In what appears to be the final chapter in the long lived QRS-11 issue, it was announced that Boeing agreed to pay $15 million to settle charges that it illegally exports commercial aircraft that contained the QRS-11 gyrochip. According to the State Department charges, Boeing shipped 94 such commercial jets overseas between 2000 and 2003 and 19 of those went to China.
Boeing long-maintained that the commercial aircraft were subject to the jurisdiction of the Export Administration Regulations, and, thus, did not require export licenses. The State Department, however, argued that because the aircraft contained a QRS-11, which is part of a backup system that maintains an artificial horizon for the pilots, the aircraft required export licenses under the International Traffic in Arms Regulations. What probably made matters worse is that Boeing continued to export the aircraft without licenses after the State Department told it not to because Boeing’s lawyers said State did not have jurisdiction.
After the alleged violations, Boeing eventually worked out an arrangement with State so that the QRS-11 chips are on the US Munitions List except that they move to the less restrictive Commerce Control List when incorporated into a commercial aircraft.
In addition to the $15 penalty, Boeing must appoint a special compliance officer to monitor Boeing’s compliance and hire an independent auditing firm.
But Boeing ain’t the only company singing the “QRS-11 Blues.” The State Department entered into a seven million dollar settlement agreement with Goodrich Corporation and L-3 Communications to settle State allegations that Goodrich and L-3 (specifically the L-3 subsidiary L-3 Communications Avionics, Inc. formerly a subsidiary of Goodrich known as Goodrich Avionics Systems, Inc.) omitted material facts from a commodity jurisdiction request for a product that contained the QRS-11 gyrochip and illegally exported the products containing the QRS-11.
Goodrich will pay $1.25 million of the seven million dollar assessment with L-3 paying $2 million. The companies are to use remaining balance of the penalty to take remedial compliance measures to prevent future violations. In addition, both companies must appoint a special compliance officer and hire an independent auditing firm.
Further details and the consent agreements for the above cases are on State’s website.
