Business: Defense Contractors

The Future of the Pentagon's Relationship with Weapons Contractors

After more than 30 years in government, Darleen Druyun had become one of the most powerful women in the Pentagon, helping direct the Air Force's $30 billion procurement budget, often without supervision. Now her career and reputation are in shambles after she pleaded guilty Oct. 1 to giving industry giant Boeing Co. preferential treatment before taking a job with the company.

On Monday, former chief financial officer for Boeing Co., Michael M. Sears, pleaded guilty to a conflict-of-interest charge, "admitting that he negotiated the company's hiring an Air Force official who was overseeing military contracts involving the aerospace firm."

The Defense Department has begun a wide-ranging review of how it buys weapons, and the fallout could cost the government hundreds of millions of dollars as companies unfairly ruled out of contracts seek restitution for the costs they incurred in the bidding process.

Washington Post staff writer Renae Merle was online Tuesday, Nov. 16, at 11 a.m. ET to discuss the Druyun scandal and the future of the Pentagon's relationship with its weapons contractors.

A transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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McLean, Va.: Although there is proven evidence of gross misconduct on the part of several top Boeing executives, the company has seen virtually no impact to its revenues, and is in fact boasting about its strong financial performance. It seems like the lack of any significant penalty sends the wrong message to taxpayers and makes the entire industry look bad. Do you think Boeing will or should be more severely punished for its actions?

washingtonpost.com: Ex-Boeing CFO Pleads Guilty in Contract Scandal (Post, Nov. 15)

Renae Merle: First of all, I want to thank everyone for their questions. I will just dive in ...

I don't really have an opinion on whether Boeing should be punished. That's up to the Air Force, Pentagon and federal prosecutors to decide. But I will say that while Boeing's financial bottom line hasn't been hurt by the scandals, it's reputation has taken a severe hit in a field where companies are juggling billions in taxpayers money, integrity certainly is important.

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Indianapolis, Ind.: I recall an editorial in another national paper that referred to the investigation of Boeing as McCain's Flying Follies. The editorial said he was just a bitter old man still carrying a grudge against the Bush administration.

So would these activities ever have been exposed if Sen. McCain hadn't been so persistent? I bet there are scandals we don't know about because the senator pursuing the matter backed down.

Renae Merle: There is little question that if Sen. McCain had not raised questions about the Air Force proposal to lease then buy tankers from Boeing the public would not have ever found out about Darleen Druyun's misdeeds. Three committee approved the deal before McCain threw up a road block in the Senate Armed Services Committee. But to be fair others, including the Project on Government Oversight, also raised questions about the deal.

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Arlington, Va.: Have you ever investigated the relationship between procurement officers at agencies and the attorneys who advise them on procurement matters? In some cases, they are married to each other.

Renae Merle: Interesting observation. I hadn't heard that, but I don't think it's unusual for someone in the Pentagon to be married to someone in the business. Darleen Druyun's husband worked at a defense contractor. The question is whether they are taking the proper steps to eliminate any conflicts of interest and recuse themselves from matters involving their spouse.

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College Park, MD: I guess the Pentagon is "Shocked!; Shocked to find gambling going on here."

Corruption and war profiteering are constants. Why is this any different than business as usual? Will there be any real consequences for the people in charge, or will they just hang a few scapegoats and scurry back to their rat holes?

Renae Merle: I think the Air Force was sincerely shocked that Druyun would admit to giving Boeing preferential treatment. She had a reputation as a hard-nosed government negotiator who liked to give defense companies a hard time. Some even said she had Air Force blue in her blood and would never do anything that wasn't in the best interest of the soldiers. It turns out everyone's perception of Druyun was wrong.

I think there have been real consequences for some already. Druyun will go to jail for nine months. Michael Sears, the Boeing CFO, who negotiated her employment could as well (though most think he will get probation). As for others in Boeing and the Air Force, we will have to wait and see. The investigations aren't over yet.

