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Air Force asks for additional investigation of Boeing contracts

By Tony Capaccio
Bloomberg News

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WASHINGTON — Air Force Secretary James Roche said he asked the Pentagon Inspector General to expand an investigation of Boeing's 767 refueling-tanker deal to include other major contract awards to the company as far back as 2000.

The 14-year, $27 billion program to start replacing the Air Force's aging fleet of aerial-refueling tankers is on hold while the Inspector General investigates whether Darleen Druyun, then the service's No. 2 acquisition official, improperly gave Boeing proprietary data related to the lease proposal from another bidder, European Aeronautic Defence and Space (EADS).

Roche said he asked that the probe include "any major programs with Boeing that Ms. Druyun was involved in" during the two years before she left in December 2002. Druyun joined Boeing the next month. Boeing fired Druyun and Chief Financial Officer Michael Sears Nov. 24, saying they broke company rules by discussing her hiring while she negotiated the tanker deal.

The Inspector General's probe likely will include contracts for upgrading NATO early warning surveillance aircraft, for space programs and for a new small-diameter smart bomb, Roche said. He said he also asked for a review of the 1998 competition between Boeing and Lockheed Martin in which Boeing was awarded 22 of 29 launches for a new rocket-booster program worth up to $1.5 billion.

Roche said he has no indication that Druyun improperly influenced any of these contracts.

"I wanted them to look back two or more years to reassure (Defense Secretary) Donald Rumsfeld and (Deputy Defense Secretary) Paul Wolfowitz that all efforts were taken to ensure there were no more potentially tainted contracts," Roche said. He added that he was advised by the service's Office of Inspector General that "going back two years from when she left was an appropriate time frame."

Wolfowitz on Dec. 1 asked Pentagon Inspector General Joseph Schmitz to conduct a preliminary inquiry to "determine whether there is any compelling reason why the Air Force should not proceed with its tanker lease program."

The Air Force and Pentagon are holding up signing a contract for roughly $2 billion for lease payments on the first 20 aircraft until this determination is made.

The Air Force decided in July that Boeing cheated in the rocket-booster competition because it possessed thousands of Lockheed Martin documents. The service as punishment shifted seven launches to Lockheed and temporarily suspended three Boeing space-business units from receiving Air Force contracts.

Justice indicted two ex-Boeing employees for conspiracy to possess trade secrets in a continuing investigation.

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