Boeing Co. has agreed to pay $12 million in penalties as part of a sweeping, first-of-its-kind settlement with federal regulators mandating tighter company oversight of suppliers and enhanced quality controls inside its own factories.
The settlement announced Tuesday by the Federal Aviation Administration resolves a total of 13 pending or potential civil-enforcement cases. It also subjects the Chicago-based plane maker to as much as $24 million in additional penalties if it fails to complete all the promised manufacturing, auditing and government reporting improvements over the next five years.
The agreement is unusual because it raises questions about how Boeing’s commercial-airplane unit has implemented some of its core quality, safety and compliance programs. Some of the alleged lapses stretch back several years—and span various offices and product lines. The broad nature of Tuesday’s move indicates FAA enforcement officials had alleged or suspected systemic shortcomings.
The FAA didn’t claim Boeing’s actions created unsafe conditions, and the agency has proposed significantly larger fines against airlines that allegedly violated safety rules.
In its announcement, the FAA highlighted the importance of internal corporate controls to ensure that everything from design to manufacturing to maintenance functions are “operating according to the highest standards.”
The agreement “is an important step toward ensuring that Boeing fully meets all applicable compliance standards going forward,” Transportation Secretary Anthony Foxx said in a statement detailing nearly two dozen specific areas slated for action under the agreement. Some improvements already are under way.
In a separate statement, Boeing said the move “fairly resolves” enforcement issues and “will further enhance Boeing’s self-correcting quality and compliance systems.” The company said “we are actively working on the areas identified in the agreement.”
The broad nature of the agreement—combined with the extensive and continuing reporting requirements imposed on Boeing—sets it apart from past settlements involving manufacturers.
In another unusual twist that deals with Boeing’s internal-investigation process, the agreement binds the company to assign all future noncompliance cases to manager-level employees. And according to the release, Boeing also will have to “meet progressively more stringent” requirements regarding “the quality and timeliness of its written submissions to the FAA.”
The agency typically makes public copies of settlement agreements with airlines. An FAA spokeswoman said the Boeing document wasn’t released because it contains extensive proprietary information that needs to be redacted.
Among other things, Boeing was tardy in developing information on fuel-tank safety upgrades for its 747 jumbo and 757 jetliner families, the FAA said. In another case that became public previously, the FAA said the company failed to take adequate corrective action when a supplier provided improper fasteners.
Details of the 11 other enforcement matters covered by the agreement weren’t disclosed by the FAA, and a Boeing spokesman also declined to identify them. In an email, he said Boeing “takes responsibility for our actions in these areas” and has taken steps to simplify specifications and enhance employee training.
According to the FAA’s summary of the agreement, however, Boeing is now obligated to improve its internal audits by appointing personnel “with appropriate technical expertise to assess the extent of regulatory compliance.” In addition, to determine whether incomplete work is being accepted improperly from suppliers, the FAA said the company must share audit results with the agency and provide it a summary of corrective actions.
Regarding any future violation identified by the FAA, the agreement puts the onus on Boeing to demonstrate it effectively dealt with the problem. And the FAA must receive quarterly reports laying out Boeing’s compliance efforts, capped by a final “comprehensive report” in 2021 about the overall effectiveness of those programs.
Boeing, Federal Aviation Administration Reach Settlement Over Safety-Compliance Concerns: Plane maker to pay $12 million in penalties, face more fines unless it improves internal processes
The U.S. Federal Aviation Administration on Tuesday said it had reached a settlement with Boeing Co. over safety-compliance concerns and that the plane maker has to pay $12 million in penalties and faces further fines unless it improves internal processes.
Boeing, the world’s largest plane maker, was tardy in developing information on safety improvements related to its 747 jumbo and 757 jetliner, the FAA said. In another case, the Chicago-based company didn't take adequate action when a supplier had provided improper parts, the U.S. air-safety regulator said.
“It is imperative that everyone complies with our aviation system’s high safety standards,” U.S. Transportation Secretary Anthony Foxx said in a statement. “This agreement is an important step toward ensuring that Boeing fully meets all applicable compliance standards going forward.”
The FAA didn't claim Boeing’s actions created unsafe conditions.
Boeing said in a separate statement it “believes that this agreement not only fairly resolves announced and potential civil penalty actions—most of which date back years, and two of which were previously announced in 2012 and 2013—but also will further enhance Boeing’s self-correcting quality and compliance systems.”
The company faces up to $24 million in further fines over the next five years if it doesn't implement improvements it has committed to carrying out under the agreement, the FAA said. The case also addresses other allegations Boeing delayed submissions of required safety information and similar issues.
Boeing has pledged to take steps such as improving auditing of internal processes, more closely scrutinize suppliers, and more rapidly provide reports to the FAA. “We are actively working on the areas identified in the agreement,” it said.