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Boeing Loses Bid to Build Tankers to Its Rival
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After awarding a $20 billion contract to Boeing to lease tankers, the Air Force's procurement chief at the time, Darleen A. Druyun, admitted that she favored Boeing while negotiating for a job with the company. Druyun and Boeing's former chief financial officer went to prison, and Boeing agreed with the Justice Department to pay $615 million -- the biggest penalty ever paid by a defense contractor -- to settle allegations of misconduct on the tanker deal and others.
The Air Force rebid the contract, setting up the battle between Boeing and the Northrop-EADS team. The competition was especially intense because there are few deals of this magnitude available for defense contractors these days. In the past few months, each team spent millions of dollars to make several presentations, buy newspaper ads and lobby Congress.
Philip Finnegan, a defense industry analyst at Teal Group in Fairfax, said that while "the general expectation was that Boeing was in the best position to win," Boeing's performance on some military and satellite programs, in which technology didn't work or projects went over budget may have hurt the company.
He said there also was "certainly sensitivity over the past close relationship between Boeing and the Air Force" with the Druyun scandal.
"Clearly the Air Force really bent over backward to make sure this was perceived as a fair competition," Finnegan said. "Part of that was coming out with a surprise in the end."
Sue C. Payton, assistant secretary of the Air Force for acquisition, said the selection put the Druyun-Boeing controversy in the past. "That was a half-decade ago," she said.
Payton said officials from the Office of the Secretary of Defense, the Government Accountability Office and the Defense Department inspector general's office helped to ensure the selection process was fair and open. "We've got it nailed," she said of the process. "I don't see any relationship as to what's gone on in the past at all."
The tanker competition has been closely scrutinized by contractors, industry analysts and Congress. The Air Force expected to award the deal last October but postponed it to be sure that its process was fair and thorough. Officials said they tried to make the competition a model for acquisitions by having more communication between the service and each bidding team.
