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Government Property Mismanagement: Boeing’s Trouble with Misplaced Tools

The front end of a commercial airplane on the runway. Text overlay says: Government Property Mismanagement: Boeing's Trouble with Misplaced Tools

We have all been watching the recent painful stories of the software problems in the Boeing 737 Max. Boeing is not only losing money, but also facing lawsuits with significant punitive damages.

However, it seems that Boeing’s trouble is not only in its commercial side of the business. It is facing cost overrun, late delivery, and non-compliance in its government business as well.

While the aerospace giant was finally able to deliver six KC-46 refueling tankers to the Air Force last month, those planes came complete with a collection of loose tools and other foreign object debris. 

The FOD (foreign object debris) quality error led to the grounding of those aircraft, a halting of future deliveries, and the development of more than a dozen manufacturing process improvements that the Air Force expects Boeing to implement immediately. 

During production, jets are supposed to be swept for any debris that could damage equipment or cause an electrical short. Either this step was missed or under-performed, as eight tools were found in two of the delivered aircraft. 

According to a report in the Seattle Times, upon hearing of the FOD declaration Boeing issued a level 3 state of alert at their Everett, Washington factory. This translated to a complete cleaning and debris inspection of the KC-46 work area. A level 4 alert would have shut the factory down. 

This is the latest in the brief but painful history of the KC-46. It has been plagued by delays since the initial contract was awarded in 2011, as an initial delivery of 18 tankers was supposed to take place in August 2017. Boeing has reportedly eaten more than $2 billion in late fees and cost overruns. 

This incident highlighted the lack of process controls in Boeing while manufacturing KC-46.

One key process control Boeing missed is tracking Government Property. These loose tools are Government Property, and so should have been inventoried closely. Upon delivery of KC-46, the Boeing team should have conducted a thorough inventory of its Government Property for this project. If that’s done, these loose tools won’t be there.

Boeing’s lack of process controls in tracking Government Property is not alone. The Department of Defense has been facing similar problems, for years, in accounting for spare parts. That’s one of the major reasons DoD has yet to pass a clean financial audit.

According to the DoD’s auditors, property accountability issues are still among the most serious problems preventing it from passing an audit. In the first year of the full-scope examination, auditors issued more than 170 separate findings and recommendations detailing the military service’s shortcomings in tracking their small-item inventory and real estate.

But David Norquist, the DoD’s CFO and Comptroller, said progress along those lines has already delivered concrete proof for why the audit is not merely a paperwork drill.

“We discovered there are certain facilities where what they thought they had in inventory did not match what they had in inventory. And if your responsibility is spare parts for airplanes, the accuracy of that inventory matters,” he told the Senate Armed Services Committee last week.

For example, at Utah’s Hill Air Force Base, a stockpile of missile motors was erroneously listed as unserviceable even though they were in perfectly good condition. Putting them back into circulation instead of ordering new ones saved the Air Force $53 million.

Properly tracking Government Property is a big challenge, to both the DoD and contractors working for the DoD. But the DoD must solve this problem in order to finally achieve a clean audit.

At Assetworks, we help both the DoD and Government contractors to improve their Government property management processes. To learn more about how to use our solution to increase efficiency and prevent government property mismanagement, go to our page on Government property management.

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