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Ex-Boeing CFO to Be Sentenced

Fallout From Druyun Case Continues for Company

By Renae Merle
Washington Post Staff Writer
Friday, February 18, 2005; Page E04

The scheduled sentencing today of fired Boeing Co. executive Michael M. Sears, for illegally recruiting an Air Force procurement official to the company, will mark the end of one headache for the aerospace giant, but not of all of its legal troubles.

Investigations are still underway into whether Boeing contracts were tainted by Darleen A. Druyun, the Air Force procurement official who admitted favoring the company for years, including while negotiating with Sears for a job. And the company's space business remains suspended from receiving new government contracts after an Air Force inquiry found that several of its employees had used proprietary documents from rival Lockheed Martin Corp. during a rocket launch competition in the late 1990s.

Michael Sears pleaded guilty to a felony charge in the hiring of an Air Force procurement official. Boeing still faces a lawsuit and contract protests. (Ken Cedeno -- Bloomberg News)

_____Recent Coverage_____
Jailed Ex-Official Linked To More Defense Contracts (The Washington Post, Feb 15, 2005)
Boeing Hopes the Worst Is Over (The Washington Post, Feb 9, 2005)

Sears pleaded guilty in December to a felony charge related to aiding Druyun. He is asking for probation while prosecutors want prison time, noting that the impact of Sears's and Druyun's actions continues to reverberate. "The cloud it has cast over Air Force procurement will take years to dispel," the government said in a presentencing filing this week.

Sears's attorney, James R. Streicker, argues that the former chief financial officer, once considered a likely candidate to become Boeing chief executive, should receive probation. Noting that he lost $10 million in salary, stock benefits and future compensation, the defense filing said, "Mike Sears has ruined his career, decimated his reputation, lost millions of dollars, and caused severe pain to those he loves most."

In its filings, the U.S. attorney's office in Alexandria also found fault with other senior Boeing managers, saying they "did not ask the defendant [Sears] the logical questions such [employment negotiations with Druyun] raised if Boeing was to act properly in this matter."

In one e-mail exchange with senior executives, including then-chairman Philip M. Condit and James F. Albaugh, head of Boeing's defense operations, Sears referred to a meeting with Druyun about a job as a "non-meeting."

"Rather than react with concern to a questionable 'non-meeting' with a senior government official these Boeing executives appear to have accepted the negotiations as business as usual," the filing said.

Boeing has added checks and balances to prevent a recurrence, spokesman Dan Beck said. "Those few senior Boeing officials who knew Sears was hiring Druyun also believed that the two longtime veterans of the aerospace and defense industry were following the appropriate laws and processes," he said. Condit resigned in late 2003.

Sears's sentencing could help the company's effort to move beyond a series of ethics scandals.

"The more milestones that they can pass through the quicker they can get it behind them," said Richard L. Aboulafia, an aviation analyst with Teal Group. "The more time passes between events like this there is a good chance there will be nothing more. Time is on their side."

Danielle Brian, executive director of the Project on Government Oversight, a watchdog group, disagrees. "Ten years ago Boeing had a different reputation on the Hill than other contractors," she said. "They were seen as cleaner. Now when you hear Boeing you think scandal. I think it's going to take years for them to recover from all of this."

The suspension from new rocket launch contracts has been in effect since mid-2003. "The long duration of Boeing's suspension is remarkable in the annals of procurement," said Charles Tiefer, professor of government contracting at University of Baltimore Law School.

Air Force officials have said they hoped to be able to lift the suspension soon -- perhaps in a few weeks.

But Boeing also remains locked in a legal battle with Lockheed, which filed a lawsuit over the loss of proprietary documents. In court filings last year, Lockheed alleged that Druyun shared Lockheed information with senior Boeing officials during the competition. Boeing denied the allegations. The U.S. attorney's office in Los Angeles is also still investigating the case, which last year grew to include an examination of NASA contract competitions.

Boeing is also still awaiting the results of protests competitors filed with the Government Accountability Office over a $4 billion contract to upgrade electronics on C-130 military transport planes and a $2 billion contract to build a small-diameter bomb. Druyun said in court documents her decisions in favor of Boeing were influenced by the company giving jobs to her daughter and son-in-law. The protests could be decided as soon as today.

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