Last April in Everett, in a tense meeting with an investigator sent by Boeing headquarters, a small group of 787 engineers dropped a bombshell.

The engineers, veterans of Boeing's work on the B-2 stealth bomber two decades ago, told investigator Rick Barreiro that technology and know-how developed for that secretive military program would be used in manufacturing the company's newest commercial jet.

The engineers refused to sign forms declaring that the 787 program is free of military data. One said he feared signing would leave him open to federal indictment.

Their assertions set off flashing red lights at Boeing. Federal law prohibits U.S. companies from letting militarily sensitive technical expertise go abroad.

Yet Boeing's entire global manufacturing plan for the 787 hinges on having foreign suppliers build large structures out of advanced composite materials.

The standoff with the engineers caught Boeing managers by surprise. "We all underestimated the amount of screening we needed to do" for military technology, said Walt Gillette, head engineer and vice president for airplane development on the 787.

In the months that followed, outside lawyers pored over 1970s-era documents in search of proof that some key manufacturing techniques originated in the commercial business, not in military programs.

And to satisfy the letter of the law, Boeing workers have embarked on some surreal tasks.

One example: Boeing's B-2 work showed that the plasticized carbon-fiber tape used to make composites can be safely frozen and stored for up to a year — twice as long as previously thought.

That fact is now well-known in the composites industry, yet 787 engineers can't inherit that knowledge from the B-2 program, Gillette said. So they conducted fresh tests to prove a result they already knew.

 

"It is our clear intent to make sure we comply with the law," Gillette said.

 

The underlying issue is whether Boeing's plan to outsource high-tech 787 composites manufacturing could put U.S. government technology in the hands of either enemies or potential future economic competitors.

Yet Boeing's internal response to Barreiro's findings suggests a reverse perspective: that the laws designed to protect military secrets create barriers to legitimate sharing of commercial technologies, which executives see as essential in the globalized aviation marketplace.

Gillette portrayed the issue as a regulatory headache rather than a genuine threat to Boeing's 787 plan. And he insisted that the questions raised by Barreiro and the engineers are being resolved.

Furor in Everett

Boeing can't take the technology-export issue lightly because it previously ran afoul of the restrictions.

Internal documents show the Department of Commerce found export-license irregularities during the 1990s in Boeing's sharing of composites technology with its Japanese partners on the 777, which has a tail made from composites.

Commerce closed that previously undisclosed investigation last year and issued a warning letter to Boeing. Neither the company nor the Commerce Department would discuss details.

And last summer, the State Department prepared civil charges against Boeing alleging 94 violations of the Arms Control Act because the company sold commercial jets without obtaining an export license for a tiny gyrochip that has defense applications.

Boeing regards that case as an overzealous application of export-control laws, but the issue hasn't been resolved.

Senior vice president and general counsel Douglas Bain told a private meeting of top Boeing executives in Orlando, Fla., earlier this month that the State Department is taking a hard line on the gyrochip case and that "it's probably their intention to hammer us."

On the new 787 program, Boeing is taking composites technology much further than it did on the 777. The whole 787 airframe, like that of the B-2, will be made from plasticized carbon-fiber composites rather than the conventional aluminum.

Boeing developed new manufacturing methods, molding enormous single-piece fuselage barrels out of composite plastic. When production starts, those fuselage sections will be made in Italy and Japan.

To ensure it didn't cross the line on potential military input, Boeing's Office of Internal Governance sent in Barreiro to lead a so-called "Red Team" review.

The story of his investigation and its aftermath was revealed in company documents obtained by The Seattle Times. Barreiro declined to comment. Some detail was confirmed by engineers who were involved.

The uproar over Barreiro's findings stemmed from how he reclassified some of the manufacturing processes.

Technology with both commercial and military applications — so-called dual-use items — is generally exportable with a Department of Commerce license.

