Rumsfeld orders review of Boeing-Air Force deal

WASHINGTON — Boeing's multibillion-dollar tanker contract with the Pentagon could be on hold after the company's acknowledgement that its chief financial officer discussed a job offer with an Air Force administrator who was overseeing the tanker deal.

Defense Secretary Donald Rumsfeld said yesterday he's asked senior staffers to consider whether the acquisition process was tainted.

"We are the custodian of the taxpayer dollars. We have an obligation to see that things are done properly," Rumsfeld said during a Pentagon press briefing. "Certainly, when something of that nature occurs, one has to step back and say, 'What is it we ought to be thinking as responsible managers of this department?' "

He wouldn't set a timetable for getting answers to the questions he posed about the $27.6 billion tanker program.

Rumsfeld's comments came after he was asked at a briefing about the implications of Boeing's announcement Monday that it had fired its chief financial officer, Mike Sears, and Darleen Druyun, a former Air Force official involved in the tanker negotiations who later went to work for Boeing.

Though Congress approved an outline for the deal in a defense bill that was signed by President Bush on Monday, the Air Force and Boeing still must sign a final contract for the deal to go forward. According to the terms of the deal, the Air Force is to lease 20 tankers and then purchase 80.

According to Boeing, Sears violated company policy when he offered Druyun a job in 2002, before she had recused herself from Boeing-related negotiations.

The dialogue began on e-mail with Druyun's daughter — a 27-year-old Boeing employee — in September. Druyun and Sears met in mid-October, but she waited more than two weeks to separate herself from Boeing work.

The company said it had decided to fire Sears and Druyun after uncovering "compelling evidence" that the two later tried to conceal their actions.

Beyond the violations of Boeing's in-house ethics policy, Sears and Druyun may have run afoul of the Procurement Integrity Act, which bars acquisition officials from discussing future employment during contract negotiations.

Congressional-watchdog groups say they want the Air Force to hold off on signing a tanker contract until the Pentagon completes internal investigations.

The groups — including the National Legal and Policy Center, Common Cause and Taxpayers for Common Sense — have spent months arguing that early incarnations of the tanker program were a horrible deal for taxpayers. By leasing all 100 planes rather than buying them outright, government estimates indicated taxpayers could be paying roughly $6 billion more for the planes.

Ultimately, Boeing, the Bush administration and Congress restructured the deal to lease 20 planes and buy 80 later, saving $3 billion to $5 billion.

Joined by Sen. John McCain, R-Ariz., the groups also said the relationship between Boeing and Druyun looked cozy. McCain released e-mails indicating that Druyun went on a "covert operation" lobbying Capitol Hill to make the tanker deal work, and she gave Boeing pricing information about Airbus' tanker proposal, details that may have been proprietary.

Ken Boehm, chairman of the National Legal and Policy Center, said it was difficult to get traction on issues involving Boeing's credibility when he first started digging around earlier this year. "It was like attacking Disney or something," Boehm said. But since then, "everything all kind of built and built and built."

He said momentum changed in May following news that Boeing had obtained more than 25,000 documents belonging to Lockheed Martin, a rival for Air Force rocket-launch contracts.

Two former Boeing managers have been indicted in that case, and a Justice Department investigation continues.

Meanwhile, the Air Force suspended Boeing from rocket-launch business until it could determine whether the company had resolved management and ethical problems that resulted in the collection of the Lockheed documents.

Some have speculated that the suspension, which cost Boeing about $1 billion in launch business, could be extended because of the tanker controversy.

So instead of celebrating the tanker deal's passage after two years of lobbying, Boeing and its congressional allies are doing damage control and hoping to make the case that the problems are isolated to two individual — but senior — executives. Sears was one of the leading candidates to ascend to CEO when Phil Condit retires.

Condit has been on the phone with lawmakers. The deal's advocates, including Rep. Norm Dicks, D-Bremerton, have been on the phone with the Pentagon. Meanwhile, Boeing-Air Force negotiations continue.

Dicks said he thinks the program will go forward because the bulk of the negotiations were done after Druyun recused herself from Boeing work in November 2002.

"I certainly hope that Boeing can get control of this situation and get their people to conduct themselves with the best possible ethics," he said.

Katherine Pfleger: kpfleger@seattletimes.com or 206-464-2772