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U.S. Probes Actions Of Boeing Executive

Ex-Air Force Official Had Proprietary Data

By Renae Merle
Washington Post Staff Writer
Thursday, September 4, 2003; Page E03

The Defense Department inspector general's office launched an investigation yesterday into whether a former Air Force official improperly shared a competitor's proprietary information with Boeing Co. during negotiations on a $21 billion deal with the Air Force.

Questions include whether Darlene Druyun engaged in theft of trade secrets during negotiations on a proposal to lease, and then buy, 100 refueling aircraft from Boeing, government officials said. Druyun served as the Air Force's principal deputy assistant secretary for acquisition and management before becoming a senior executive in Boeing's missile-defense unit in January. The inspector general's office is also assessing whether Druyun was involved in any conflicts of interest, government officials said.

Sens. John McCain (R-Ariz.) and Ted Stevens (R-Alaska) at a hearing on whether the Air Force should lease, and then buy, planes from Boeing. (Photos Ray Lustig -- The Washington Post)

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"An investigation has been initiated on the basis of information received regarding the leasing from Boeing of the next generation of Air Force refueling tankers," the inspector general's office said.

The investigation was announced as Boeing and the Air Force defended the deal before the Senate Commerce Committee, where it was criticized as an uneconomical contract contrived to help Boeing. "From the beginning, the Air Force appeared not so much to negotiate with Boeing as to advocate for it, to the point of appearing to allow the company too much control not only over the pricing and the terms and conditions of the contract," said Sen. John McCain (R-Ariz.), chairman of the committee and a chief critic of the deal.

The Air Force argues that leasing first is the only way to speed delivery of the planes, which refuel fighters in midair. The strategy would cost more than buying the aircraft outright, but the difference is not significant, supporters say. The higher cost would be offset by savings derived from the elimination of maintenance expenses for some 40-year-old planes in the current fleet, they add.

"We do not propose leasing tankers as a bailout for Boeing," Secretary of the Air Force James G. Roche said in written testimony yesterday. "We propose leasing tankers because we need tankers to fight our nation's wars."

The United States will lose its air superiority "if we let this tool age any more," Sen. Ted Stevens (R-Alaska) told the committee.

The inspector general's office launched the investigation into Druyun's actions after the Senate Commerce Committee collected 8,000 e-mails and memos from Boeing, the Air Force, the Pentagon, and the Office of Management and Budget. According to an e-mail released by the committee, Druyun told Boeing officials that its competitor, Europe's Airbus, had submitted a bid that was lower by $5 million to $17 million per plane.

"If it was proprietary it was wrong" of Druyun to release it, Roche said.

Boeing officials denied receiving any proprietary information and noted that aircraft prices are available on the Internet. The e-mail was distributed after the Air Force announced that it would negotiate a deal with Boeing, so the information did not help formulate their initial bid, company officials said. Druyun, through a company spokesman, declined to comment.

Debriefing competitors after a competition is common, "but the use of specific numbers may not have been appropriate and that is being looked into," Roche said.

McCain said he would continue to fight the deal but was not optimistic. The contract has already been approved by three of the four committees with jurisdiction, and the holdout, the Senate Armed Services Committee, is considered friendly to the deal, industry officials said. "The fix is in," McCain said.

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