Both the FAA and the Boeing Commercial Planes issued statements about the resolution of pending cases. This resolution not only closes thirteen matters but it also forges a compromise within the FAA between its old and its new approaches to this type of case.
The facts in the original cases date back to 1996 and 2008. The subsequent complaints were issued by the FAA to Boeing; they are dated in 2012 and 2013. So while these proceedings were working their way through FAA and US Attorney lawyers reviews, a major shift in FAA policy occurred—from enforcement (civil penalties) to compliance (collaborative solutions) as the primary regulatory regime. There were some initial signals that this transition may have incurred resistance in the FAA field offices. One recent final action indicated that maybe the new approach was getting traction.
Now comes these two high profile cases, plus 11 other matters, in which lawyers and technical staff on both sides have invested substantial time. If your viewing or reading preferences include any recent criminal case stories, you know that, WHEN the “defendant” compelled the prosecutor to work that hard, the government demanded the maximum penalty (that is also an FAA’s “old school” enforcement stance). The two original press releases totaled $16.32M in fines; so historic expectations would point to a number close to or higher than the starting offer.
The final FAA press release incorporated a modified Old School approach by agreeing to a reduction to $12M to be paid by Boeing plus a “New School” collaborative solution. The list of “fixes” agreed to under the SMS approach includes:
Improved Management Oversight and Accountability
- Implement the Safety Management Systems (SMS) plan BCA has developed to meet internationally accepted standards, throughout the company’s activities.
- Use the FAA’s safety analysis modeling, in addition to BCA’s proprietary risk modeling, to assess all identified compliance issues.
- Comply with a new Regulatory Compliance Plan, which requires BCA to assign each compliance matter to a manager-level employee for resolution and accountability.
- Require review of the regulatory compliance performance of BCA managers.
- To improve its internal audit processes, audit teams will be required to report directly to BCA’s Vice President of Quality, and conduct audits across all processes (Engineering, Supplier Management, Production, Modification, Repair and Customer Support) at all sites.
- Assess the effectiveness of its internal auditing systems.
- Appoint audit team members with appropriate technical expertise to assess the extent of regulatory compliance.
- Conduct an evaluation of regulatory compliance procedures among different facilities and programs.
- Implement risk-based criteria for selecting the subjects of audits.
Enhanced Supplier Management
- To determine whether incomplete work is being accepted, conduct an initial set of audits of its suppliers, analyze the results and consult with the FAA on audit findings.
- Based upon risk analysis, conduct a second, more extensive set of audits, again reporting the results to the FAA and providing the FAA with a summary of any corrective actions.
Quality and Timeliness Regulatory Submissions
- Meet progressively more stringent performance metrics in the quality and timeliness of its written submissions to the FAA.
- Annually for the next five years, review and simplify at least 15 process specifications used in the design, build, delivery and support of BCA products.
- Implement improvements to processes to ensure that assembly installations that have been affected by process or design changes continue to conform to type design.
Stampings and Other Verification Records Accuracy
- Conduct mandatory training of all manufacturing and quality employees who exercise stamping approval authority, and conduct recurrent training at least every 24 months.
- Conduct mandatory training of all engineering employees on their regulatory compliance obligations.
- During each year of the agreement, conduct at least three internal audits of each product line and at least one audit of each BCA fabrication site.
- Prevent any repeat findings of improper stamping.
Corrective Action Development, Implementation and Sustainment
- Apply the “Boeing Problem-Solving Model” to a wide variety of analyses that BCA submits to the FAA.
- For future violations that the FAA identifies, conduct a second, follow-up audit within 12 months of the original incident to ensure that corrective actions were effective at the time and continue to be effective.
BCA’s Reporting Obligations
- Report to the FAA at least annually about the effectiveness of BCA’s regulatory compliance activities, including a final and comprehensive report after the fifth year of the agreement.
- Report to the FAA each quarter the results of any internal audits pertaining to safety management, regulatory compliance, corrective action implementation and sustainment, process compliance and conforming products.”
The Old School approach wrote the last point of the settlement by noting that:
“BCA will face up to $24 million in additional penalties over the next five years if it fails to implement its obligations under the agreement.
The performance period for BCA’s commitments begins Jan. 1, 2016 and will continue for five years unless the FAA and BCA agree to an extension.”
In old FAA parlance, which recently had dropped from their recent negotiating vocabulary, that form of settlement was called a “deferred sanction.” Its return as a possible outcome provides a great bridge between the Old and New approach.
All twelve paragraphs of action are the sort of work product which would usually be developed in the SMS collaborative solution process between Boeing and the FAA. The company’s statement intimates that these measures are fully supported by it and are already implemented or being implemented:
“Boeing believes that this agreement not only fairly resolves announced and potential civil penalty actions – most of which date back years, and two of which were previously announced in 2012 and 2013 – but also will further enhance Boeing’s self-correcting quality and compliance systems. Under the terms of the agreement, Boeing has agreed to pay $12 million and make additional quality and compliance process improvements. Many of the improvements listed in the agreement have already been implemented or are in the process of implementation.”
An unusual resolution of old cases and a forced amalgamation of the Old and New School policies bears review by all of those involved in regulatory affairs. For those SMS professionals in both the TC/PC realm and the holders of other certificates, the specific actions bear imitation.
P.S. the quote found in one press account was either ignorant or intentionally inaccurate; it said:
Boeing has agreed to pay $12 million for failing to meet a deadline to submit service instructions that would enable airlines to reduce the risk of fuel tank explosions on hundreds of planes, among other violations, the Federal Aviation Administration said Tuesday.
First and foremost that sentence cannot be found in the FAA statement, i.e. to assert that the FAA “said” the specifics of the sentence. Second, there is nothing in the FAA Press Release which suggests that hundreds of planes were at “risk.”