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Washington, D.C.: Because of Darlene Druyun's admissions that she favored Boeing, how much is this likely to cost the taxpayers if restitution is required for the tainted contracts?

Renae Merle: That is hard to say. It depends on whether the Pentagon Inspector General and General Accountability Office find that Druyun's misdeeds extend past what she has already admitted to.

Lockheed, BAE and L-3 Communications have already filed protests on the C-130 avionics upgrade contract that Druyun said she may have unfairly given to Boeing. The Air Force has spent more than $300 million on that $4 billion contract already, so cancelling it and starting over would be especially expensive.

But where the costs could really start to add up is if the Inspector General or GAO determine that Boeing's competitors for that contract or others should be reimbursed how much they spent bidding on the contracts. Companies spend tens of millions developing proposals for these contracts.

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Munich, Germany: Perhaps I'm I just being a pessimistic, but don't you think that it's naive to believe that personal contacts don't play a vital role in the awarding of military contracts?

Specifically I'm thinking of the Cheney-Halliburton connection. Halliburton stock prices surged right after the election, so the market must believe that Cheney's re-election has a business advantage for Halliburton.

Renae Merle: The Halliburton contracts fall outside my beat, but a few thoughts about personal relationships:

They certainly do help in military contracting and every business arena. There are rules to prevent a highranking military official from taking a job with a defense contractor then going back and lobbying or even talking to the people in the Pentagon they used to work with. That should help eliminate some of the personal influence that someone like Druyun is able to build after 30 years in government. But a retired Pentagon official still retains their insights into the procurement system and military thinking, which they can pass on to the company without breaking any rules. Remember, one of the reasons Boeing recruited Druyun was to prevent her from joining their biggest rival, Lockheed.

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Washington, D.C.: The Boeing/Druyun scandal tarnishes an entire industry, one that depends on a stringent, uncompromising attention to ethics and integrity. What do you think will be the most important outcome from a review of the industry's relationship with its government customer?

Renae Merle: I think this has served as a reminder to the rest of the industry of what can happen. There is not a single executive who would trade places Boeing right now. I suspect ethics and integrity are as common dinner talk as precision weapons and missiles in the home of every defense contractor these days. The Pentagon has ordered a review of the entire procurement system (how the military buys weapons) which could generate some interesting solutions to the problems the Druyun scandal has shed a light on.

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Lyme, Conn.: How is it that a person in charge of procurement should operate without supervision? Were her decisions checked or audited by any supervisor or third party or independent source? How long was she able to award contracts improperly before anyone noticed something was amiss?

Renae Merle: Druyun was supervised by a political appointee, the Air Force acquisition chief. But there has been a lot of turn over in that position and it can take a while to get someone confirmed by Congress, so there were stretches when there was no one filling the acquisition chief position and Druyun was basically running the office herself. The other thing is that it would take some time for any acquisition chief to get familiar with the hundreds of programs the Air Force was managing. They would have to depend on Druyun's judgment and advice for guidance.

Until Boeing fired her for accepting a job with the company while still supervising their work at the Air Force, you were hard pressed to find anyone that would question Druyun's ethics. She was known as a government contracting expert who knew the ins and outs of the system better than almost anyone. Otherwise, she was easy to trust.

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Washington, D.C.: I used to work as a developer for a large contractor who did all types of web application contracts for different federal bodies.

One thing I learned when studying computer science at college is that "reusing" software tends to improve reliability and worker efficiency/productivity in that you are not recreating the wheel over and over again.

The irony with government contractor work is that contractors constantly recreate the wheel over and over again, because they tend to bill the government by labor hours worked.

Most applications we did for the government, we had already done many times before and could have just reused many modules (for their reliability and to save man-hours). Some modules, in fact, could have been purchased off-the-shelf and integrated for far cheaper, but we were always told by our project managers to start from scratch, which led to countless hours in development, testing, and debugging.

