February 24, 2004

Pentagon cancels £20bn Boeing contract


THE Pentagon dealt another blow to Boeing last night with the cancellation of its plans to buy 600 Comanche helicopters, a contract worth about $38 billion (£20 billion) to the US defence industry.

Boeing, under investigation by the Pentagon over contract violations, had teamed with United Technologies for the contract, originally for 1,200 of the reconnaissance helicopters. Shares in both companies fell on the news.

The Comanche programme was plagued by technical problems and it is thought that Donald Rumsfeld, the US Defence Secretary, believes that unmanned aircraft could perform the same role.

It is thought that about $8 billion had already been spent on developing the helicopter and the cancellation is one of the most costly for the Defence Department.

The US Government may have to pay termination fees of between $2 million and $4 million, it was estimated last night.

Boeing’s defence division has been hit by a series of problems, including allegations of industrial espionage and violations over the appointment of a former Pentagon official.

Last year the Pentagon suspended a $17 billion contract for mid-air refuelling tankers pending an investigation and Boeing has been forced to begin redundancies because of the delays.

Eric Miller, at Project for Government Oversight, a government watchdog group, said that ending the Comanche programme, started under President Clinton, was a good idea. “It’s just been such a disaster, the whole programme,” Mr Miller said.

It has been restructured at least five times since its inception, he added.

Analysts had estimated that Comanche would be worth about $20 billion to Boeing. The company will be hoping that the cancellation will mean further funding for its Apache attack helicopter.







Boeing: Did the Air Force “owe” them the contract?

Posted by Monica Guzman at February 29, 2008 3:00 p.m.
Categories: Corrections, Cultural comment, Just curious …


Link to original:  http://blog.seattlepi.nwsource.com/thebigblog/archives/133075.asp

News that the U.S. Air Force has picked a team from Northrop Grumman Corp. and Airbus parent EADS over our very own Boeing Co. for what could be a $40 billion tanker deal has many readers crying foul. They’re crushed that Boeing lost — of course. But some are even more enraged that a team they consider foreign won.

Boeing offered the KC-767 Advanced Tanker in the U.S. Air Force’s KC-X competition — and lost. Artist rendition by Chuck Schroeder. MSF07-1700-1 2/12/2007 (The Boeing Company)

“This is a joke. American security should be solely in the hands of American contractors,” one reader wrote. “Why is France even allowed to bid on major national defense procurement contracts?” asked another.

But the winning team isn’t as “foreign” as some might think. Nor is our beloved Boeing all red, white and blue.

Globalized trade has long been part of the American economic landscape. Many media outlets already are pointing out that China is one of Boeing’s largest foreign parts suppliers. And while the European Aeronautic Defense and Space Co., the parent of Airbus, is based in France, it’s been supplying NATO — our allies — for years. The other half of that team, Northrup Grumman Corp., is based in Los Angeles. As for where the Northrop-EADS tanker will be assembled, it’ll be on this side of the pond, in Mobile, Ala.

The terms “foreign” and “domestic” couldn’t be more blurred.

So the question is this: Is it helpful or productive in such a border-less world to view trade contracts through such a stark dichotomy? Even more critical — can it be considered fair or wise to think the Air Force owes Boeing this contract merely because they share the same national border?

Update, March 3, 2008: This post has been changed since it was first published to clarify China is one of Boeing’s largest supplier, not its largest supplier.



Business Services Industry

Boeing’s Failure to Track Foreign Workers Hurts Programs, Risks Trade Violations, says SPEEA

Business WireAugust 18, 2008

SEATTLE — While building its global supplier network, The Boeing Company is putting delivery schedules and programs at risk by failing to track the number and locations of foreign workers at its U.S. facilities, according to the union representing 21,500 engineers and technical workers at the aerospace giant.

The Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001, is uncovering a growing number of mistakes by the inexperienced foreign contractors who work directly for Boeing or a global partner. Union officials said problems with contractors contribute to delays with the 787 and other commercial and defense programs. Union efforts to address the issue with Boeing and track contract labor have been rejected.

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“We continue to uncover a pattern of abuse of foreign contract labor at Boeing facilities,” said Ray Goforth, SPEEA executive director. “This is bringing the mistake of outsourcing, which continues to delay the 787, right into Boeing offices and factories.”

