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GAO Is Probing Oversight by Boeing

August 12, 2004|From Bloomberg News

Boeing Co.'s management of vendors who process crucial military spare parts is under review by the Government Accountability Office, an official handling the probe said Wednesday.

The investigative arm of Congress last month completed reviews of contracts involving Boeing sites in Long Beach and Philadelphia, said David Schmitt, deputy director of the GAO's defense capabilities and management unit.

The investigation, which also involved 14 smaller contractors, could lead to stricter Pentagon regulation of the military aircraft industry.

The disclosure of Boeing's inclusion in the probe comes a year after Sen. Tom Harkin, an Iowa Democrat, raised concerns about the Chicago-based company's oversight of subcontractors in charge of preparing spare parts for military use. Congress last year directed the GAO to conduct the investigation. Boeing "fully cooperated," company spokesman Douglas Kennett said.

"We have begun analyzing the data we collected and drafting the final report," Schmitt said in a statement. "We reviewed their internal quality assurance processes for overseeing their suppliers and contractors," he said of Boeing and the other contractors.

The final report is due in December, he said.

Boeing is the largest private employer in Southern California, with about 36,000 employees.

Harkin is a member of the Senate defense appropriations subcommittee. In a Senate floor speech, he cited Boeing's failure in March 2000 to issue an industrywide notice warning major contractors and military services after it disqualified a parts vendor over quality process deficiencies. The company, aluminum parts processor Temperform USA of La Mirada, has since gone out of business.

Schmitt and Kennett said four parts contracts for the B-1B bomber and the CH-46 Sea Knight helicopter were reviewed.

Of the companies being reviewed by the government office, Boeing had the most contracts under scrutiny, Schmitt said.

In the Temperform case, "Even though we found deficiencies in their treatment processes, neither Boeing nor our first-tier suppliers" found any parts that did not meet treatment specifications, so an industrywide notification was not required, Kennett said.

Boeing shares rose 7 cents to $49.68 on the New York Stock Exchange.

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