...
By Jesus Mesa
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
When Boeing agreed late Sunday to plead guilty to one count of defrauding Federal Aviation Administration (FAA) officials — after accepting what one lawyer called a "sweetheart deal" with the federal government — the planemaker and aerospace giant effectively accepted that it would now be branded a felon.
For most companies that do business with the government, a criminal conviction — especially one for fraud — would signal the end of that relationship. Boeing, of course, is not most companies.
Boeing's plea deal, hammered out over weeks of deliberations with the Department of Justice, is related to the 737 Max jetliner crashes in 2018 and 2019 that resulted in 346 deaths. The arrangement includes a $244 million fine, three years of probation, and the appointment of a corporate monitor to ensure compliance with safety regulations.
Read More on News
By accepting the deal, Boeing will be able to avoid a costly and damaging public trial and a much bigger fine (the family members of victims who died on board those two jetliners had urged federal prosecutors to seek a penalty as high as $25 billion).
...
While the government may have been amenable to a larger fine to send a message to the embattled company, its hands were tied because Boeing is such a crucial contractor for the aerospace and defense industries, according to legal and aviation experts consulted by Newsweek.
Last year, Boeing's Pentagon contracts alone were worth $22.8 billion, according to federal data.
"Boeing is considered too big to fail due to its extensive involvement in crucial government and military projects," said Franklin Turner, a government contracts lawyer at the New Jersey-based law firm McCarter & English.
Turner believes that despite potential administrative or compliance issues, Boeing's ability to work with the government will not materially change.
"If they thought being excluded from current or future contracts was a likelihood or a real problem, I don't think that they would have accepted a deal like this," he told Newsweek.
Boeing's involvement in various high-profile projects, including Air Force One, the F-15 and F-18 fighters, and the Starliner space capsule, among other military programs, underscores the government's dependency on the company, said Addison Schonland, an aviation expert and co-founder of AirInsight.
...
"If it was anybody else who broke the rules, there would be no question. But it's not everybody else. This makes it nearly impossible for the government to cut off Boeing from contracts without significant repercussions."
Mike Borfitz, a former FAA manager and Boeing engineer who's now CEO of the consultancy Kilroy Aviation, believes that the company is still likely to receive increased scrutiny from various federal agencies.
"Boeing's status as a government contractor with a felony conviction may very well have to be examined by the FAA, Departments of Transportation and Defense, and even NASA," Borfitz said. At the same time, he emphasized the difficulty in terminating or suspending contracts in which the company is deeply involved.
An Exception to the Rule
As a general rule, felons are not able to contract with the federal government. However, there are mechanisms for exemptions. The contractor can request a waiver, which Boeing is likely to do, according to Peter Reilly and Tracy Brammeier, two attorneys representing the victims' families.
"The federal agencies involved can easily waive any complications that might result from a conviction of Boeing or its top officials," said Reilly.
"Despite Boeing admitting to a crime, the Department of Defense is already working with Boeing to ensure this continuity," Brammeier added.
...
Boeing currently employs around 170,000 people across its various sectors and plays a crucial role in national security. In 2023, 37% of revenue came from U.S. government contracts, primarily for defense and military sales, according to its most recent annual report.
In the first quarter of this year, Boeing's defense, space, and security sector generated $7 billion in revenue, while its commercial airplanes business, still affected by the 737 MAX incidents, reported $4.7 billion.
As one of just two major commercial airplane manufacturers in the world, and the only American one, Boeing is also a critical piece of the U.S. economy.
According to Turner, the McCarter & English attorney, government officials in each department or agency would need to decide whether Boeing, as a convicted felon, is entitled to a waiver.
"Boeing's vast array of contracts with the federal government underscores its critical role, suggesting that the government would likely find ways to maintain these relationships despite any regulatory challenges," he said.
He agreed that while administrative measures might be implemented to address compliance issues, the likelihood of Boeing's contracts being terminated or the company being debarred from government contracting is minimal.
'Let Off the Hook'
The families of the 737 crash victims have said they plan to object to the plea agreement, which they described as "another sweetheart deal" that does not hold the company accountable for the deaths of more than 300 people.
"The victims' families have no interest whatsoever in interfering with Boeing's federal contracting work. They want Boeing to succeed, and they are well aware of the company's importance to our national security," Reilly said.
...
"The families simply want Boeing officials held accountable for criminal activity that led to 346 deaths, and they want Boeing products to be safe so nobody else gets injured or killed."
Brammeier, the other family attorney, said that while Boeing pleading guilty to defrauding the FAA "is significant," the plaintiffs still believe that the company is "getting let off the hook."
"The criminal plea agreement does not connect the crime to the two crashes. This was intentional by Boeing to avoid admitting that this crime caused the crashes," she said.
At an upcoming hearing, the date of which is yet to be announced, the families will ask Judge Reed O'Connor to reject the plea deal. The families have requested that the court delay setting a scheduling order until at least this Friday, giving them time to organize a briefing outlining why the deal should be thrown out.
Boeing still faces civil lawsuits over the 737 MAX crashes. The company has admitted responsibility for the deaths in the Ethiopian Airlines disaster and is also dealing with suits from the 2018 Lion Air crash victims' families, though most of those cases have been settled.
Do you have a story we should be covering? Do you have any questions about Boeing? Contact LiveNews@newsweek.com
View 0 Comments
Submit Correction
View Editorial & AI Guidelines