Boeing Fires Back Over ‘Used Helicopter Parts’ Charge

by William White | October 15, 2013 9:33 am

boeing1 Boeing Fires Back Over 'Used Helicopter Parts' Charge[1]

Boeing (BA[2]) denies that it overcharged the U.S. Army by $7.4 million to $16.6 million[3] on a $4.4 billion helicopter contract.

The claims that Boeing overcharged the U.S. Army for helicopter parts comes from a report made by one of the Pentagon’s inspector generals. The report states that Boeing overestimated how many new parts it would use in the construction of 181 CH-47F Chinook helicopters under a five-year contract. It claims that Boeing used more used parts than what it had estimated. Boeing disagrees with this report, instead claiming that it complied with the contract and that it adjusted its proposal for a second five-year contract. According to industry experts, the fixed price contracts were carefully negotiated between the company and the government. Both the government and Boeing took a risk with the contract. If Boeing had went over on the cost to create the helicopters, then it would have had to handled the extra cost on its own, reports Reuters.

The inspector general’s report didn’t advise[4] the Army to seek a refund for overcharges because it’s unlikely that there is a legal basis to do so, but it did suggest that Boeing could voluntarily refund the overcharges.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/04/boeing1.jpg
  2. BA: http://studio-5.financialcontent.com/investplace/quote?Symbol=BA
  3. $7.4 million to $16.6 million: http://www.reuters.com/article/2013/10/14/us-boeing-helicopters-report-idUSBRE99D0MT20131014
  4. didn’t advise: http://www.businessweek.com/news/2013-10-14/boeing-charges-u-dot-s-dot-for-new-copter-parts-while-reusing-old-ones#p1

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