Defense Dealing Too Close for Comfort?
WASHINGTON -- When Darleen Druyun talked, chief executives of the world’s largest defense companies listened.
She held a somewhat obscure post, as the Air Force’s principal deputy assistant secretary for acquisitions, and turned it into one of the Pentagon’s most powerful civilian jobs. She controlled a $30-billion-a-year procurement budget and could make or kill a military project.
In August, she could be sentenced to as many as five years in prison.
Druyun pleaded guilty two months ago to one federal count of criminal conspiracy to obstruct justice, admitting that she tried to cover up that she had brokered a $250,000-a-year executive position with Boeing Co. at the same time that she was signing off on multibillion-dollar contracts with the company.
Now she is cooperating with federal prosecutors looking into a $23-billion Air Force pact to lease aerial refueling tankers from Boeing, which hired the 56-year-old after she retired from her federal job.
Pentagon investigators, under orders from Defense Secretary Donald H. Rumsfeld, are reviewing a spate of contracts Druyun oversaw before her November 2002 retirement, including two awarded to Boeing shortly before she began working as the Chicago-based company’s deputy general manager for missile defense.
As the investigation unfolds, the Druyun case is focusing attention on the ties that can develop between buyers for the military and the defense contractors that bid to build weapons and other hardware.
With a relative handful of defense contractors still in business after a decade of consolidation in the industry, Pentagon officials can hardly avoid close working relationships with their private-sector counterparts. But Druyun stretched the ethical boundaries, federal prosecutors and critics of the defense contracting system allege.
Now the Pentagon is evaluating its acquisition procedures, according to people familiar with the situation, concerned that Druyun had so much authority that she was the ultimate decision maker on some of the government’s biggest military contracts. The deputy assistant position Druyun held at the Air Force for nine years remains vacant.
At Boeing, the fallout reverberates: Its tanker lease contract has been suspended pending the outcome of studies to determine whether the tanker airplanes are needed. Longtime Chairman Phil Condit resigned in December, shortly after Boeing fired Druyun and Chief Financial Officer Michael Sears, who the company said had improperly offered her a job while she was still with the Air Force.
“The more you peel back the onion, the more sordid and calculated the Druyun-Boeing connection appears to be,” said Eric Miller, senior defense investigator for Project on Government Oversight, a nonprofit watchdog group.
“She was placing Boeing above the welfare of the taxpayers, who she was supposed to be working for.”
Druyun and her attorney, John Dowd, did not respond to requests for comment. Sears has denied violating Boeing policy.
A Boeing spokesman said the company undertook a rigorous internal investigation and then “took swift, decisive action” by firing Druyun and Sears. The spokesman said Boeing was cooperating with federal investigators.
Interviews with current and former Pentagon and industry officials, and a review of Pentagon documents and court filings, suggest that Druyun had a cozy relationship with Boeing and its former CFO.
In the spring of 2000, for example, Druyun asked Sears to help find her daughter’s fiance a job, according to a footnote in a criminal complaint against Druyun. The fiance -- who later married Druyun’s daughter -- went to work in the company’s St. Louis office.
In August 2000 -- as the Pentagon was deciding the outcome of a number of competitions for major military weapons systems -- Druyun asked Sears to lend her daughter a hand. The daughter, a recent college graduate, was hired as a college recruiter in Boeing’s St. Louis office, a position created for her during a hiring freeze, according to the criminal complaint against Druyun. (She asked her bosses at the Pentagon whether they had any objection to her daughter’s going to work for Boeing, though she did not mention she had played a role in landing the job, and was given the all-clear.)
At the Pentagon, a number of inquiries into Druyun’s work at the Air Force are underway.
Investigators are reviewing several high-profile competitions that Boeing won during Druyun’s watch. They include a $1.5-billion deal to upgrade C-130 transport planes; a $2-billion contract for a new generation of rockets; a $1.3-billion award to build military communication satellites; and a $2.5-billion contract to build a so-called small-diameter bomb.
If the reviews find there was wrongdoing, Boeing could be fined or suspended from doing certain business with the Air Force.
At least one probe into Druyun’s dealings with Boeing has concluded. The Pentagon’s inspector general said in April that Druyun had failed to follow proper contracting procedures when she revised a contract with Boeing to modernize airborne warning and control system, or AWACS, airplanes operated by the North Atlantic Treaty Organization.
