Pentagon Postpones Deal With Boeing
The Pentagon postponed action on an $18-billion Air Force deal for 100 Boeing Co. 767 tankers until the deal is investigated, after Boeing’s firing of two executives for ethics violations.
Deputy Defense Secretary Paul D. Wolfowitz told leaders of the Senate Armed Services Committee in a letter dated Dec. 1 that he was ordering a “pause in the execution” of the Air Force contracts to lease and buy the midair refueling tankers, a major setback in Boeing’s two-year effort to sell the planes.
Wolfowitz said his decision was prompted by Boeing’s firing last week of Chief Financial Officer Michael Sears for discussing a possible job with former Air Force deputy procurement official Darleen Druyun -- the lead player on the lease deal -- before she recused herself from overseeing Boeing business.
Boeing subsequently hired Druyun in January and fired her last month. On Monday, it also announced the resignation of Chairman and Chief Executive Philip M. Condit.
Wolfowitz said he asked Pentagon Inspector Gen. Joseph Schmitz -- who first launched a criminal investigation of the deal in September -- to assess any negative effect the alleged misconduct might have had on the contract negotiations.
After the investigation is completed, Wolfowitz said, the Pentagon would consider whether to proceed with the Air Force plan to lease the first 20 of the planes. He said the Pentagon also would comply with federal rules requiring a 30-day notification of Congress of any multiyear purchases.
Senate Armed Services Committee Chairman John W. Warner (R-Va.) welcomed Wolfowitz’s decision but warned the Pentagon to let lawmakers review the results of the probe before it approved any lease or purchase.
Boeing had no comment on the delay, but Sen. Patty Murray (D-Wash.), who represents many Boeing workers, warned that further delays in the tanker program “could result in greater costs to taxpayers and to our defense capability.”
Boeing shares fell 19 cents to $37.83 on the New York Stock Exchange.
