Boeing Facing Fine for Failing to Report Cracks, Lax Oversight

The Federal Aviation Administration on Wednesday proposed fining Boeing Co. $1.24 million--the biggest penalty in the aerospace firm’s history--for failing to report cracks on two separate aircraft and failing to assure that some of its suppliers followed quality-control procedures.

One of the suppliers cited for quality problems was Northrop Grumman, which builds structural parts for Boeing in both Dallas and Hawthorne.

Boeing and the FAA said flight safety was never directly compromised in any of the incidents, because the violations were mainly a failure to properly notify federal regulators. But laggard reporting of defects is regarded as a serious safety issue.

The penalties result from audits and incidents that occurred in 1997 and 1998, when Boeing’s factories and its 3,000 suppliers struggled to meet a growing demand for new airplanes. The company’s commercial airplane division was in the midst of changing how it built jetliners, including trying to improve quality and streamline the reporting process while assembling a record number of planes.

Boeing executives said they have made improvements to the production process, but the FAA wants to see additional work on quality control and reporting.

“They know we can build safe airplanes,” Boeing spokeswoman Liz Verdier said. “But what the FAA wants to see is the paperwork and the established procedure so everybody is doing the same thing at the same time. And that’s what they did not see.”

The penalties are not related to a special FAA audit that was conducted late last year, Verdier said. Results of that probe are expected this fall.

The federal agency proposed two penalties: $500,000 for failing to report cracks in two separate aircraft, and $741,000 for multiple incidents of quality-control problems at four Boeing subcontractors.

Boeing is negotiating with the FAA to reduce the settlement in return for agreeing to additional changes not required by the regulations, Verdier said. The highest previous penalty lodged against Boeing was $392,000.

The most serious incident involved a crack in the pressure bulkhead of a 737-200, first reported to Boeing on Sept. 27, 1997, according to the FAA. Such a crack could lead to a loss of cabin pressure in the jetliner, although no incidents were ever reported, Boeing said.

Boeing’s Verdier said the company urged the airline to replace the part and it did, but Boeing waited more than a year--until Nov. 23, 1998--to report the crack to regulators, the FAA says.

The delay occurred, Verdier said, because Boeing had to wait to obtain the part from the airline to test it. The FAA said it ordered regular inspections of the bulkhead on all aircraft every 1,200 flight cycles.

When Boeing finally received the part and conducted its own testing, engineers realized it was a safety-related issue, Verdier said. She blamed the slow response partly on a complex reporting system that the company has been trying to streamline.

“We’re trying to come up with more processes that are less complex,” she said.

Boeing is required to report safety-related issues to the FAA within 24 hours after making a determination.

The FAA also said Boeing delayed notifying the agency about cracks in a horizontal stabilizer wing on a 737-100 on Aug. 7, 1997. The horizontal stabilizers are the short wings at the rear of an aircraft that control the plane’s pitch.

Boeing waited until June 2, 1998, to report the problem, again blaming delays in receiving and studying the questionable part.

The other penalty involves oversight of Boeing’s 3,000 suppliers. Boeing is responsible for the quality of parts built by its suppliers.

The FAA cited four subcontractors for a total of 17 violations, including failing to check machine tools, improperly heat-treating products, failure to keep up with certification for quality-control workers and failing to make corrections raised in earlier audits.

The contractors, in addition to Century City-based Northrop Grumman, which builds horizontal stabilizer systems in Dallas for the 747, 757 and 767, are:

* Kayaba Industries of Tokyo, which makes skid controls for the tail sections of the 757, 767 and 777.

* Aerospace Technologies of Port Melbourne, Australia, which builds wing flaps for the 747 and rudders for the 757 and 777.

* Part Control Systems of Ogden, Utah, which makes controls that power wing flaps on the 737, 747, 767 and 777.