Boeing sues US Air Force for rocket refund

WASHINGTON Fri Jul 20, 2012 6:15pm EDT

VIP's on a tour look at the United Launch Alliance (ULA) Boeing Delta 4 rocket, with a classified payload for the National Reconnaissance Office, at Vandenberg Air Force Base, California, March 28, 2012. REUTERS/Gene Blevins

VIP's on a tour look at the United Launch Alliance (ULA) Boeing Delta 4 rocket, with a classified payload for the National Reconnaissance Office, at Vandenberg Air Force Base, California, March 28, 2012.

Credit: Reuters/Gene Blevins

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WASHINGTON (Reuters) - Boeing Co (BA.N) is suing the U.S. Air Force, its biggest client, for $385 million it says it is owed for Delta IV rocket launch services.

Boeing and the United Launch Alliance, a joint venture with Lockheed Martin Corp (LMT.N), filed a joint complaint on June 14 "to preserve their rights to recover these costs," Boeing said in a statement made available Friday.

At issue are "legitimate, allowable costs of the Delta IV program that Boeing incurred prior to the creation of ULA in 2006," said Jenna McMullin, a company spokeswoman.

The suit harks back to the creation of the Defense Department's awkwardly named Evolved Expendable Launch Vehicle (EELV) program.

The Pentagon launched the EELV program in the mid-1990s in a an effort to cut the cost of putting government satellites in orbit. It resulted in two families of commercially owned and operated launch vehicles — Boeing's Delta IV and Lockheed Martin's Atlas V.

The suit, in the U.S. Court of Federal Claims, says the Air Force had agreed to reimburse the costs at issue as part of efforts to win Boeing's continued participation in the EELV program after the Air Force opted to restructure it.

Boeing conditioned its willingness to stick with it on recovery of certain costs incurred from 1998 to 2006, the suit said. The United Launch Alliance began operations in December 2006, pooling Boeing and Lockheed launch-system assets in an efficiency drive.

United Launch Services, a subsidiary of ULA, is Boeing's "successor-in-interest" to the relevant contracts and agreements, the suit said.

"We believe ULA is entitled to the full amount at issue and that the agreements with the Air Force are valid and enforceable," McMullin said.

An Air Force spokesman, Chris Isleib, declined to comment on the dispute, citing pending legal action.

(Reporting By Jim Wolf; Editing by Bernard Orr)

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