Confession Casts New Shadow Over Boeing Deal

A former top Pentagon procurement official was sentenced to nine months in prison Friday after making a surprise admission that she favored Boeing Co. on several major Air Force contracts because the company gave her family jobs.

In a development that could spark a new round of legal and business headaches for the aerospace giant, Darleen Druyun said that she helped Boeing win a $4-billion contract, agreed to pay relatively high prices for Boeing aircraft and restructured a deal to give the company $100 million more than what she thought was “appropriate.”

Wearing a navy blue suit, Druyun listened to the proceedings without expression and then expressed remorse in a voice that wavered at times.

“I sincerely wish to apologize to my nation, my family and friends, and to the court for what I have done,” said Druyun, the highest-ranking Pentagon official to be convicted since the 1980s. “I understand that this was wrong, and I accept full responsibility for my conduct.”

Druyun, 57, spoke only briefly in the courtroom, leaving her real bombshell for a signed statement in which the government spelled out how she obtained Boeing jobs not only for herself but also for her daughter and her daughter’s fiance while overseeing multibillion-dollar procurement pacts for the Air Force.

“Darleen Druyun owed her primary allegiance to the American taxpayer,” U.S. Atty. Paul J. McNulty said. “Instead, she put her own personal interests ahead of the U.S. Air Force.”

Druyun’s admission stunned officials at Boeing, where certain executives are still being scrutinized by federal investigators in connection with the affair, according to sources.

Boeing, based in Chicago, is the largest private employer in Southern California, with about 36,000 employees here.

“These new statements came as a total surprise,” Boeing President and Chief Executive Harry Stonecipher said in a memo to employees late Friday. “Until today, we thought we were dealing with a case of improper hiring. We now learn that Druyun has changed her story. Our reputation is being tested once again.”

Analysts said more than reputation was at risk for Boeing, which last year got caught up in a separate scandal after employees stole documents from rival Lockheed Martin Corp. to win a lucrative rocket contract.

The latest admission could derail a controversial $23-billion deal that Boeing struck to lease and sell 100 aerial refueling tankers to the Air Force.

“Considering Druyun’s admission, there is no way the Pentagon could proceed with paying the agreed price for the tankers,” said Keith Ashdown, vice president of policy for watchdog group Taxpayers for Common Sense. “The person who brokered the deal is admitting that she paid too much, which ironically is going to kill it.”

Sen. John McCain (R-Ariz.), one of the harshest critics of the tanker deal, said Friday that Druyun’s admission “affirms beyond doubt that the deal was a folly from the start.”

Shortly after retiring as the Air Force’s second-highest-ranking civilian procurement official in November 2002, Druyun began working for Boeing as vice president of missile defense programs at the company’s Washington office.

Druyun originally was supposed to be sentenced Friday for pleading guilty in April to one count of criminal conspiracy to obstruct justice. As part of that plea, she admitted that she tried to cover up the fact that in 2002 she had worked out a $250,000-a-year executive post at Boeing at the same time that she was negotiating the tanker deal with the company.

In the April plea agreement, Druyun insisted that her crime was a technical violation and maintained that she always upheld the government’s interest when negotiating contracts. Under that agreement, Druyun could have escaped jail time.

But just before the federal judge was scheduled to sentence Druyun on Friday, prosecutors filed a supplemental plea accord in which Druyun admitted lying to investigators about her cozy relationship with Boeing.

According to prosecutors, Druyun failed a lie detector test and when confronted with new evidence, she admitted to a wider role in helping Boeing obtain favorable terms on at least four major Pentagon contracts.

Druyun also admitted to having secretly altered a journal she had provided the government to support her version of events.

While with the Department of the Air Force in 2001, Druyun acknowledged that she picked Boeing over four competitors for a $4-billion contract to upgrade the cockpits of C-130 cargo planes as “indebtedness to Boeing for employing her future son-in-law and daughter.”

Boeing had hired the couple a year earlier to work at its St. Louis operations at Druyun’s request, according to prosecutors.

Druyun said she agreed in 2002 to pay Boeing $100 million more than what she believed was appropriate to restructure an early-warning radar plane deal for NATO. The decision was “influenced by her daughter’s and son-in-law’s relationship with Boeing,” she said in the court filings.

Druyun also agreed to pay Boeing $412 million to settle a contract dispute over the production of C-17 transport planes, which are assembled in Long Beach. The settlement was reached while Druyun was seeking employment for her son-in-law, who at the time was her daughter’s boyfriend.

And in the most controversial deal of all -- to acquire 100 Boeing 767s for $23 billion for use as aerial refueling tankers -- Druyun admitted to agreeing to pay a higher price for the aircraft than “she believed was appropriate,” according to the statement of facts filed in court.

She also admitted that in 2002, when her daughter expressed concern that her job performance at Boeing might lead to her being let go, Druyun contacted a senior Boeing executive who was involved in the tanker negotiations. The daughter ultimately was shifted to another position and not fired.

Pentagon officials said Friday that the NATO deal was now being renegotiated, and that the inspector general was reviewing all contracts Druyun oversaw in the two years before her 2002 retirement. If wrongdoing is found, the Pentagon said, it will renegotiate those contracts.

Scrutiny over the $23-billion tanker deal prompted Boeing to conduct an internal investigation which led the company to fire Druyun and its chief financial officer, Michael Sears. Federal prosecutors have charged Sears with improperly offering Druyun a job.

Druyun’s admission Friday may derail a plea agreement that prosecutors were close to finalizing with Sears. A hearing in the case that was scheduled in August -- around the time of her latest revelations -- has been postponed definitely.

On Friday, U.S. District Judge T.S. Ellis said the new admissions showed that Druyun breached her original deal with prosecutors and marked a “stain” on what otherwise were “years of unblemished service.”

Citing the importance of defense procurement in wartime, prosecutors asked the judge to impose a 16-month sentence.

Judge Ellis described the case as difficult as he sought to weigh the good that Druyun had done earlier in her career against her recent transgressions.

“We are at war -- and your position was all the more important,” he said. But he added that he had been moved by a series of letters he had received by Druyun’s supporters: “I was struck by the unanimity of feeling about the good service you have performed. I think your statement of contrition is genuine.”

Druyun was allowed to leave the court and avoided reporters after the hearing. But outside, her attorney, John M. Dowd, described the sentence as “very fair” and said he was pleased.

Pressed about why Druyun had misled prosecutors, only to change her story later, Dowd said: “There’s a lot of fear. There’s a lot of tension. There’s a lot of pressure.”

He added: “She cooperated, but she had difficulty. People sometimes have difficulty coming to grips with what they’ve done.”

Peterson reported from Alexandria and Pae from Los Angeles.