Boeing To Pay $6.61 million in FAA Penalties

 - February 26, 2021, 8:47 AM
FAA civil penalties against Boeing include $1.21 million to settle pending cases that included charges it exerted undue pressure or interfered with members of its Organization Designation Authorization (ODA) unit.

Boeing will pay a total of $6.61 million for its failure to meet certain performance obligations under a 2015 settlement agreement and to resolve two pending FAA enforcement cases, the agency said late Thursday.

The fines include $5.4 million in deferred civil penalties for the company’s failure to meet certain performance targets related to internal processes to improve and prioritize regulatory compliance. The manufacturer agreed to pay another $1.21 million to settle pending cases that included charges it exerted undue pressure or interfered with members of its Organization Designation Authorization (ODA) unit.

In a statement, Boeing characterized the resolution as fair.

“Boeing is committed to designing and building the safest products and to fostering an environment where teammates can perform work fully consistent with our values of collaborating with humility, inclusion, and transparency,” it said. “We are strengthening our work processes and operations to ensure we hold ourselves accountable to the highest standards of safety and quality. Boeing believes that the announcement today fairly resolves previously announced civil penalty actions while accounting for ongoing safety, quality and compliance process improvements.”

The FAA assessed $5.4 million in deferred penalties under the terms of the 2015 agreement because Boeing missed some of its improvement targets, and because some company managers did not sufficiently prioritize compliance with FAA regulations, said the agency. The 2015 agreement prevents Boeing from appealing the FAA's penalty assessment, and the five-year term of the agreement has ended. Boeing previously paid $12 million in civil penalties as an initial condition of the 2015 agreement. The company agreed to the terms of the new settlement at the end of December 2020, noted the agency.

“Boeing failed to meet all of its obligations under the settlement agreement, and the FAA is holding Boeing accountable by imposing additional penalties,” FAA administrator Steve Dickson said. “I have reiterated to Boeing’s leadership time and again that the company must prioritize safety and regulatory compliance, and that the FAA will always put safety first in all its decisions.”

The $1.21 million payment settles two cases, one alleging the company improperly structured its ODA program and exerted undue pressure or interfered with ODA unit members. The other case alleged it failed to follow its quality-control processes and unduly pressured or interfered with ODA members during an aircraft airworthiness inspection.

“The FAA will be vigilant in its oversight of Boeing’s engineering and production activities, and is actively implementing the certification reform and oversight provisions of the 2020 Aircraft Certification, Safety, and Accountability Act,” said the agency in a statement. “This legislation will allow FAA to assess even greater civil penalties against manufacturers that exert undue pressure on ODA unit members.”

The settlement announcement came a day after a DOT inspector general’s report concluded that weaknesses in the FAA’s certification and delegation processes hindered its oversight of the certification of the Boeing 737 Max 8. The report found that the agency’s limitations in guidance and certification processes led to a “significant misunderstanding” of the Maneuvering Characteristics Augmentation System (MCAS), the flight control software identified as contributing to the two accidents that resulted in the grounding of the model.

Although the IG report also said the FAA addressed many of the deficiencies outlined in a June 2020 interim report, it concluded that “it is not clear” that the FAA’s current oversight structure and processes can effectively identify future safety concerns within the Boeing ODA structure. It further indicates that the FAA has not yet implemented a so-called risk-based approach to ODA oversight, and engineers in the FAA’s Boeing oversight office continue to face “challenges” in balancing certification and oversight responsibilities.

According to the IG report, the FAA’s ODA program does not prevent conflicting duties of ODA unit members, and preventing interference with ODA unit members “remains a concern.”