Boeing Goes on Offensive in Ad Campaign
Plagued by allegations of misconduct and facing a federal investigation, Boeing Co. is expected to run a full-page ad in newspapers today featuring an open letter that defends the company’s “integrity” and “honesty.”
By taking the unusual step of moving the debate over ethics in the defense business to a public forum, Boeing also is acknowledging for the first time publicly that some of its employees “behaved unethically” when it outbid rival Lockheed Martin Corp. to win a multibillion-dollar military rocket contract.
“It has become clear that some of our employees did not behave properly during the competition” over the rocket pact, Boeing Chairman Phil Condit says in the open letter, a copy of which was obtained by The Times.
A Boeing spokesman declined to comment on the letter.
Boeing, based in Chicago, is the world’s largest commercial aircraft maker and is the nation’s third-largest defense contractor, with about 35,000 employees in Southern California.
Five weeks ago, Boeing revealed that the Justice Department was investigating allegations that the company illicitly used documents obtained from Lockheed Martin to win the lucrative satellite rocket accord.
In turn, several government watchdog groups have stepped up their criticism of Boeing, challenging several large defense contracts the company has won.
Last month, the Pentagon approved a controversial $16-billion deal to lease 100 Boeing jetliners for the Air Force to use as aerial refueling tankers. Some members of Congress have criticized the deal as a handout to Boeing. Sen. John McCain (R-Ariz.), for one, has called the deal a “military industry rip-off.”
The attacks intensified last week when a watchdog group ran an ad in a Capitol Hill newspaper criticizing Boeing’s business ethics. The ad apparently prompted top Boeing executives to take the highly unusual step of responding publicly, a company source said.
In addition, a coalition of taxpayer groups has been preparing a letter to key congressional leaders denouncing the Air Force tanker lease deal. The letter is expected to cite the Justice Department investigation into the rocket contract as a key reason Congress should derail the tanker lease, a source with one of the groups said.
Signers of the letter are expected to include an odd alliance of conservative and liberal groups, including the Project for Government Oversight, Public Citizen and Americans for Tax Reform.
“Ordinarily, we would have nothing further to say pending the completion of the investigation” by the Justice Department, Condit says in the open letter, which is scheduled to be published today in several newspapers, including the New York Times, Washington Post and Wall Street Journal. But in this case, Condit adds, “the question raised about Boeing’s commitment to the values of integrity and fairness cannot go unanswered.”
Condit’s letter says the company has “always stood for integrity in its actions and products” and continues to “strive everyday to reinforce a culture where business is conducted honestly.”
Condit says he recognizes that “based on events disclosed in the past few weeks, there has been a serious question raised about this commitment.”
“This question suggests that the actions of a few individuals who behaved unethically are representative of the values of the Boeing Company. They are not,” his letters states.
Much of the criticism directed at Boeing centers on how it beat out Lockheed Martin to win the contract to develop the so-called Evolved Expendable Launch Vehicle, a military rocket designed to be relatively reliable and cheap to use.
Federal investigators have declined to discuss the scope of the inquiries, but sources said they were focused on internal Lockheed documents obtained by a Boeing employee hired away from Lockheed in 1997. The two companies were gearing up to bid on the rocket contract at the time.
Investigators believe that the hiring of Kenneth Branch, a former Lockheed rocket program engineer, may have given Boeing an unfair competitive advantage. Branch brought with him thousands of pages of Lockheed documents, including some that had been stamped “proprietary.”
Boeing eventually fired Branch and his supervisor, citing a violation of company policy of using a competitor’s proprietary information. It alerted Lockheed and Air Force officials about the documents in 1999.
A year later, the two employees filed a lawsuit against Boeing, alleging wrongful termination. A Florida judge dismissed the case, but documents obtained during the discovery phase of the suit evidently prompted the government to begin its probe.
“Boeing has worked very hard to justify its reputation,” Condit says in his letter. “However, we are a large organization, and we are not always perfect.”
Last month, Boeing’s legal woes continued. A private El Segundo company that hoped to be the first to send backup rental satellites into orbit sued Boeing, alleging that the aerospace giant had stolen its idea and then put it out of business.
Condit has also been under attack. The National Legal and Policy Center, which promotes “ethics in government,” has called for the Private Sector Council to strip Condit of a 2003 Leadership Award, saying the “notion that Boeing would deserve a reward after years of unethical behavior strikes us as ludicrous, and we want the award rescinded.”
