August 15, 2005

US Air Force averts funding halt for C-130 program

WASHINGTON (Reuters) - The U.S. Air Force narrowly avoided
a funding shortfall that threatened to halt work by Boeing Co.
on upgrading the cockpit electronics of the C-130 Hercules
aircraft, a company official said on Monday.

Cathy Schoonover, contracting officer for the upgrade
program at Robins Air Force Base in Georgia, warned that the
funding crunch would prevent communications between all but one
program official and the company, effective August 8, according
to a text of her August 4 memorandum obtained by Reuters.

But Boeing spokesman Tom LaRock said the so-called "veil of
silence" was averted when the Air Force obtained sufficient
funding to keep the program going through the end of the 2005
fiscal year on September 30.

"At the moment, the funding is on schedule," LaRock told
Reuters, adding that Chicago-based Boeing did not expect any
further problems through the end of the year.

He said Boeing was currently modifying one C-130 cargo
airplane, which was on track for a first flight in early 2006.

One defense official confirmed the funding issue had been
resolved, noting that such crises were not uncommon near the
end of the fiscal year. A second official said the amount in
question in this case had been around $25 million.

Boeing won a $4 billion Air Force contract in June 2001 to
upgrade the avionics and software on the C-130 aircraft.

U.S. congressional investigators this year said part of the
contract should be reopened to competition because a convicted
former Air Force official had unfairly favored Boeing.

LaRock said the current issue was completely unrelated, and
a new competition was unlikely until around 2009 or 2010.