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The Boeing Company (NYSE:BA) Denies Pentagon Reports Of Overcharging

Boston, MA 10/15/2013 (wallstreetpr) –  An Inspector General of the U.S. Army from Pentagon had alleged that The Boeing Company had charged more money for a five year contract of delivering 177 CH-47F Chinook helicopters. Most of the helicopters were charged for new parts whereas in reality they were using used parts for developing these helicopters. This increased the costs by $7.4 to $16.6 million as submitted by the Pentagon. The Inspector General blamed the Army in turn for not properly overseeing the contract.

The company in turn denied these reports as false allegations against the company. Spokesperson of Boeing, Damien Mills, said that the company has high regard for the audit conducted in connection with the CH-47F multiyear contract and that it totally rebuts these allegations.

The content of the report filed by the Inspector General

The Pentagon reported that the contract in question is the second of such five year contracts and that it was the terms of the first five year contract that compelled the Army to look into the second contract terms properly. Since in the second year contract, the government had asked to use used parts from the helicopters returning back from wars, if possible. The government was looking to save $37 million but instead it found overcharges of about $11 to $19 million. And this was after negotiating with the company and reducing $15 million.

Boeing’s rebuttal

Boeing stated that it had always complied with the government policies of contracting for the first contract and that the same contract was extended for the second 5-year contract as well when it agreed to deliver 177 more CH-47Fs on June 10, 2013. Mills said that the company was still expecting a final version of the report in order to file the proper responses.

In the share market, the shares of the company remained unaffected and in fact increased from a day opening of $117.18 to a close of $119.62 which is about 1.48% increase from previous close.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).

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