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Audit says that Boeing should lose $271 million in rocket billings

interns Contributor

Boeing Co., the No. 2 U.S. defense contractor, should lose as much as $271 million in government payments for satellite launch services because it violated federal accounting rules, according to the Pentagon’s audit agency.

The Defense Contract Audit Agency, in a July 23 audit, recommended that the Pentagon require Boeing to reimburse $72 million that was previously paid, agency director Patrick Fitzgerald said in an e-mail statement.

Fitzgerald said the Defense Contract Management Agency, which monitors contractor performance, also should notify the joint Boeing-Lockheed Martin Corp. United Launch Alliance that the government won’t pay another $199 million in “unallowable” pending support costs. Boeing was notified of the finding on July 28 and doesn’t agree, a company spokesman said.

The auditors reviewed whether Chicago-based Boeing improperly billed the Air Force in a 2006-2008 contract for labor, management, quality control and support costs that had been incurred between 1998 and 2006 in the Delta IV rocket program.

Boeing was “in non-compliance” with federal accounting standards that require billings to take place during the year when the costs were incurred, Fitzgerald said.

‘Legitimate Costs’

Boeing spokesman Joseph Tedino, in an e-mail statement, said “the costs at issue were legitimate costs of the Delta program,” which the government acknowledged by agreeing in 2006 to pay for those items. “Boeing believes its 2006 agreement was appropriate, and that the United Launch Alliance’s recovery of the costs is fully compliant” with government accounting standards, Tedino said.

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Full Story: Boeing Should Lose $271 Million in Rocket Billings, Audit Says – Bloomberg