Following an over 18-month suspension that resulted from violations of federal procurement laws, the Air Force has come to an interim agreement with Boeing that will allow the company to continue military launches, the Air Force’ top civilian official said earlier this month.

“To protect the government’s interest, an interim agreement between the Air Force and Boeing has been signed,” acting Air Force Secretary Peter Teets said at a Pentagon briefing to announce lifting the suspension. “In it, the Air Force may revoke the agreement and reinstate suspensions in the event Boeing is indicted or convicted, or if new evidence is discovered.” His comments were first reported by sister publication Defense Daily.

The Air Force action will allow Boeing to resume launches on the Air Force’s Evolved Expendable Launch Vehicle (EELV) program. Boeing’s work on that program was effectively halted in July 2003 when the Air Force General Counsel suspended three of the company’s divisions after it was discovered that Boeing had illegally obtained proprietary documents related to the competition from rival Lockheed Martin.

In the 1990s, Boeing competed against Lockheed Martin for work on the EELV. Boeing, which was considered the underdog, eventually won a majority of the launches using its Delta 4 rocket, although the Lockheed Atlas 5 also was given work..

After Boeing was suspended, the Air Force reduced the number of the company’s launches to 12 from 20, giving the extra work to Lockheed Martin. With the suspension lifted, Boeing can now compete for the next series EELV launches, which Teets said could be awarded next year.

As part of the agreement, Boeing will reimburse the Air Force $1.9 million to pay for the costs associated with reviewing the contract. Additionally, Boeing has agreed to “outside verification” of its ethical procedures, which will be overseen by a special compliance officer.

Retired Air Force Gen. George Babbitt, the former commander of Air Force Materiel Command, will serve as the compliance officer, Teets said.

DOJ Continues Investigation

In the meantime, however, the Department of Justice is continuing its own investigation into Boeing activities, which could include a larger civil penalty, or indictments of other company officials. Any new evidence related to that investigation could also lead to a reinstatement of the suspension.

But lifting the suspension guarantees that, for the time being, the Air Force will maintain two launch providers, a policy supported by the administration. The White House in January released a space transportation policy that endorsed maintaining two well-funded expendable launch providers.

Both Teets and Steven Shaw, the Air Force’s Deputy General Counsel, acknowledged the interim agreement was unique. It was a way of allowing Boeing’s work to continue while the Department of Justice performs its investigations, which could take many months.

While any new revelation could result in the suspension being reinstated, “we do not have any indication that any shoes will drop,” Shaw said.

A spokesman for Lockheed Martin said the company was aware the Boeing suspension was lifted, but declined to comment on the issue.

“We have worked hard throughout the past 20 months to restore the trust and confidence of our customer, and we are grateful that we have reached this point,” Boeing said in a statement released after the Air Force’s announcement. “The company is committed to maintaining the highest standards of ethical business conduct at every level of the organization.”

–Sharon Weinberger