Boeing, Boeing, Gone

Defense behemoth Boeing Corporation has had more than its share of very public highs and lows of late. Losing its multibillion dollar bid for the next generation of the Air Force tankers was a blow; it went on to win its protest (a rarity in the contract world) only to  threaten to walk away from the process if government officials fail to grant an extension for submitting new bids.* A similar scenario might tank a lesser entity.

Now add lawsuit and strike to the list. (We have not confirmed rumors that Boeing has moved its headquarters to the Alamo.)

In an interesting move, the Feds are suing Big Bad Boeing, alleging the aviation giant inflated B-1 bomber equipment prices. The suit says Boeing bilked its doe-eyed client, the U.S. Air Force, for a paltry $7.5 million (probably more than the daily cost overrun on some naval programs). Deceit? Cost of doing business? Do we not now assume that either side would sell an aging female relative to make or save a buck? This is the same Air Force that chose Northrop Grumman over Boeing in the $35 billion tanker competition. Dog-eat-dog? (The contract negotiations named in the suit date back to 1990. Under the False Claims Act, the government can recover three times the amount in dispute plus penalties.)

If it’s not embarrassing enough to be sued by Big Brother, whose business remains crucial to Boeing’s bottom line, the company is facing a strike of 28,000 machinists costing the giant $100 million each day, though reports note Boeing has the war chest to weather this storm. It has been reported the two sides are nowhere close to a deal, with 87 percent of the union voting for the walk out. The strike could delay the Boeing bird, the new 787. According to The Wall Street Journal, the controversy centers around outsourcing for the 787, a plan that ultimately backfired on Boeing suits.

What impact can a law suit and strike have on the defense daddy’s shot at other contracts in the near term, say, the tanker deal or any other government-Boeing agreement? Neither Boeing’s overcharge nor its labor woes are unique, but do these companies win $35 billion deals? Not that DoD hasn’t made questionable awards in the past. (Have we mentioned those $50 million Air Force Jumbotrons lately?)

Earning the title of “Beltway Bandito” one contract at a time.

*In a move that could be seen as a Boeing victory, Defense Secretary (and occasional superhero) Robert M. Gates has scrapped the tanker contract for now, pushing further decisions to the next administration.

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