GAO Says Boeing Pact May Be Tainted
A $4-billion contract awarded to Boeing Co. to upgrade cockpit avionics on C-130 military cargo planes might have been tainted by the “improper involvement and influence” of disgraced former Air Force official Darleen Druyun, a government audit agency said Thursday.
The Government Accountability Office recommended that the Air Force reopen a remaining portion of the contract -- potentially worth $1.8 billion -- to competitive bidding.
The GAO findings mark the latest fallout from Druyun’s admission last October that she favored Boeing in several multibillion-dollar contract competitions because the company gave her daughter and son-in-law jobs at her request.
Druyun was sentenced to nine months in prison for holding job talks with Boeing while she was negotiating a $23-billion contract with the company for new aerial refueling tankers. The contract has since been scuttled.
Last week, Boeing’s former chief financial officer, Michael Sears, was sentenced to four months in prison for offering a $250,000-a-year job to Druyun, which she took in 2003 after leaving the Air Force.
Druyun’s admission that she favored Boeing prompted several rival defense companies to file protests of Boeing contracts that Druyun oversaw.
In a summary of its findings, the GAO said Druyun “was materially involved in the evaluation of proposals” for the C-130 upgrade contract and that she “expressly or implicitly” ordered changes to the ratings of bids from Boeing and its competitors.
Moreover, the GAO said that “the Air Force conducted discussions in a manner that favored Boeing.” The GAO’s full report is expected next month.
As a remedy, the GAO recommended that the Air Force hold competition for the installation portion of the C-130 Hercules upgrade program. Under a 2001 contract, Boeing was given the task of designing, developing, producing and installing the cockpit upgrades -- work with a total potential value of $4 billion. Boeing has so far completed the engineering and manufacturing development work, worth about $1 billion.
The contract award was protested by Lockheed Martin Co., L3 Communications and BAE Systems, the three losing bidders.
Last week, the GAO sustained a protest of another contract award that Druyun was involved in, a $2.5-billion program that was given to Boeing to develop the so-called Small Diameter Bomb. It recommended that a new round of competition be held for future bomb orders.
In upholding the protest, the GAO also raised questions about the involvement in the bomb competition of another former Air Force official who went to work for Lockheed, which lost the bid and protested the award.
“The Air Force will evaluate the recommendations and take appropriate action,” an Air Force spokesman said.
Boeing has maintained that it was unaware of having received any special consideration in the awards and that the awards were justified on their own merits.
