Boeing Hid Outsourcing, Says U.S.

LOS ANGELES - (CN) - The United States charged Boeing Tuesday with making false claims, alleging the aerospace giant inflated prices for decoys towed behind the B-1 bomber by $7.5 million. The government says Boeing failed to report that it reduced costs by outsourcing manufacturing jobs, after saying that it would make many of its own parts.

According to the complaint, Boeing claimed it would manufacture parts at its Palmdale Site 9 facility in its negotiations with the Air Force in 1998, despite its public announcement in March of 1998 of plans to close the facility at the end of the year.

Instead, Boeing cut costs by subcontracting parts-manufacturing. Had the Air Force known about the subcontracting, it would have negotiated a much lower price for the Towed Decoy System, which diverts missiles fired at the B-1 bomber.

Boeing employees aware of the concealment reportedly complained to their managers, but the complaints were ignored.

When asked to respond to these charges, Boeing stated that it will not comment on the specifics of the litigation, but that it believes it acted appropriately in negotiating and performing the contract in question.

Under the False Claims Act, the government can recover a maximum of $22.5 million in this case, plus statutory penalties for each of its 140 illegally inflated bills.

Lisa Palombo, the Assistant United States Attorney, is representing the government. Boeing has yet to select its outside legal counsel.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit