Pentagon Expands Review of Boeing Deals

Boeing Co. probably will remain barred from seeking military rocket work until all the defense contracts overseen by a former Air Force official who admitted giving the company favorable treatment are reviewed for possible improprieties, a top Pentagon official said Tuesday.

The review could prolong Boeing’s suspension for six months, dealing a blow to efforts by the world’s largest aerospace company to recover from scandals that have tarnished its reputation.

The Pentagon first suspended Boeing from future rocket work in July 2003, after two former employees were charged with stealing proprietary documents from archrival Lockheed Martin Corp. Air Force officials considered lifting the suspension earlier this year after Boeing instituted new ethics policies and procedures.

Then a former Air Force acquisition official admitted that she favored Boeing in several large contracts because the company gave jobs to members of her family. Darleen Druyun said she agreed to higher prices for Boeing aerial refueling tankers and favored Boeing for a $4-billion contract to refurbish C-130 military transport planes.

“It’s really hard for the Air Force to move forward now that this has all come out,” Michael Wynne, the Pentagon’s acting chief for acquisitions, said Tuesday during a briefing with reporters. “We’ve got to sweep away any allegations of ethical misconduct.”

Druyun’s admission about her dealings with Boeing initially prompted Air Force officials to review several major contracts that she oversaw since 2000. Wynne said that Pentagon auditors would now begin poring over hundreds of contracts that Druyun handled dating to 1993 when she first began working as a senior acquisition official. .

A rocket contract that Boeing won in 1998 will be among those reviewed, Wynne said. Druyun was the so-called source selection authority, or the ultimate decision-maker on that contract.

Druyun pleaded guilty to criminal conspiracy to obstruct justice and was sentenced to nine months in prison.

Wynne gave no timetable for the review, “ but added that he hoped to have some preliminary report from the group by mid-February.

He said he was creating a second task force consisting mostly of outside experts who would look at “management practices and circumstances” that gave one acquisition official so much power.

Boeing spokesman Dan Beck said the company had been cooperating with Pentagon investigators and was eager to “get back into the business of meeting their launch needs.” He added that Boeing was willing to wait to “make sure their concerns are addressed.”

Boeing, headquartered in Chicago, is the largest private employer in Southern California with 36,000 workers.

In a separate matter, Wynne said he expected Pentagon officials to make a decision soon on whether to reopen competition for new aerial refueling tankers to replace the aging fleet of KC-135 airplanes.

The officials are awaiting a report by Rand Corp., a Santa Monica-based think thank, on tanker alternatives before making the decision, Wynne said. The report is expected to be completed Monday.

Congress last month killed plans for the Air Force to lease and buy 100 tankers from Boeing for $23.5 billion. Since then, Europe’s largest defense contractor has launched a campaign to persuade Congress and defense officials to buy its tankers, The Times reported Tuesday.

Responding to that report, Wynne said that the European Aeronautic Defense & Space Co., which plans to offer a modified Airbus A330 passenger jet, should be allowed to enter the tanker competition. If there is new competition, he said, “it has to be full and open.”

Reuters was used in compiling this report.