- The Washington Times - Friday, March 4, 2005

ASSOCIATED PRESS

The Air Force yesterday lifted a 20-month ban prohibiting Boeing Co. from bidding on satellite launch contracts, saying the company had corrected the problems that led to accusations that it stole information from a competitor in 1998.

The Chicago aerospace giant was suspended in 2003 and stripped of some $1 billion in launch contracts after it was found in possession of thousands of sensitive documents belonging to rival Lockheed Martin.

Acting Air Force Secretary Peter Teets said Boeing will reimburse the military $1.9 million for the cost of investigating the incident. Boeing also will pay for a special compliance officer, reporting to the Air Force, who will monitor the company’s business ethics for the next three years.

“This has been the longest suspension of a major defense contractor, and it demonstrates how seriously we take the issue of procurement integrity,” Mr. Teets told a Pentagon press conference. “Over the past 20 months, Boeing has taken serious corrective actions.”

In July 2003, the Air Force banned Boeing from satellite launches after concluding that Boeing committed “serious and substantial violations of federal law” by stealing extensive information from Lockheed during competition for a $1.9 billion satellite launching contract in 1998.

As a further penalty, the Air Force took away a series of launches, worth about $1 billion in revenue, that were to use Boeing rockets, and gave them to Lockheed.

Both companies participate in the Air Force’s Evolved Expendable Launch Vehicle program, the military’s main system for getting satellites into space.

Under the interim agreement announced yesterday, Boeing will be allowed to compete next year when the Air Force holds a competition for a new round of launches.

The Air Force initially awarded Boeing and Lockheed Martin contracts worth nearly $2 billion over the course of 28 missions from 2002 through 2008. Boeing received the majority of the contracts, many of which were transferred to Lockheed Martin after Boeing was suspended.

Three Boeing employees were charged in connection with the reported thefts.

Boeing spokesman Doug Kennett said the company was relieved to be able to move on.

“We have worked hard over the past 20 months to restore the trust and confidence of our customer, and we are grateful that we have reached this point. The company is committed to maintaining the highest standards of ethical business conduct at every level of the organization,” Mr. Kennett said.

A Lockheed spokesman declined to comment, citing ongoing litigation.

In addition to the administrative sanctions Boeing has faced since July 2003, the company is facing separate civil and criminal investigations as a result of acquiring the Lockheed papers.

The Air Force has estimated the total cost of shifting launches to Lockheed, building a new launch pad on the West Coast and covering other financial fallout from Boeing’s document-gathering has amounted to hundreds of millions of dollars.

Boeing shares rose 96 cents to $58.38 on the New York Stock Exchange yesterday.


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