The Air Force lifted the 20-month suspension of Boeing Co.'s satellite launch business yesterday, clearing the way for the aerospace giant to compete again for rocket launching contracts worth billions of dollars.
The suspension, the longest for a major contractor, stemmed from an Air Force investigation in 2003 that found Chicago-based Boeing had acquired thousands of pages of Lockheed Martin Corp. documents during a 1998 competition to launch weather, spy and communications satellites. In addition to the suspension, the Air Force transferred seven rocket launches, worth about $1 billion, to Lockheed.
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"We hope that everyone who does business with the Air Force takes note of this case and is reminded that we tackle ethical breaches very seriously and will not hesitate to impose significant sanctions when necessary," said Peter B. Teets, the acting secretary of the Air Force. Teets said he didn't know how much potential government work Boeing, the Pentagon's second-largest contractor, missed during the suspension.
In at least one case, the Air Force waived the suspension and awarded the company a contract. Boeing blamed the layoff of 84 employees at its rocket launch assembly facility in Decatur, Ala., on the loss of business during the suspension.
"It shows more about Boeing's claim to be indispensable than Boeing's claim to be reformed," said Charles Tiefer, professor of government contracting at the University of Baltimore Law School. "When you blacklist Boeing, you're not getting competition."
Boeing agreed to reimburse the Air Force the $1.9 million it cost to investigate the matter and to hire a "special compliance officer" to monitor its compliance with ethics rules. The officer, retired Gen. George T. Babbitt, the former commander of Air Force Material Command, has been at the company since last year. He will be supported by a staff from BearingPoint Inc., the Air Force said.
"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 said in a statement.
The suspension was originally expected to last 60 to 90 days. But it was repeatedly extended as the U.S. attorney's office in Los Angeles turned up more evidence, including that Boeing may have also used stolen Lockheed documents to win NASA contracts.
Teets said he also waited to lift the suspension until after the latest sentencing in another Boeing contracting scandal, one involving Air Force procurement official Darleen A. Druyun.
Druyun is serving a nine-month prison sentence after admitting taking a job with Boeing while still overseeing its work and giving the company preferential treatment for years before that. Former Boeing chief financial officer Michael M. Sears was sentenced last month to four months in prison for illegally recruiting Druyun.
The company is still in litigation with Lockheed over the rocket launches, and federal prosecutors in Los Angeles still are investigating the case. If the investigation finds new evidence, or if Boeing is indicted, the suspension could be reinstated, the Air Force said.