Boeing is reportedly in discussions with the US Defense Department regarding the potential repercussions of a guilty plea in a criminal fraud conspiracy charge. The charge is linked to a US Department of Justice investigation into two fatal crashes involving Boeing's 737 MAX aircraft. According to an insider familiar with the matter, Boeing is working to assess how a guilty plea could affect its extensive government contracts, particularly with the US Defense Department and NASA.
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A guilty plea could potentially threaten the company's ability to secure lucrative government contracts, although government agencies can waive any restrictions. The Pentagon plans to evaluate Boeing's improvement plans and the Justice Department deal before determining the impact of Boeing's plan to plead guilty on its government contracts. A defense official stated that the Pentagon will conduct a review "to make a determination as to what steps are necessary and appropriate to protect the Federal Government" under federal contracting regulations.
Boeing's defense and space unit is vital to its business, with $7 billion in first-quarter sales, up 6% from a year ago. The company's shares were up 3.4% on Monday to $190.68 in morning trading, despite the potential risks associated with the guilty plea. As part of the plea deal, Boeing has agreed to pay a $243.6 million fine and invest at least $455 million over three years to strengthen safety and compliance programs.
The company will also have the Justice Department appoint an independent monitor to oversee compliance for three years. The discussions between Boeing and the US Defense Department highlight the complex implications of the company's legal troubles on its business operations and government contracts. As Boeing navigates this challenging situation, the outcome of these talks will likely have significant ramifications for the company's future.