U.S. Probes Claim of Boeing Overcharges and Double Billing

The federal government is investigating allegations that the Boeing Co. overcharged and double-billed the Department of Defense millions of dollars for repairs of buildings leased for secret military work.

The investigation by two defense agencies, a congressional panel, and reportedly, the Department of Justice’s criminal division, was sparked by a Boeing electrical engineer and inspector, Kevin G. Kelly, who was fired Friday.

But it has gone beyond his allegations, said an investigator for a congressman looking into the case.

The investigation appears to have started with Boeing’s lease of buildings under government contract from millionaire Seattle developer David Sabey, according to an internal Boeing memorandum obtained by Associated Press.

The buildings were built to Boeing’s specifications by Sabey, but Kelly said three buildings at one office park were substandard and required $3 million in electrical and other repairs and improvements, and that Boeing billed the government for the work, rather than Sabey.

Investigation Acknowledged

Boeing spokesman Paul Binder confirmed Tuesday that an investigation is under way and read a statement:

“Mr. Kelly noted some items that he concluded did not meet building and electrical codes. The items he noted were thoroughly investigated by Boeing and corrective actions were taken where appropriate. Additionally, the buildings were inspected and approved by the appropriate local government agencies.”

Binder, Boeing’s director of public relations, declined further comment on the investigation and Kelly’s firing.

Sabey was unavailable, his secretary said. Sabey Corp. attorney Don Berdick said the firm would have no comment.

The leases with Sabey include buildings at two office parks used by Boeing Advanced Systems for military work. The Boeing division has defense contracts and subcontracts that range from work on the B-2 Stealth bomber to guided missile systems and avionic research.

Kelly contends he was fired for alerting federal officials to Boeing billing the Defense Department for the repairs at the Oxbow office park.

Says Boeing Ignored Warnings

He said Boeing ignored his early warnings that electrical work in the buildings was substandard. In a July 18 letter to Boeing Chief Executive Officer Frank Schrontz, Kelly contended he was “effectively quieted by Boeing management” and “I have not been able to intelligently and satisfactorily discuss with supervisors the substandard workmanship.”

Schrontz’s secretary said her boss would not comment.

“People in management have been covering up,” Kelly asserted Tuesday. “Not one man in that whole group had the courage to stand up and tell Sabey the buildings were substandard. Instead, they said ‘Let the taxpayer pay for it.’ ”