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Air Force lifts Boeing suspension

Press Release From: US Air Force
Posted: Friday, March 4, 2005

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Air Force officials removed the suspension of three Boeing Co. units associated with its rocket business March 4.

The company's Launch Systems, Boeing Launch Services and Delta Program business units were suspended July 24, 2003, for serious violations of federal law, officials said. The 20-month suspension has been the longest for a major defense contractor.

"We believe that Boeing has taken significant action to rectify past improprieties and to develop long-lasting integrity standards that makes them eligible to compete for government launch contracts again," said Peter B. Teets, acting secretary of the Air Force.

An interim agreement between Air Force and Boeing officials has been signed to protect the government's interest. Air Force officials may revoke the agreement and reinstate suspensions if Boeing is indicted or convicted, or if new evidence is discovered.

The conditions of the agreement specify that Boeing officials must submit to outside verification of their remedial measures and their compliance with the interim agreement through a special compliance officer. Retired Gen. George T. Babbitt, the former commander of Air Force Materiel Command, is the special compliance officer who will report to the Air Force on the status of Boeing's remedial actions.

Boeing officials will also be required to agree that any of their costs related to the evolved expendable launch vehicle misconduct, including costs of defending the civil litigation, cannot be charged to the Air Force.

Some of the actions Boeing officials have taken include recognizing management responsibility for the ethical conduct of the organization and making significant and far reaching changes to their business processes and culture. Boeing officials have also reimbursed $1.9 million to the Air Force for its costs of reviewing the matter.

"The Air Force can now move forward to fulfilling the nation's need for assured access to space by having two launch systems which will secure our ability to launch our vital space-based capabilities," Mr. Teets said.

An Air Force inquiry discovered that Boeing possessed thousands of pages of Lockheed Martin proprietary EELV documents during the 1998 source selection.

As part of its sanctions, Air Force officials reallocated seven launches awarded to Boeing during the 1998 source selection to Lockheed Martin, permitted Lockheed Martin to develop a west coast launch capability at Vandenberg Air Force Base, Calif., and disqualified Boeing from the award of three additional launches and awarded that work to Lockheed Martin.

The Boeing Delta IV and Lockheed Martin's Atlas V are the two families of EELVs developed with the Air Force to modernize and reduce the cost of the nation's spacelift operation while providing the United States with assured access to space, officials said.

Full text of the agreement can be found at www.af.mil/library/posture/Interim_Admin_Agreement.pdf.

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