Boeing and the Justice Department have finalized the details of a plea deal in the wake of two fatal 737 Max crashes five years ago.
The 83-page document memorialized a plea agreement between Boeing and federal prosecutors, punishing the company for fraud related to a faulty software system on the Max planes that led to the accidents.
Writing the court, federal prosecutors contend that in the years since those crashes, Boeing’s promises to improve safety and quality weren’t met. Boeing executives emphasized production over quality and pushed incomplete airplanes through the company’s factories, federal prosecutors wrote.
“Boeing senior executives prioritized the movement of aircraft through Boeing’s factories over reducing out-of-sequence work to ensure production quality,” federal prosecutors wrote.
Following a January midair blowout aboard a misassembled Max, Boeing pledged to eliminate “out-of-sequence work.”
Boeing pleaded guilty earlier this month to fraud and admitted it misled safety regulators several years ago about a then-new, badly flawed software system on the Max. An error with that system led two planes to nosedive in 2018 and 2019, killing a total of 346 people.
Boeing now has agreed to pay a $243.6 million fine, make a $455 million investment in safety and compliance programs, and allow oversight from an independent monitor to reduce the risk of misconduct.
Released Wednesday evening, the plea agreement for the first time connects actions surrounding the Max crashes and the recent missteps at Boeing — including assembly errors that resulted in a panel blowing off a 737 Max plane midflight in January.
A Boeing spokesperson said Wednesday that the company “will continue to work transparently with our regulators as we take significant actions across Boeing to further strengthen our safety, quality and compliance programs.”
The plea deal, filed in Texas district court, is still subject to court approval. Those who lost loved ones in the Max crashes plan to ask that the deal be thrown out. They argue it is too lenient to force Boeing to make the long-term changes necessary to prevent future crashes.
In 2021, Boeing and federal prosecutors agreed to a deal that would have allowed the company to avoid criminal charges if it met certain conditions for three years.
Boeing appeared to be on track to avoid a criminal conviction. But the Jan. 5 panel blowout on an Alaska Airlines flight out of Portland threw the earlier agreement into question. On Wednesday, the Justice Department pointed to the circumstances behind that incident as well as other recent safety concerns as evidence that Boeing had breached the terms of the 2021 agreement.
Prosecutors pointed specifically to Boeing’s reliance on “out-of-sequence work” and incomplete records of work done on its planes.
Out-of-sequence work refers to jobs that don’t get done in the normal order according to protocol on a Boeing assembly line. In those cases, workers continue to move a plane along the factory floor and come back to the unfinished job later. That can lead to errors as parts are taken off and reinstalled.
In the Alaska Airlines incident, the panel blew off because four bolts meant to hold the piece in place had been removed. Boeing machinists in the Renton factory had moved the panel for repair and did not reinstall it properly.
Boeing has told investigators from the National Transportation Safety Board it does not have records of the removal of the panel or the bolts.
In the plea deal, the Justice Department said Boeing had “received numerous reports” of noncompliance with its policies for removal work and documentation of that work. It also said the company had allowed out-of-sequence work to persist, raising the risk of errors in order to keep production rates up.
Boeing has said it is taking steps to reduce or eliminate that type of work in its factories.
In the plea deal, the Justice Department also pointed to a disclosure this year that Boeing employees in its South Carolina factory had falsified inspection records related to another jet, the 787 Dreamliner.
“Complete, accurate and truthful build records are the basis for Boeing’s certification of airworthiness to the FAA,” the plea deal read. “In the face of known manufacturing, quality, safety and anti-fraud risks … Boeing failed to implement additional or sufficient control.”
Boeing had taken meaningful steps to enhance its anti-fraud compliance, according to court papers, including strengthening its compliance control for potential safety and quality risks and working to integrate its compliance efforts across its business.
But it had still fallen short, the deal said.
“The Department determined that Boeing’s anti-fraud compliance program still has significant gaps,” federal prosecutors wrote.
Independent oversight
The families who lost loved ones in the two Max crashes have said they object to the agreement because, they contend, it allows Boeing to get by without full accountability or sufficient oversight to prevent additional accidents.
The families are particularly concerned about how much say Boeing will have in determining who would act as the independent monitor required by the plea agreement.
The plea deal filed Wednesday laid out new details for how that monitor will be chosen. The Justice Department said it would open a public posting on its website for people to submit proposals.
The department will then select six candidates that met its qualifications. Boeing would have the ability to strike one candidate from the list. The department would then pick from the remaining five.
It hoped to finalize the independent monitor within 90 days of the execution of the plea deal.
The monitor will oversee Boeing for three years and focus on the effectiveness of the company’s compliance program, internal controls and record-keeping policies. The monitor will also assess Boeing’s board of directors and senior management on their commitment to implementing an effective corporate compliance program.
The monitor will not focus on Boeing’s design, engineering or manufacturing processes, or the company’s compliance with the FAA, according to the plea deal.
The plea deal is still subject to approval from U.S. District Judge Reed O’Connor. Attorneys representing the victims’ families expect a hearing will be held in August.
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