Boeing’s Billings May Be Subject of Probe

A federal grand jury is investigating allegations against a Boeing Co. division and at least one mid-level company official of overcharging the Air Force millions of dollars, a newspaper reported.

The government contends that Boeing Military Airplanes of Wichita overcharged the Air Force $11 million during the past decade on contracts to replace the aluminum skins of KC-135 transports and refueling tankers, the Wichita Eagle reported.

Because the five-year statute of limitations expired on some of the contracts, the felony criminal investigation is limited to alleged overcharges of $3 million to $5 million.

The Defense Department is considering civil action to try to reclaim all $11 million, according to Defense Department sources who requested anonymity, the newspaper said.

Company Cooperating

Any convictions could result in a possible maximum penalty of 10 years in prison and $500,000 in fines. The company could be fined $1 million in addition to repayment of overcharges.

The newspaper quoted Defense Department sources as alleging that the Boeing division charged the government 12% to 13% more for aluminum than it was paying its suppliers, a markup not allowed under such military contracts.

Boeing Military spokesman Richard Hill said the company has been cooperating fully with the investigation.

“The issues pertain to the pricing of certain raw materials used in the performance of the contracts, and it involves complex regulatory and accounting principles,” Hill said.

He refused to explain Boeing’s position further.

Federal prosecutors plan to present a draft indictment to the grand jury before the statute of limitations expires early next month, the Eagle reported.