UPDATE 1-Boeing to pay cash, repairs to resolve U.S. case

* Boeing to make cash payment and repairs to resolve case

* Settlement puts to rest claims regarding repairs, fees

* Boeing shares flat after hours (Adds Assistant Attorney General comment, background)

WASHINGTON, Aug 13 (Reuters) - The Boeing Co (BA.N) will pay $25 million in cash and repairs to resolve accusations that it performed defective work on the Air Force's aerial refueling fleet, the U.S. Justice Department said on Thursday.

A lawsuit originally filed in federal court in Texas by two former Boeing employees had accused the company of defectively installing insulation blanket kits in KC-10 aircraft while performing maintenance at the Boeing Aerospace Support Center in San Antonio.

The settlement also resolved allegations that Boeing overcharged to install the kits, the Justice Department said.

The settlement consists of a cash payment of $18,400,000 and $6,600,000 worth of repairs to be done at Boeing's expense, resolving the company's potential liability under the False Claims Act, the Justice Department said.

The KC-10 aircraft is a mainstay of the Air Force's aerial refueling fleet used in the wars in Iraq and Afghanistan.

"The Department of Justice will vigorously pursue cases under the False Claims Act against those contractors who provide shoddy work," Assistant Attorney General Tony West said in a statement,

The settlement negotiations with Boeing were conducted by the U.S. Attorney's office in San Antonio and the Justice Department's Civil Division. (Reporting by James Vicini)