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Exclusive: Boeing to face independent ethics probe over lunar lander bid - document

FILE PHOTO: The Boeing logo is displayed on a screen, at the NYSE in New York
FILE PHOTO: The Boeing logo is displayed on a screen, at the NYSE in New York
Joey Roulette

By Joey Roulette

WASHINGTON (Reuters) - Boeing Co <BA.N> is submitting to an independent review of its compliance and ethics practices, according to an agreement struck with NASA and the U.S. Air Force and seen by Reuters, part of widening fallout from its behavior in bidding to supply lunar landing vehicles.

The agreement, signed in August, comes as federal prosecutors continue a criminal investigation into whether NASA's former human exploration chief, Doug Loverro, improperly guided Boeing space executive Jim Chilton during the contract bidding process.

By agreeing to the "Compliance Program Enhancements", the aerospace heavyweight staves off harsher consequences from NASA and the Air Force - its space division's top customers - such as being suspended or debarred from bidding on future space contracts.

The agreement calls for Boeing to pay a "third party expert" to assess its ethics and compliance programs and review training procedures for executives who liaise with government officials, citing "concerns related to procurement integrity" during NASA's Human Landing System competition.

Since Loverro resigned in May, Boeing has fired one company attorney and a group of mid-level employees, three people familiar with the actions told Reuters.

Boeing has also revised its internal Procurement Integrity Act procedures, and disseminated new training materials to employees, according to the agreement.

"We did not meet our own high expectations, or those of our customer, in the (human landing systems) procurement," Boeing spokesman Damien Mills told Reuters on Wednesday.

"We appreciate the productive dialogue we have had with the agencies and believe that the agreement will help to ensure that we will meet those expectations in the future," Mills added.

Boeing's space business was already under NASA scrutiny for its botched 2019 test flight of its Starliner space capsule.

NASA did not return requests for comment. An attorney for Loverro declined to comment. The Air Force did not immediately respond to a request for comment.

The agreement requires Boeing to meet quarterly with NASA and Air Force officials through 2022 to provide updates on its ethics and compliance improvement efforts.

The agreement and criminal probe stem from NASA's most ambitious space exploration endeavor: sending humans back to the moon by 2024 under a hastened timeline set by the Trump administration in 2019.

In April, NASA bypassed Boeing and awarded contracts worth a combined $1 billion to Elon Musk's SpaceX, Amazon.com Inc <AMZN.O> founder Jeff Bezos' Blue Origin, and Leidos Inc affiliate Dynetics to build lunar landing vehicles that can carry astronauts to the moon by 2024.


(Reporting by Joey Roulette in Washington; Additional reporting by Eric M. Johnson in Seattle; Editing by Greg Mitchell and Lincoln Feast)