But after hearing from the engineers, Barreiro retagged a list of 787 technical specifications as defense items, not dual-use items, meaning they are subject to stricter State Department jurisdiction under the International Traffic in Arms Regulations (ITAR) law.

Bottom line: The 787 must be "ITAR-free." With even a single ITAR item on a commercial airplane, it cannot be sold overseas.

Barreiro's ITAR classification prompted a furor. Local 787 export-control manager Vanessa Gemmell angrily confronted Barreiro, then stormed out to complain to his boss.

Next day, Barreiro threatened to quit. He stayed only after Boeing legal staffers upheld his concerns.

Gillette, in a later interview, minimized the internal clashes.

He said some engineers had initially balked at signing a form declaring the 787 free of military know-how only because it was poorly worded. Once the wording was changed to attest only to what they personally knew, the engineers were ready to sign.

The outside review by Barreiro's "Red Team" delivered a helpful jolt, Gillette said, since "our knowledge of the depths of the law was still coming up to speed."

Boeing must identify every "little piece of data that came from a military source," Gillette said. "We have to find it, and we have to remove it and replace it with a commercial source of the data."

A Boeing spokeswoman said the meticulous process now under way has reduced the number of potential ITAR items on the program from 20 in July to "only a few" now.

Cutting edge or not?

In a plant across from the Flight Museum, Boeing has worked for more than a year with its Japanese and Italian partners to perfect the pioneering robotic production of 787 wings and large, single-piece fuselage barrels.

Gillette described the 787 airframe as a "black aluminum" design — meaning its structure is identical to earlier aluminum airplanes, except made with composite plastics, which are black.

In other words, not so revolutionary. Boeing isn't the only one with those skills, he said. "All of our big airframe partners, they all make various kinds of primary composite structure already."

Gillette also said commercial-aerospace research on composites predated the military uses.

He produced copies of NASA documents outlining 1970s research programs conducted by Boeing, Lockheed Martin and McDonnell Douglas that culminated in the first use of composites on primary aircraft structures in civil jets.

Under the legislation that guides NASA, he said, the results of that work were "put into the public domain for all to use," generally within a year of completion.

Though secret research on the stealth bomber had already begun in the late 1970s, it was publicly launched only in 1981. Gillette said five special-issue Boeing 737s with carbon-fiber tails entered scheduled service in 1982, a year later.

Likewise Airbus was manufacturing A310 passenger jets with carbon-fiber vertical fins by 1985, three years before the first B-2 was publicly displayed.

If some engineers think B-2 technology has migrated to the 787, he suggested, they may simply be unaware of such earlier commercial applications.

Regardless of how the technology was developed, Loren Thompson, a defense analyst with the Lexington Institute, agreed with Gillette that the 20-year-old material design of the B-2 is no longer state-of-the-art. He dismissed the idea that any composites technology on the 787 could still be militarily sensitive.

"Knowing how to work with composites, by itself, would not greatly aid an enemy," Thompson said.

He sees the export laws as outdated, reflecting a control system designed for the Cold War rather than the new reality of economic globalization.

"At some point people need to lift their eyes from their military concerns and look around at how the global market has changed," Thompson said.

Nevertheless, Boeing must satisfy the government.

In late October, Commercial Airplanes Chief Executive Alan Mulally sent employees a memo on the importance of complying with the laws controlling export of technical data.

On a visit to Seattle this month, David McCormick, undersecretary of Commerce responsible for export control, said his department is in constant dialogue with Boeing on the subject. After a period of intense scrutiny and delay, Commerce in November granted a license that will allow manufacture of the 787 rudder in Chengdu, China.

"There is a national-security issue around composites," McCormick said, specifically citing China. "That's certainly something Boeing has tried to be sensitive to."

According to a Boeing insider, at the company's private annual leadership retreat in Orlando on Jan. 5, top lawyer Bain said that the 787 program has more than 100 people dealing with export-control matters.

He described export-license problems throughout the company as "the biggest issue we face."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com