In April, SPEEA asked the aerospace and defense giant for information on the process used to renew foreign worker visas and the treatment of the workers while at Boeing.

“Boeing is refusing to tell us how many foreign contractors are being brought here and what programs they are working on,” Goforth said.

Failing to track foreign contractors, particularly at defense contractors like Boeing, puts the company at risk for further violations of International Traffic in Arms (ITAR) rules. In recent years the Department of State assessed Boeing a $15 million fine and Boeing/Hughes a $32 million fine for exporting unauthorized defense articles and services to foreign employees. Each is among the largest ITAR fines in history.

To build and maintain the company’s global supplier network, Boeing brings foreign workers to the U.S. to learn engineering, technical and manufacturing jobs from existing career workers. Russian workers learn skills and take engineering work back to the Moscow Design Center where more than 1,000 engineers work on Boeing products. Similar work transfers bring contract workers from India’s TATA Group and China where Boeing plans to expand production facilities.

Earlier this year SPEEA learned that 300 contractors from Russia were working at Boeing under the B1 (business) visa program. The B1 visa is typically reserved for visitors on business trips. All of the foreign contractors were doing jobs previously performed by U.S. workers.

“Boeing is undermining its own products by arming these workers with high-tech knowledge and skills and then sending them home with work that should be performed by U.S. workers,” Goforth said. “Japan, China and Russia all have large scale efforts to enter the commercial airplane business with skills they learned from Boeing.”

In October, SPEEA begins main table negotiations with Boeing for 21,500 employees in Washington, Kansas, Oregon, Utah and California. A local of the International Federation of Professional and Technical Engineers (IFPTE), SPEEA represents 24,700 aerospace professionals at Boeing, Spirit AeroSystems in Wichita, KS, Triumph Composite Systems, Inc. in Spokane, Wash., and at BAE Systems, Inc. in Irving, Texas.


Link to Original:  http://findarticles.com/p/articles/mi_m0EIN/is_2008_August_18/ai_n28009887





24 July 2003
US military gives $1 bln in Boeing work to Lockheed
By Andrea Shalal-Esa


WASHINGTON, July 24 (Reuters) – The U.S. Air Force on Thursday shifted rocket launch contracts worth about $1 billion from No. 2 U.S. defense contractor Boeing Co.  to its rival Lockheed Martin Corp. for acquiring about 25,000 Lockheed documents during a heated 1998 contract competition.

The Air Force stopped short of formally debarring Boeing from government contracts, but said three business units of Boeing Integrated Defense Systems and three of its former employees would be suspended indefinitely from future work until corrective action was taken.

“Boeing has committed serious and substantial violations of federal law,” Air Force Undersecretary Peter Teets told reporters. He said he had never seen a case involving procurement violations of such magnitude.

“As a matter of policy, we do not tolerate breaches of procurement integrity, and we hold industry accountable for the actions of their employees,” Teets told reporters.

He said the Air Force inquiry found Boeing possessed an “extraordinary” 25,000 pages of Lockheed proprietary material at the time of the 1998 EELV contract award, in which Boeing won the lion’s share of a deal worth nearly $2 billion.

Boeing Chairman Phil Condit said in a statement, “We are extremely disappointed by the circumstances that prompted our customer’s action, but we understand the U.S. Air Force’s position that unethical behavior will not be tolerated.”

The documents gave Boeing “great insight” into top U.S. defense contractor Lockheed’s costs and pricing, Teets said. Moreover, Boeing was “not forthcoming” with the Air Force about the amount of Lockheed data it held and took nearly four years to return them all.

As a result of the findings, the Air Force decided to revoke seven contracts of 19 contracts awarded to Boeing under the Evolved Expendable Launch Vehicle (EELV) program in 1998.

The Air Force also disqualified Boeing from a second set of three launches that would now go to Lockheed and said Boeing had lost its exclusive rights to carry out important West Coast launches of military satellites, Teets said.

He said Lockheed Martin would now build its own launch facilities at Vandenberg Air Force Base in California to carry out the next three EELV contracts.

That is a critical move, since polar orbiting military satellites that can spy on China and other areas of interest can only be launched from the West Coast, analysts said.

