Jim Albaugh, chief of Boeing's Integrated Defense Systems division, has two things on his wish list. He wants to keep the company's huge Future Combat Systems contract from being derailed by Congress, the way Boeing's equally vital Air Force tanker deal was killed last year. And, like Boeing Commercial chief Alan Mulally, he would like to become Boeing's next CEO.

Albaugh faces two big hurdles, though. One is Sen. John McCain, the Arizona Republican now taking aim at Air Force and Army procurement. The second is an apparent rift between Boeing's defense division and others at the company, especially the D.C. lobbying operation, which plays a crucial role in the company's government contracts.

Albaugh is a rocket scientist, not a politician. In an interview with The Seattle Times, he suggested that fallout from the tanker deal has cleared. "We've shot off all the toes," he said. "There aren't any more toes to shoot."

He seemed surprised to hear from a reporter that in fact, the collateral damage continues on Capitol Hill, clouding other Boeing contracts as well as his own prospects for the CEO job.

Albaugh acknowledged that the company badly mishandled the controversial $24 billion deal to lease 767 tankers to the military, and the subsequent scandal that erupted over Boeing's illegal hiring of Darleen Druyun, the Air Force official who oversaw awarding of the contract. "We should have let go of it sooner," he said.

For more than two years beginning in late 2001, McCain criticized an Air Force contract to lease 100 tankers from Boeing as too expensive. The final nail in the coffin for the tanker contract came when it was revealed that Druyun, while still in charge of Air Force contracts, discussed a job with Boeing Chief Financial Officer Michael Sears.

Albaugh was not implicated by government prosecutors in any wrongdoing from the tanker contract or the ensuing Druyun scandal.

In the interview, he made it clear he will not let the Future Combat Systems (FCS) contract become Tanker Two. That, he said, is why the company responded quickly when McCain began raising questions this spring about the FCS contract, a $21 billion project led by Boeing to modernize the Army's communications and targeting systems. FCS is currently worth about $15 billion in revenue to Boeing, and could mean more later; its work force includes 550 in Kent.

But McCain, who single-handedly killed the tanker deal over concerns about cost and conflict-of-interest issues, is going after FCS in similar fashion.

As head of the Senate Armed Forces subcommittee that oversees Air Force procurement, he compelled the secretary of the Army earlier this month to initiate a rewriting of the entire FCS contract to conform to strict procurement accountability standards. Until McCain made his demands, the contract had been arranged by the Army and lacked the usual guarantees against price increases and conflict of interest by contractors.

He doesn't intend to stop there, say McCain staffers and defense-industry analysts: He will soon launch a more comprehensive review of FCS costs and technical problems, which could hurt Boeing.

On a separate front, early next month the Pentagon's Inspector General will release his final report on responsibility for the tanker mess. It may implicate more Air Force officials and rub off on Boeing, according to Armed Services committee staffers and congressional watchdog groups.

With these big procurement issues at stake, cooperation between Boeing's St. Louis-based defense division and the company's 35-person D.C. lobbying operation would seem vital. But there are plenty of signs that Albaugh's unit and the D.C. office aren't working well together.

"There is a serious problem with the breakdown of internal lines of communications at Boeing," said Richard Aboulafia of The Teal Group in Virginia, who closely follows the company's internal machinations.

"Other companies have had Byzantine power struggles," Aboulafia said. "But this infighting is far more serious, at a pivotal moment in terms of contract awards and execution."

In one example of communication gaps, Albaugh staffers say he didn't get adequate warning from the D.C. office about McCain's March 16 hearing focusing on Boeing's prized FCS contract. That hearing led to the Army beginning a massive rewrite of the contract, significantly complicating Boeing's work.

Albaugh's office wanted someone from Boeing to monitor the proceedings, but Boeing's lobbyists and corporate communications officials didn't want company officials there who might draw attention to themselves. Finally, Albaugh's office had to send its outside PR firm to observe and take notes.

People close to Albaugh also say Boeing's political operatives in D.C. never briefed him on the extent to which McCain links him to the tanker scandal.

Albaugh himself wouldn't speak directly to that.

But he said there are exculpatory internal memos, showing he had reservations about Boeing's hiring Druyun because of the possible conflict of interest.

Both Druyun and Sears went to jail for conducting illegal job discussions while she oversaw Boeing contracting, and Albaugh considers himself one of the good guys in calling attention to those improprieties, and even urging that Druyun not be hired, though in the end, he assented to it.

McCain, who has a cache of more than 8,000 Boeing e-mails on the tanker project, has a different view. He has repeatedly singled out one 2001 Boeing memo he considers pivotal, which lays out a meeting where a strategy originated for circumventing the usual congressional-approval process on the tanker deal by making it a lease, not a purchase. Albaugh is listed as one of eight people present, as is Druyun.

McCain has said he doesn't think Boeing should hire as CEO anyone involved in the tanker deal, and in previous interviews, he included Albaugh as one of the officials involved: "They're in the e-mails," he said, naming Albaugh and others, including several D.C. lobbyists.

Talking about Albaugh's surprise at McCain's continuing concerns, Aboulafia, who has known him for years, said, "It doesn't sound like they are keeping Albaugh in the loop."

Other people close to Albaugh who spoke on condition of anonymity said he had not been told how McCain has used the massive stash of Boeing documents turned over during the tanker investigation to paint his own picture of the scandal, including Albaugh's role.

"Your people who deal with the media and your lobbyists have to let you know how things are playing in D.C., and what's being said about you," Aboulafia said. "Controlling information can be devastating, not just for Albaugh, but to their bottom line."

Albaugh still hopes there is some common ground with McCain. "There's nothing wrong with any of the questions McCain is asking," either about the tanker deal or the FCS, he said.

"Is there uncertainty with the [FCS] contract now? Sure," Albaugh said. But, he added, agreeing to rewrite the contract was Boeing's best option. "When you get in a fight with a customer, you usually lose.

"We're better off now for what we have been through," he said. The FCS will prove that, he added.

Even though Albaugh has not been implicated in any tanker-deal wrongdoing, his competitors for CEO, whether Mulally or any outside candidate, have even more distance from all of that.

Mulally is lying low, not visibly campaigning for the job. However, he came to D.C. yesterday to meet with the state's delegation as a guest of veteran Rep. Norm Dicks, D-Bremerton. Dicks told the group Mulally would make a great CEO, according to several people present.

Albaugh will be in D.C. later this week, meeting with members of Congress to discuss the impact of potential Pentagon budget cuts on Boeing.

Meanwhile, Boeing employees are pushing for a CEO from within. The current issue of Boeing's in-house magazine says acting CEO James Bell and the board chairman "have been hearing a decent amount from employees who want to see their leaders become the next CEO."

Albaugh insists that in the end, the choice of CEO doesn't make that much of a difference on an established company such as Boeing.

"We're not a company defined by individuals," Albaugh said. "People come and go. And, boy, obviously they have."

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com