Boeing Will Be Docked $21.4 Million on Project

Boeing Co. will be docked $21.4 million in performance- based fees by the U.S. Air Force for cost overruns and delays on global positioning system satellite contracts, a program official said Tuesday.

The decision is “based on a review of the contractor’s performance compared with the fee criteria for this period,” program manager Col. Wesley Ballenger said. Boeing confirmed that the money would be withheld.

The program ran at least $266 million over budget and has had three years of delays. The money will be used to cover some of the costs of the overruns in a 12-month period ending Sept. 30, the Air Force and Chicago-based Boeing said. The company gets more than half its revenue from the defense business.

The military services have pledged to tighten the criteria used to pay fees after a Government Accountability Office report in December concluded that money was paid out even for poor performance.

The House defense appropriations subcommittee has scheduled a hearing for Thursday to evaluate the state of Pentagon contractor oversight, including payment of performance fees.

Boeing spokeswoman Diana Ball said it was the company’s idea to forgo the performance fee.

“In February, Boeing approached the Air Force about program problems with GPS IIF and, working closely with the Air Force customer, restructured the program and replaced the management team,” she said.

Shares of Boeing fell 7 cents to $75.36.