Boeing Company to Pay $25 Million For Botched Blanket Kit
The Boeing Company will pay the United States $25 million to
resolve allegations that the company performed defective work on
the entire KC-10 Extender fleet, the Justice Department announced
today. The KC-10 Extender is a mainstay of the Air Force's aerial
refueling fleet in the Iraq and Afghanistan war theaters.
The lawsuit alleged that Boeing defectively installed insulation
blanket kits in KC-10 aircraft while performing depot maintenance
at the Boeing Aerospace Support Center in San Antonio, Texas. The
settlement also settles allegations that Boeing overcharged the
government for installation of the blanket kits.
The blanket kit is a critical component in the KC-10 Extender
and consists of several thousand blankets resembling the insulation
installed in the walls of a house. These blankets are installed on
all inside surfaces of the aircraft and serve the critical
functions of providing a thermal barrier to maintain temperature
inside the aircraft during flight, reducing noise in the aircraft
and providing a vapor barrier to reduce corrosion caused by
moisture buildup on the inside surface of the skin of the
The case was originally filed in U.S. District Court for the
Western District of Texas by two former Boeing employees, Anthony
Rico and Fernando de la Garza, under the qui tam or whistleblower
provisions of the False Claims Act. Under the qui tam statute, a
private party, known as a "relator," can file an action on behalf
of the United States and receive a portion of the recovery. Mr.
Rico and Mr. de la Garza will receive $2,625,000 as their share of
the proceeds of the settlement.
During the investigation of the allegations of faulty
installation, the government also found that Boeing overcharged for
the installation. Auditors found that Boeing inflated estimates of
the number of hours needed to perform the blanket kit work and
charged an excessive hourly rate for the work.
"Companies that do business with the United States must deal
honestly with the government," said Tony West, Assistant Attorney
General for the Justice Department's Civil Division. "The
Department of Justice will vigorously pursue cases under the False
Claims Act against those contractors who provide shoddy work."
The $25 million settlement consists of a cash payment by Boeing
of $18,400,000 and $6,600,000 worth of repair work to be done at
the aircraft manufacturer's expense on the defective blankets. The
settlement resolves Boeing's potential liability under the False
KC 10 File Photo
"Defense contractors will be held to high standards,
particularly when their work could potentially impede mission
critical functions of our armed forces," said John E, Murphy,
Acting U.S. Attorney for the Western District of Texas. "The
pursuit and favorable settlement of this civil litigation
demonstrates that the Department of Justice will work closely with
investigative agencies in order to enforce these standards."
The settlement negotiations were conducted by the U.S.
Attorney's office in San Antonio and the Department's Civil
Division. The allegations were investigated by the Defense Criminal
Investigative Service, the Air Force Office of Special
Investigations and the Defense Contract Audit Agency.