what would you do??

Ok - so my stepdaughter is back living with mum the school week - at parents evening in October the school told us she was dropping grades for not turning in homework, I spoke to her mum as she didn't attend parents evening and asked that she keep an eye on homework, the response was that she has 5 kids and can't keep an eye on just 1 - so my husband and I set up a chart, we know when homework is coming out, what the due dates are and what the homework requires - it's been working like a dream... until last night.... SD had to make a volcano, we provided all materials on Sunday night, on Monday night she sends a pic of the finished article - a beautiful volcano, all paper mache and painted - but not something SD would have had time to create in the time between dropping off the materials and the pic coming through.... she tells me the story of how it's been made and mentions it's a joint project with her friend - I have now seen messages between her and a friend that date back to just prior to the pic being sent to me basically asking for a pic of the friends finished project and telling her that she needs to put both their names on it otherwise SD will get into big trouble for not completing the homework - it also shows this poor girl stayed home and finished her volcano project whilst SD was away to a Christmas fair.  Hubby and I are in two minds how to tackle this. Should we contact the school and tell them SD had no involvement in the project thus damaging her grades? Should we let it slide but deal with it personally at home? I don't feel comfortable this poor girl sharing her credit with SD who contributed nothing - equally don't want to be the parent that gets SD grades reduced ??? Any advice?