Air Force May End Boeing Ban
The Air Force is expected today to lift an 18-month-long suspension order that had prevented Boeing Co. from seeking multibillion-dollar rocket contracts, industry and government sources said.
In a major boost to the aerospace giant, the Air Force will reinstate Boeing as a “good corporate citizen” so it can once again bid for rocket orders potentially worth as much as $4 billion, sources said.
The Air Force in July 2003 suspended Boeing from seeking rocket contracts and took away about $1 billion of rocket orders after federal investigators found that two Boeing employees had stolen proprietary rocket documents from rival Lockheed Martin Corp.
In the late 1990s, the two defense contractors competed to win contracts to build a new generation of rockets, known as Evolved Expendable Launch Vehicles, or EELVs, to launch military satellites. Boeing won a lion’s share of the rocket orders, but the Air Force later took away seven of the 21 orders the company had won and gave them to Lockheed.
A criminal trial is slated for this month for the two former Boeing employees, who worked on the company’s Delta rocket program in Huntington Beach.
Sources said the suspension would be lifted after a 25-page administrative agreement was reached with Boeing that could include a financial settlement of $170 million to cover the cost that the Air Force says it incurred because of the rocket suspensions. Boeing also could face the possibility of paying a portion of the $200 million that the Air Force is paying Lockheed to build a West Coast launch pad for the rockets.
Boeing already has implemented other elements of the agreement including hiring compliance officers and creating an internal ethics office.
A government source cautioned that the announcement could be delayed pending review of the administrative agreement by the Pentagon’s general counsel but that there were no “show stoppers” as of late Thursday.
An Air Force spokeswoman declined to comment. Boeing spokesman Dan Beck said the company was not aware of the pending decision but had been eagerly waiting for the day when it can again begin to provide its rockets to the Air Force.
“We’ve got a great rocket,” Beck said. “All we want to do is get back making these rockets.”
The suspension was initially expected to last only a few months, but another ethics scandal erupted involving the company’s chief financial officer and a top Air Force acquisition official. Former Boeing finance chief Michael Sears was sentenced last week to four months in prison for illegally offering a job to the Air Force official.
The Pentagon official, Darleen Druyun, was sentenced to nine months in prison last fall after admitting that she favored Boeing on several defense contracts because the company gave jobs to members of her family at her request.
Boeing shares rose $2.12 on Thursday to a 3 1/2 -year high of $57.42 on the New York Stock Exchange.
