US sues Boeing over B-1 decoy system cost

LOS ANGELES—The federal government sued the Boeing Co. on Tuesday for allegedly inflating the prices of B-1 bomber equipment sold to the Air Force.

The lawsuit alleges the military paid $7.5 million more than it should have because Boeing did not tell the Air Force during contract negotiations that it found a source for cheaper parts to build decoy systems that protect bombers from missiles.

The government said the Air Force would have argued for lower prices if the Chicago-based company had told it about the savings.

"It's a significant amount and, of course, it's all taxpayer money," Assistant U.S. Attorney Lisa Palombo told The Associated Press.

"We make it a priority to collect all taxpayer funds that are obtained through fraud. We don't make exceptions for anyone, individuals or large companies."

Boeing spokesman Forrest Gossett said the company disputes the allegations and believes it properly negotiated and fulfilled its contract with the Air Force.

The lawsuit, filed in Los Angeles federal court, alleges Boeing told the Air Force during negotiations in 1990 that it would manufacture parts for decoy systems at its own facility in Palmdale. Boeing allegedly did not inform the Air Force that it planned to close the facility and buy parts from subcontractors at a lower price.

The Air Force paid $36 million for 57 decoy kits that are towed behind bombers.

Under the False Claims Act, the government can recover up to three times the amount it overpaid, plus penalties.

The lawsuit said Boeing managers ignored employees' warnings not to hide the potential savings during negotiations.