On February 21, 1995, at 0845 mountain standard time, an Israel Aircraft Industries 1124, N66JE, sustained substantial damage from an onboard fire while standing on the ramp at Stapleton International Airport, Denver, Colorado. The copilot, who was aboard, was not injured. Cabin preparation for a flight later in the day was being conducted at the time of the incident. According to the first officer who was conducting cabin checks with no power on the aircraft, he turned on the oxygen valve, heard a loud hissing sound and an immediate fire occurred. The first officer evacuated the aircraft and local ramp personnel extinguished the fire before the airport fire department arrived. However, the cabin and flight deck were scorched with substantial melting, and a large hole was burned in the pressure vessel in the vicinity of the oxygen regulator. The oxygen regulator was melted in the fire and meaningful examination for function and leaks was not possible. The oxygen bottle was removed and forwarded to Israel Aircraft Industries, Engineering Division, for detailed examination. Their report is attached and provides information that the oxygen bottle contained deposits consisting of phthalates, hydrocarbons, fatty acids and zinc bis (n,n-diethyldithiocarbamate), the latter being documented as a catalyst. Their conclusions were that there was oil present in the oxygen cylinder. A review of maintenance activity on the oxygen cylinder was conducted and records were located which provided information that the oxygen bottle had been tested and cleaned by TEC AIR Services, Northport, New York, on November 4, 1990, and on January 11, 1994. (Copies of work orders are attached.) TEC AIR Services was a Certified Repair Station (CRS) No. MA1R315K. The FAA provided information that TEC AIR Services, had been investigated by the FAA for failing to properly overhaul and repair oxygen cylinder assemblies before returning those items to service. The FAA investigation resulted in repair station certificate revocation. The President of Professional Jet Management, the operator of the incident aircraft, was queried. He stated that he had a Hawker 700 jet, N700AC, which had oxygen bottle service by TEC AIR. This bottle was inspected and the inspection revealed that the bottle was unserviceable due to internal corrosion. Further, the FAA published an Advisory Circular 43-16, dated February 1995. In that publication Mr. Fred Stein, Technical Branch Manager (AEA 230), with the Eastern Regional Office pointed out that TEC AIR, in many instances, may have failed to properly overhaul and repair oxygen cylinder assemblies before returning them to service.