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Last Updated: Thursday, 24 July, 2003, 22:39 GMT 23:39 UK
Boeing punished for spying
Atlas rocket
The Atlas rocket was at the heart of the disputed programme
The US Air Force has punished Boeing for resorting to industrial espionage in order to better its defence rival Lockheed Martin.

The Pentagon has barred Boeing from future rocket work and revoked $1bn worth of contracts which will be re-assigned to Lockheed Martin.

But it stopped short of banning all Boeing business units from being awarded government contracts.

Lockheed Martin sued Boeing for acquiring about 25,000 confidential documents during a 1998 contract competition.

That stolen information is thought to have helped Boeing win 21 of the 28 tendered military satellite launches, part of the Air Force's Evolved Expendable Launch Vehicle (EELV) programme.

Humble pie

"Boeing has committed serious and substantial violations of federal law," Air Force Undersecretary Peter Teets said.

All 78,000 employees in the three offending Boeing departments are being asked to stand down.

And the company has apologised publicly for the affair and promised to improve its ethics.

"We are extremely disappointed by the circumstances that prompted our customer's action, but we understand the US Air Force's position that unethical behaviour will not be tolerated," Boeing's chief executive Phil Condit said.

The Justice Department has launched a criminal probe into the matter and Lockheed Martin is still suing Boeing for damages.

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