Boeing Will Pay $3.1 Million to Settle C-17 Suit

Boeing Co. agreed Wednesday to pay $3.1 million to settle allegations that its former McDonnell Douglas operations in Long Beach cheated the government on sophisticated tools used to build the C-17 cargo jet for the Air Force.

The allegations were contained in a federal whistle-blower lawsuit filed in 1990 by Douglas A. Oberman, a former senior inspector at the plant. Boeing acquired McDonnell Douglas earlier this year.

Oberman alleged the firm had accepted millions of dollars of defective tooling for the C-17 assembly line from subcontractors and then billed the government for the cost of repairs, rather than holding the subcontractors accountable.

The settlement closes the books on one of the most difficult technical problems in the C-17 program, which is going well today but threatened to bankrupt McDonnell Douglas in the early 1990s.

An inspection ordered by the Air Force in 1989 found that more than half the tools built for the C-17 assembly were faulty and that plant officials had altered some of the tools’ quality assurance records. At one point, the Air Force made 42 findings of key deficiencies in quality and standards at the plant.

The tooling was then among the most sophisticated in aerospace history, capable of holding the aircraft’s dimensions to tolerances of 15 thousandths of an inch. As a result, any uncorrected defects would have had serious repercussions on efficiency.

By 1992, the FBI had begun looking into whether some of the aircraft tools--which are massive iron structures that resemble a building skeleton--were purchased without proper competitive bidding. At least one executive at the plant was fired, but no charges were ever filed.

Oberman filed his suit in 1990 under the federal False Claims Act, which allows individuals to sue contractors on behalf of the government and share in any damages. But the case was kept under a court-ordered seal for six years while the Justice Department investigated. In 1996, the department joined in the prosecution.

Under terms of the settlement, the government will receive $2 million and Oberman and his attorneys will get $1.1 million.

Oberman, 42, who left McDonnell in 1990 when he filed his suit, is now in poor health and unemployed, according to his attorney, Phillip Benson of Yorba Linda.