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Air Force lifts ban on Boeing contracts

The Air Force Friday lifted a ban on Boeing Co. contracts, clearing it to vie for billions of dollars in government satellite-launching business.
/ Source: Reuters

The Air Force Friday reinstated Boeing Co. as a good corporate citizen, clearing it to vie for billions of dollars in government satellite-launching business and ending the longest suspension of a major defense contractor.

“We believe that Boeing has taken significant action over the past 20 months to rectify past improprieties and to develop long-lasting integrity standards that make them eligible to compete for government launch contracts again,” Acting Air Force Secretary Peter Teets told reporters at the Pentagon.

Chicago-based Boeing and the Air Force have signed an unusual interim pact envisaging new punishments if the aerospace company is indicted, convicted or new evidence of wrongdoing is found by the Justice Department, Teets said.

At stake is a chance to bid for as many as 24 launches of spy and other satellites that the Air Force is expected to start negotiating for this year or next.

Three Boeing units were suspended in July 2003 after the Air Force said the company committed “serious and substantial violations of federal law” involving illegal acquisition of rival Lockheed Martin Corp. trade secrets.

Boeing, the Pentagon’s No. 2 supplier, obtained more than 25,000 pages of Lockheed’s documents that helped it win a 1998 launch competition for a rocket program called the Evolved Expendable Launch Vehicle.

As part of its punishment, Boeing was stripped of $1 billion in government rocket business and seven of its launches were shifted to Lockheed, the Pentagon’s No. 1 supplier.

The reinstatement does not end Boeing’s current ethical woes. Nor does it address what could still be a large liability settlement involving months of additional discussions with the Justice Department.

“That’s the reason is called an 'interim' administrative agreement,” said Steven Shaw, an Air Force attorney overseeing the matter. “We can choose to terminate the agreement and resuspend if there’s new evidence” of wrongdoing.

“We don’t have any indication that any other shoes are going to drop — ever,” he added.

Federal prosecutors are continuing a criminal investigation into the illegal recruiting of Darleen Druyun, a top Air Force weapons buyer, while she was still overseeing billions in Boeing contracts.

Druyun is serving nine months in federal prison for violating conflict-of-interest laws. Boeing's former chief financial officer, Michael Sears, was sentenced to a four-month prison term two weeks ago for his role in hiring her.

Boeing said it had worked hard to restore the Air Force’s trust and confidence through an ethics training program and other measures.

“The company is committed to maintaining the highest standards of ethical business conduct at every level of the organization,” said Daniel Beck, a spokesman.