Boeing told to refund overcharges to Pentagon

June 19, 2013
Procurement
Pentagon demands
refund from Boeing

The Pentagon’s purchasing agency said Boeing must refund $13.7 million in excessive charges on spare parts, including a $10 device for which the defense contractor charged $2,286 apiece.

The Defense Logistics Agency “is seeking a refund from Boeing,” spokeswoman Michelle McCaskill said in an e-mailed statement. “The refund will be for the full $13.7 million identified” and will be requested by July 31, she said.

The agency overpaid about $1.3 million for 573 of the aluminum “bearing sleeves” used on an aircraft’s main landing-gear door that should have cost $10 each, the Pentagon’s inspector general said in an audit.

Wasteful spending resulted from agency personnel failing to negotiate good deals or to perform adequate oversight, and from Boeing’s failure to pass on savings it won from subcontractors, according to the audit report.

Boeing “has been working with the Defense Logistics Agency” and the inspector general “throughout the audit process,” Ellen Buhr, a spokeswoman for Boeing’s Global Services and Support unit, said in an e-mailed statement. “We are working with DLA to review the official report and to understand the issues identified.”

The audit marks the second time in two years that the inspector general has cited excessive parts pricing by Chicago-based Boeing, the Pentagon’s second-biggest contractor after Lockheed Martin. A May 2011 inspector general’s audit of two Boeing contracts for an Army depot in Corpus Christi, Tex., found about $13 million in overcharges on $23 million in orders. The Pentagon has recovered $2.67 million in that case, according to Bridget Serchak, a spokeswoman for the inspector general’s office.

— Bloomberg News

AUTOMOTIVE
GM leads industry
in quality survey

General Motors led one of the auto industry’s most closely watched quality measures for the first time since the survey began almost three decades ago, pacing U.S. carmakers producing their best cars in a generation.

All four of GM’s U.S. brands were ranked above average in J.D. Power & Associates’ Initial Quality Study, led by its GMC truck brand, which trailed only Volkswagen’s Porsche sports-car line. Chevrolet, Detroit-based GM’s biggest-selling brand, ranked fifth in the market, leapfrogging Toyota’s namesake brand, which had the seventh-best score.

“If you were to ask me the question, what corporation has the best quality in the entire industry, the answer would be General Motors” for the first time, David Sargent, J.D. Power vice president of global vehicle research, said in a telephone interview. The gap in quality of domestic cars to imports is now “almost immaterial.”

The results are a shift in the 27-year history of a study long dominated by Toyota and other import brands. Consumers credited GM’s Chevrolet Silverado pickup, Ford’s Mustang sports car and Chrysler’s Town & Country minivan for leading in quality, more evidence that U.S. automakers’ lineups are the most competitive in decades.

The survey, conducted annually, tracks the number of consumer complaints per 100 vehicles in the first 90 days of new car ownership. The market research firm revamped the study this year by beginning to measure the quality of new technology such as systems that warn drivers when they’re driving out of their lane or have something in their blind spot.

— Bloomberg News

Also in Business

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l  FedEx’s fourth-quarter profit fell 45 percent to $303 million as international customers traded down to less-expensive delivery options and the company spent heavily on restructuring. FedEx said 3,600 employees will take voluntary buyouts and nearly half of them have already left. The company is also retiring older airplanes. Excluding charges related to those moves, FedEx’s results beat Wall Street expectations, but the company’s profit forecast for the next 12 months was less than analysts predicted.

l  After facing a backlash from consumers over policies for its new Xbox One console, Microsoft has updated them for the device, saying that users will be able to “share, lend and resell” their games in the same way they do today. In a company blog post, Don Mattrick, president of Interactive Entertainment Business at Microsoft, said the changes have been made in response to consumer feedback to policies that would have limited video game players’ ability to lend games to friends and sell older titles on the second-hand market.

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l  A government review found that the merger of American Airlines and US Airways would reduce competition on more than 1,600 routes traveled by more than 53 million passengers. That’s a greater loss of competition than occurred with the 2010 merger of United and Continental airlines, analyst Gerald Dillingham for the Government Accountability Office told a Senate aviation subcommittee Wednesday. Antitrust regulators at the Justice Department are reviewing the proposed American-US Airways deal, which also faces a vote by US Airways shareholders and would need approval by the federal judge overseeing American’s bankruptcy case.

— From staff reports, news services

Coming Today

l  8:30 a.m.: Weekly jobless claims released.

l  10 a.m.: Existing home sales, weekly mortgage rates and leading indicators released.

l  Earnings: Kroger, Oracle.

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