENDMENT NUMBER 1
TO
AGREEMENT BETWEEN HERLEY INDUSTRIES, INC.
AND THE DEPARTMENT OF THE NAVY
1. Background. On 11 June 2007, Herley Industries, Inc. (Herley) notified the
Department of the Navy Suspending and Debarring Official (SDO) that it had
reason to believe one or more Herley employees at its Lancaster facility had
falsified test results on components delivered to the United States Air Force
under a contract with the Boeing Company (Boeing). Herley, in coordination with
Boeing, conducted an investigation into the issue. The investigation revealed
that three Herley employees were directly involved in falsifying test data
provided to the Air Force under contract FA8107-05-C-0003. The SDO suspended
Herley Industries, Inc. effective 26 June 2007 pending the outcome of the
investigation. Upon conclusion of its investigation, Herley terminated two of
the employees for cause effective 20 July 2007. Herley suspended the third
employee without pay for a period of 30 working days effective 23 July 2007,
with a return to active employment on 4 September 2007 under a six month
probationary period. During this probationary period, any infraction will be
cause for termination.
2. Modifications. The Agreement Between Herley Industries, Inc. and the
Department of the Navy dated October 12, 2006 (the "Administrative Agreement")
regarding the present responsibility of Herley Industries, Inc. to contract with
the Federal Government is amended to reflect the following:
a. The first sentence of Paragraph 2 is amended to read:
This Agreement affects only those causes for suspension that are stated in
the Navy's Notice of Suspension dated June 9, 2006, attached hereto as
Annex A and the Navy's Notice of Suspension dated June 26, 2007, attached
hereto as Annex J. (hereinafter "the Notices")
b. Each use of the term "Notice" in the Administrative Agreement is amended
to read "Notices."
c. In addition to the access to information provided under Paragraph 5.F,
Herley expressly agrees to allow the Federal Government to conduct a
thorough Quality Management System Audit, or to participate jointly with
any of Herley's prime contractors to conduct such an audit.
Government-designated participants may include the Joint Audit Planning
Committee, Department of the Navy, Department of the Air Force, NASA, or
any other agency/entity for whom Herley provides goods or services. The
Navy Suspension Authority will notify Herley if the Government elects to
conduct or participate in such an audit.
d. Paragraph 12 is amended to include the following as its last sentence:
Subsequent to giving notice to Herley of a failure under this Agreement,
the Navy Suspension Authority may suspend Herley in whole or in part if he
deems it necessary for the protection of the Government pending the outcome
of an investigation or pending the curing of any failure to the Navy
Suspension Authority's reasonable satisfaction.
e. The term of the Administrative Agreement is extended by one year. The
first sentence of Paragraph 20 is amended to strike "three (3) years" and
replace with "four (4) years."
f. The following is added as a new Paragraph 22:
22. Herley expressly represents that no one within Herley was aware of or
participated in the test data falsification that formed the basis of the 26
June 2007 suspension other than the three Herley employees identified to
the Navy on 25 July 2007. Should the Navy learn of participation in or
contemporaneous knowledge of the test data falsification by any other
Herley employee(s) or representative(s), this failure to identify all
individuals involved shall constitute a cause for debarment subject to the
procedures established by the Federal Acquisition Regulation and any other
applicable statute or regulation. Such failure shall not be subject to the
cure notice provisions of Paragraph 12 but shall immediately constitute a
cause for debarment.
g. Herley expressly represents that it will implement all actions
identified in its Action Plan -Administrative Agreement dated 20 July 2007,
and that it will implement all actions on or before the dates indicated in
the Action Plan (if applicable).
3. All other terms and conditions of the Administrative Agreement remain in full
force and effect.
4. Authorizing Signatures.
/s/ Myron Levy 8/14/07
- ----------------------------------------- -------
Myron Levy Date
Chairman and Chief Executive Officer
Herley Industries, Inc.
/s/ Jeffrey L. Markel 8/14/07
- ----------------------------------------- -------
Jeffrey L. Markel
Chief Operating Officer
Herley Industries, Inc.
/s/ Charles L. Pourciau, Jr. 8/14/07
- ----------------------------------------- -------
Charles L. Pourciau, JR
Vice President Administration and Governance
Herley Industries, Inc.
/s/ Mark O. Wilkoff 8/15/07
- ----------------------------------------- -------
Mark O. Wilkoff
Suspending and Debarring Official
Department of the Navy