Teets said Boeing could be reinstated as an approved contractor within 60 to 90 days, in time for the company to bid for 15 to 20 additional launches to be awarded late this year.

“It is my sincere hope that the Boeing Company moves quickly to take meaningful corrective actions so that this suspension can be lifted and they may be allowed to compete in future launch competitions,” he said.

He said he spoke with Boeing’s Condit on Wednesday, although the company was formally notified of the Air Force’s specific actions only on Thursday.

“I am anxious to see their strong response to this suspension, and it could involve some changing of personnel,” he said, adding that the Air Force had not formally requested any specific personnel changes.

Boeing said it would ask all 78,000 workers in the affected division to attend four hours of briefings on the case, which began in 1997 when Boeing hired a former Lockheed engineer, who brought thousands of documents with him to his new job.

Boeing fired the man and his supervisor in 1999, and a third official involved has since left the company.

A spokesman for Lockheed Martin, which has filed a civil lawsuit against Boeing in the case, said it was ready to take on the new work.

“We can handle the additional launches. The increased volume will not pose any problems,” Tom Jurkowsky said.

Teets said the Air Force could seek a waiver from the suspension based on “compelling need” if it decided it urgently needed to use Boeing services to get a satellite into space.

Teets said he worked at Lockheed until October or November 1999, but was unaware of this case, which first came to light in June 1999.

(Additional reporting by Charles Aldinger, Will Dunham and Chelsea Emery)

24 July 2003
Watchdog Calls for More Action After Air Force Suspends Boeing from Government Contracts


Questions still linger about company’s other deals,’ says Schatz

WASHINGTON – Citizens Against Government Waste (CAGW) commended, with reservation, the announcement today by the Air Force suspending 3 Boeing rocket units from contracts for violations relating to a bidding competition for the Evolved Expendable Launch Vehicle (EELV) Program. Boeing could be reinstated within 60-90 days or sooner if there is a “compelling national need.”  The Air Force says that it expects the units will be reinstated without any problems.

“The suspension will hopefully show that corporate espionage does not pay,” CAGW President Tom Schatz said.  “The government should only award contracts to reputable, law-abiding companies.  Companies, such as Boeing, that have not shown exemplary behavior can not be trusted with taxpayer dollars.”

The controversy surrounds a contract for the EELV program, originally won by Boeing, worth $1.38 billion.  It called for Boeing to build 19 of the 28 missiles needed to launch spy satellites and other communications instruments involved in the program, while its competitor, Lockheed Martin, built the other 9.  It is now alleged that Boeing won this contract unfairly.  The company has been accused of possessing secret Lockheed documents concerning the rocket project on which both companies were working.  Engineer Kenneth Branch, the manager of Lockheed’s rocket team, brought the documents with him when he came to McDonnell Douglas in June 1996 for a job interview.  Boeing, who had since purchased McDonnell Douglas, hired Branch in January of 1997. After Boeing won the contract, Branch and his supervisor were fired following an internal investigation that discovered the illegal papers.

“While this is a step in the right direction, it is merely a slap on the wrist for a company that has had a reputation for such behavior in the past,” Schatz continued.  “More importantly, today’s suspension shows that Congress needs to scrutinize the current tanker lease deal between the Air Force and Boeing that is nothing more than a boondoggle bailout for Boeing at the expense of taxpayers.”

In the fiscal 2002 Defense Appropriations Bill, Boeing was granted the right to lease 100 767 fuel tankers to the Air Force at a cost of $21 billion. The Air Force claims that efficiency will rise by “replacing” the older KC-135 tankers. Critics, including the General Accounting Office, assert that it is much more economical to upgrade these old tankers, at a cost of only $3.2 billion, a would-be savings of $17.8 billion for taxpayers.  The Air Force released new data on Monday indicating that the deal will cost an additional $6.8 billion in training and maintenance costs.  Congress is required to approve the deal and is currently holding hearings.

“Congress needs to do what is best for the military and the taxpayers and put an end to this sweetheart deal,” Schatz concluded.  “It is an enormous risk for the government to be dealing with a company with such questionable ethics.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.




Link to original:  http://cndyorks.gn.apc.org/yspace/articles/boeingsuspended.htm