NSS CHRONICLES: Pentagon Procurement Corrupt
Pentagon to Probe 8 Contracts Awarded During Druyun Era
New Report Cites Deals to Boeing, Lockheed
By ANDY PASZTOR
Staff Reporter of THE WALL STREET JOURNAL
February 14, 2005 12:00 p.m.
The Pentagon's chief procurement official ordered further investigation of eight more contracts for which the "process was set up, interrupted or unduly influenced" by Darleen Druyun, the former senior Air Force procurement official whose activities sparked a major scandal.
Michael Wynne, the Defense Department's acting procurement head, told reporters that a recently completed report of more than 400 individual contracts going back to the early 1990s identified eight more contracts that appeared suspicious because they deviated from "general contracting procedures."
The report, written by the Defense Contract Management Agency, identified four contracts that were awarded to Boeing Co. and two to rival Lockheed Martin Corp., a big financial-management contract that went to Andersen Consulting and a ground-support-equipment contract for Systems Electronics Inc. as warranting further scrutiny. In announcing the results, Mr. Wynne stressed that the review was done by contracting experts, not professional investigators, and it was too early to tell whether improprieties were involved.
But if the Pentagon's inspector general determines that any of the contracts were manipulated or improperly awarded, Mr. Wynne said he intends to invite the losing bidders in those instances to file formal protests.
Mr. Wynne said the contracts slated for further scrutiny include a portion of a weather-satellite contract Boeing won in 2001; a long-term maintenance contract for Air Force KC-135 aerial-refueling tankers Boeing won in 2000 and 2001; a C-5 cargo plane upgrade contract Lockheed Martin won in the late 1980s; and a replacement contract for certain VIP-transport aircraft awarded to Boeing since the late 1990s.
In addition, Mr. Wynne said the Defense Science Board, a high-level Pentagon advisory board, is completing a separate report that will call for tighter oversight of procurement policies and more emphasis by senior Pentagon officials on ethical issues. At one point, Mr. Wynne criticized the Pentagon's leadership for allowing the focus on advocating integrity to lapse, saying it "fell off the radar screen" and helped set the stage for the improprieties Ms. Druyun has admitted.
Mr. Wynne also told reporters that the recently completed review of contracts influence by Ms. Druyun didn't show any evidence that Michael Sears, Boeing's former chief financial officer, helped manipulate any contracts. Mr. Sears, who helped recruit Ms. Druyun to Boeing in late 2002 , faces sentencing for his role in the affair at the end of the week.
Ms. Druyun was fired by Boeing in late 2003 for lying about employment talks with the Chicago-based aerospace giant while she still had authority over the company's Air Force contracts. She has since been sentenced to prison.
The report's conclusions are bound to raise new questions about the role the now-disgraced Ms. Druyun played in the biggest military procurement scandal since the 1980s. The fallout is expected to be months of continued Pentagon audits and investigations of her dealings with Boeing.
Boeing had no immediate comment on the findings. Spokesman Dan Beck said the company has been "responsive to every request" from government investigators. "We want to resolve these issues," he said, "so we can continue with our government customers as a trusted contractor."
The contracts highlighted in the latest report haven't previously surfaced as part of the Druyun scandal or the passel of criminal, civil and congressional investigations it has spawned. The DCMA tried to determine if procedures or rules were somehow overlooked, skirted or broken. The Pentagon's inspector general is expected to delve more deeply into the various contracting issues.
Write to Andy Pasztor at andy.pasztor@wsj.com.
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