I would guess that some of the projects could have been done for probably one-tenth of the budget except, I guess, every contractor wants to milk the taxpayer for everything it can, even if it means producing less reliable products for them in the process. It all sort of felt dishonest. The high-ranking government employees who dealt with our project managers seemed uneducated in software development and eager to write the checks.

Renae Merle: Interesting example and you point to a real problem in government procurement. It is difficult to find acquisition officials that are versed in the technology they are buying. A growing complaint among some industry observers is that the government is depending on companies to tell them what they need and how much it should cost.

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Arlington, Va.: Another big problem area defense contractors face is the incredibly long delays involved in obtaining security clearances for their staff. The proposal to centralize adjudications under the new intel czar will further delay this process. Delays cost defense contractors money and ultimately the taxpayer foots the bill. Investigation backlogs are approaching one million cases.

Renae Merle: thanks for the comment.

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Washington DC: What do you believe was the fatal flaw in Druyun's character that led to this Macbeth-esque fall from from grace?

Renae Merle: I wish I knew. She is an absolutely fascinating character, who has not sat down for an interview since this started. Druyun rose to the top because she was perceived as a competent, hard working, ethical government worker. That she would cross the line was unimaginable even to her it seems. She only admitted to giving Boeing preferential treatment after failing a polygraph.

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Washington, DC: Yet another defense contractor scandal. This, after the CACI Abu Ghraib mess where, somehow, providing "information technology" meant "prisoner interrogation" and abuse, it seems to me that defense contractors and the government have been in bed together for quite some time. How efficient and, more importantly, just is the convoluted paper trail of "government contracting" after all??

Renae Merle: I think a lot of people are asking whether there is something wrong with the military procurement system, including the Pentagon.

As far as what happened with the CACI contract for interrogators in Iraq, that was always prohibited. The GSA has said the work should not have been attached to an IT contract and is cracking down on those sorts of slips.

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Northern Virginia: This is more of a comment than a question - This is a comment on what I've seen working for government contractors. The Darleen Druyun episode is not uncommon whatsoever. I know of two instances where we've hired people "referred" by our customer. And it wasn't because these individuals had unique and valuable experience - they were fresh out of college and we're paying them over $50k, for office assistant/receptionist positions. It's definitely an environment of who you know, not your qualifications that gets contracts and jobs.

washingtonpost.com: Long Fall for Pentagon Star (Post, Nov. 14)

Renae Merle: thanks for the comment

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Alexandria, va: For many years now, retired Military Officers who have gone to work for Defense Contractors have been working with their yet unretired Military cronies back in the Pentagon to get DOD business for their new employers.... AKA Eisenhower's Military Industrial Complex. A big deal was made out of the Druyun case because she was a Civil Service employee and not Military or a political appointee and a female to boot. The Military brass and political appointees constantly sneered at her behind her back but never to her face. If they had, she would have withered them with a mere scornful glance!

A retired 40 year DOD employee who is currently happily unemployed!

Renae Merle: Thanks for your comment. I have heard that military officers tended to dislike Druyun and that she couldn't have cared less. I don't think it had anything to do with her being a civilian or a woman. It probably had more to do with her having a lot of power and knew how to use it.

Good luck in your retirement.

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Seattle, WA: Why did the OSD (Acquisition and Technology) head APPROVE the major weapons systems buys that Druyun pushed forward? It is my understanding they had the power to stop programs from going forward based on all factors, including cost.

Renae Merle: Air Force officials note that while during her final years in office they began to suspect she accumulated too much power, they never questioned her ethics or that she was doing what was best for the Air Force. Her supervisors certainly could have chosen to ignore or overrule or recommendations, but her job was often to provide them with guidance and expertise. With nine years in one position, she certainly had more tenure than any of the political appointees above her.

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Renae Merle: Thanks for the chat, folks. I appreciate all of your interesting questions and comments.

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