spacetoday.net: Air Force levies huge penalty against Boeing

Posted: Fri, Jul 25, 2003, 10:47 AM ET (1447 GMT)
Delta 4 first launch cose-up image (Boeing)

The US Air Force announced late Thursday that it was stripping Boeing of seven existing Delta 4 launch contracts and suspending the company's launch vehicle units from competing on future launch contracts indefinitely because of the company’s unethical conduct during the initial bidding process. Air Force undersecretary Peter Teets announced that seven Delta 4 launch contracts initially awarded to Boeing in the original "Buy 1" EELV contracts in 1998 would be transferred to Lockheed Martin’s Atlas 5. In addition, three of the four "Buy 2" contracts scheduled to be awarded this summer will also go to Lockheed; the fourth will remain unassigned for now. The total cost of the lost launch contracts is estimated to be approximately $1 billion; Lockheed now has 17 EELV launches to Boeing's 12. Some of the launches reassigned to Lockheed include flights from Vandenberg Air Force Base in California; Lockheed will be given permission to convert an existing Atlas 2 pad there to support Atlas 5 launches. Lockheed will have to pay the estimated $200 million to renovate the pad, and the government will then lease it back from Lockheed for launches. The Air Force also suspended Boeing's launch vehicle units from competing for future contracts. That suspension, though, could be lifted within 60-90 days if Boeing shows to the Air Force that it has taken steps to prevent actions similar to those that took place in the 1990s — the appropriation and misuse of proprietary Lockheed Martin documents — from happening again. Boeing announced that they were disappointed in, but accepted, the penalty. The company is planning a stand-down of its entire Integrated Defense Systems business unit on July 30 for ethics training.