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1 1 (November 4, 2024)

handle is hein.crs/goverfl0001 and id is 1 raw text is: Defense Implications of Challenges at Boeing November 4, 2024 The Boeing Company (Boeing), a supplier of equipment and services to the U.S. Department of Defense (DOD), has since 2018 faced challenges including labor actions, production delays, quality control problems, and financial losses on government contracts. Given Boeing's importance to the defense industrial base, Congress may assess whether or not these developments have implications for U.S. national security. Boeing is the United States' largest manufacturer of commercial airliners. Boeing's financial difficulties, therefore, affect both its defense and commercial aircraft businesses. In 2018 and 2019, Boeing's 737 Max airliner experienced fatal crashes. Since that time, Boeing has faced safety, legal, and financial problems. On September 13, 2024, Boeing machinists went on strike for eight weeks, which reportedly cost the company $1 billion a month. On November 4, the union accepted a contract offer for a 38% pay increase. To shore up its finances, Boeing, on October 15, filed papers with the Securities and Exchange Commission saying that Boeing plans to raise up to $25 billion through a stock and debt offering. Boeing reportedly plans to lay off 10% of its workforce, or about 17,000 employees. Some analysts have speculated that Boeing could declare bankruptcy or seek to sell elements of its space or defense business. Boeing's Role in DOD Programs Boeing Defense, Space, and Security business is the fourth-largest DOD contractor, with $20.1 billion or 3.3% of $609.2 billion in total FY2023 U.S. defense contracts. Boeing manufactures several aircraft important to U.S. military capabilities, including the F-15EX fighteriets, AH-64 Apache attack helicopters, and CH-47 Chinook heavy-lift helicopters. Several Boeing defense aircraft including the KC- 46 aerial refueling tanker, the VC-25B presidential transport aircraft, and the P-8 Poseidon maritime patrol aircraft, are military versions of commercial airliners. In addition, Boeing is in the process of acquiring Spirit AeroSystems, which plays a major role in the B-21 Raider bomber program. Boeing is a partner with Lockheed Martin in the United Launch Alliance (ULA), one of three suppliers with SpaceX and Blue Origin, competing to launch U.S. national security satellites to the most challenging orbits. Boeing also builds military and intelligence satellites. Boeing exports billions of dollars of defense equipment annually. Boeing Defense, Space, and Security holds a set offixed-price contracts with DOD. In a fixed-price contract, the federal government sets a price for a good or service and the vendor's profit varies depending on performance costs. The Federal Acquisition Regulation states that fixed-price contracts Congressional Research Service https://crsreports.congress.gov IN12455 CRS INSIGHT Prepared for Members and Committees of Congress

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