Druyun approved the revision to give Boeing $800 million on top of the $500 million the company had been granted to complete the project, which was running behind schedule and over budget.
The revised contract was signed without a review by anyone outside Druyun’s office to determine whether the additional cost was “fair and reasonable,” the inspector general said in his report.
The report prompted the Air Force to begin renegotiating the AWACS contract with Boeing last month, with the goal of bringing down the value of the contract.
The timing of the contract’s revision -- in September 2002 -- has also come under scrutiny.
In August of that year, Druyun told the assistant secretary of the Air Force that she planned to retire and was talking to Lockheed Martin Corp. and Raytheon Co. about possible jobs. She recused herself from handling any Pentagon matters involving those two companies but not, at the time, Boeing.
The next month, her daughter, Heather McKee, “acting as Druyun’s agent,” sent an e-mail to Boeing CFO Sears, according to an Air Force memo. McKee -- still working for Boeing in St. Louis -- said Druyun was planning to leave the Pentagon and was discussing a job with Lockheed.
“We need to talk to her,” McKee wrote. Two days later, she e-mailed Sears to say that Druyun was seeking a chief operating officer-level job, according to Pentagon and Justice Department documents.
In another e-mail, Druyun’s daughter informed Sears that her mother was “VERY, VERY excited” about the prospects of a job at Boeing. McKee added that Druyun “leaves for Brussels Tues.,” referring to a NATO meeting at which Druyun discussed the AWACS contract revision with Boeing executives.
A Boeing spokesman said McKee and her husband declined to comment.
Three days after that e-mail, Boeing and Druyun worked out the AWACS revision in Brussels, according to the inspector general, who noted that Druyun signed off on the new contract before a 40-member Pentagon task force could complete its evaluation of the project. The task force was abandoned.
Other contacts between Druyun and Boeing have drawn attention.
Last fall, the National Legal and Policy Center, a watchdog group, dug up the fact that Druyun had sold her Northern Virginia home to John Judy, Boeing’s assistant general counsel, who was the company’s legal advisor on the $23-billion tanker lease deal.
The sale was completed for $692,000 on Jan. 2, 2003, the day Druyun began her job at Boeing. But according to real estate records on file in Virginia, Judy signed the contract to purchase the house on Oct. 21, 2002, two weeks before Druyun recused herself from handling matters involving Boeing.
The Boeing spokesman said the company’s legal counsel had vetted the sale, finding nothing wrong with it. Judy declined to comment.
Druyun, born in Vallejo, Calif., graduated from Chaminade University in Hawaii in 1968 and began her Air Force career as a contracting intern at Robins Air Force Base in Georgia two years later. She was named principal deputy assistant secretary for acquisitions in 1993, one year after she was accused, along with several Air Force generals, of secretly funneling $500 million to McDonnell Douglas Corp., later acquired by Boeing, to stave off a cash crisis on its C-17 military transport program.
Three generals and a civilian manager, but not Druyun, were fired or disciplined. Les Aspin, the Defense secretary at the time, wanted to fire her, said retired Air Force Gen. Merrill McPeak, then the service’s chief of staff. McPeak said he lobbied Aspin to spare her.
“I thought it was unjust and unfair. She was a fine public servant,” McPeak said. “I was able to convince him that it was a good idea to keep her, particularly because of the Clinton administration’s focus on having more women” in key government positions.
McPeak said he had been surprised by the revelations about Druyun’s surreptitious job talks with Boeing. “Power does tend to corrupt,” he said.
Druyun’s rise in authority in the ‘90s at the Air Force paralleled a dramatic shift at the Pentagon. After the Cold War, and in the face of shrinking defense budgets, acquisition processes were ripe for reform and Druyun led the charge.
She advocated closer collaboration with defense contractors in developing weapons systems and suggested money-saving steps such as buying off-the-shelf commercial products.
In a briefing to Air Force officials in November 2001, Druyun summed up her views on reforming the Pentagon’s cumbersome contract regulations: “The law is the law,” she said, “but too often we are slaves to processes and rules we all know should be rewritten or discarded.”
When Druyun retired from the Pentagon, more than 100 industry executives and government officials feted her at an Italian restaurant in Virginia. Lockheed, Raytheon and Boeing sent executives to the party, hoping to court her. She had already decided on Boeing, where she remained on the payroll for 11 months.
