Washington - Boeing agreed on Thursday to pay the US government $25m to settle claims the company did defective work on critical military refuelling planes in Iraq and Afghanistan.
The settlement arose out of a whistle-blower lawsuit filed in Texas by two former Boeing workers who will now receive $2.6m for drawing attention to the issue.
The Justice Department had investigated the Chicago-based aerospace giant for allegedly defective work on the Air Force fleet of KC-10 Extenders, which are used for in-flight refuelling in the Iraq and Afghanistan war theatres.
The work was done while performing maintenance on the planes at the Boeing Aerospace Support Centre in San Antonio, Texas.
The government investigation found Boeing overcharged the government for installing insulation blankets by padding the estimated hours of work and charging an excessive hourly rate for labour.
In announcing the settlement, Assistant Attorney General Tony West said companies that do work for the United States "must deal honestly with the government."
Even as it agreed to fork over millions of dollars, the company still insisted it did nothing wrong.
"Boeing disagreed with the (Justice Department) claims that our employees improperly installed the blankets and improperly billed the Air Force for our work," company spokesperson Forrest Gossett said in a statement. The statement did not explain why Boeing chose to settle the case when it believed it had not done improper work.
Under terms of the settlement, Boeing will pay $18.4m in cash and do $6.6m worth of repairs.