Pentagon Watchdog Questions Boeing Deal

The Air Force should not move forward on a plan to acquire 100 aerial refueling tankers from Boeing Co. for $23.5 billion until significant changes are made to the deal, the Pentagon’s inspector general said Friday.

In a highly critical report, Inspector Gen. Joseph Schmitz said procedural and financial problems with the deal could cause the government to spend up to $4.5 billion more than necessary.

Once the changes are made, however, there is no compelling reason not to complete the deal, the report said.

The long-anticipated report said the Air Force’s decision to acquire the tankers as a commercial item put the Pentagon at “high risk for paying excessive prices and profits and precludes good fiduciary responsibility” for Defense Department funds.

It also said senior Air Force officials failed to comply with military contracting laws, accepted insufficient or inaccurate Boeing data during negotiations, and wrongly waived any right to audit the program once it gets started.

The Air Force, in a response included in the report, said it followed procedures outlined by Congress “and reviewed and improved within the [Defense] Department using approved acquisition processes.”

The Air Force and Boeing also disputed the report’s claim that the Air Force “cannot ensure to the war fighter” that the tankers would meet the military’s operational requirements.

Boeing said it created a “totally compliant design” that meets all Air Force requirements, as well as standards set by senior Pentagon officials.

The Air Force said in its response that the new KC-767 would be the “world’s newest and most advanced tanker” and was “critical to the defense of our country.”