The Booming Defense Business

It's not every day that the chief executive of a major defense contractor steps down because of ethical wrongdoing on his watch, as Boeing CEO Phil Condit did Dec. 1. But let's be clear about one thing: This mounting scandal, which centers on whether Boeing improperly offered Pentagon procurement official Darleen Druyun a job while she was negotiating the terms of a $20-billion deal to lease 747s from the company, goes well beyond a few misguided executives at one corporation.

In fact, under the guise of reforming Pentagon business practices, President Bush and Secretary of Defense Donald Rumsfeld have created an ethically challenged environment at the Pentagon that is an open invitation for contractors like Boeing to engage in waste, fraud and abuse.

As soon as he took office, Rumsfeld set out to recruit a core group of corporate executives to run the Pentagon in what one commentator described as "Department of Defense Inc." Nowhere was Rumsfeld's vision of a corporate-dominated department more evident than in his initial choices to run three military services: Secretary of the Air Force James Roche, a former vice president at Northrop Grumman; Secretary of the Navy Gordon England, a former executive at General Dynamics; and former Secretary of the Army Thomas E. White, who came from Enron.

In its first year and a half in office, the Bush administration named 32 appointees to top policymaking positions who were former executives, paid consultants or major shareholders of top defense contractors.

It's not just the number of military-industry hires that distinguishes the Bush administration from its predecessors; it's how they have conducted themselves in office.

Take Roche. He was a driving force behind the plan to have the Pentagon lease and modify 100 Boeing airliners for use as aerial refueling tankers -- which would have cost $4 billion more than buying them outright. Sen. John McCain (R-Ariz.) described this no-bid deal as "war profiteering." Roche's former company, Northrop Grumman, was a major partner with Boeing on programs like the F-18 combat aircraft. His backroom dealing on Boeing's behalf carries a strong whiff of conflict of interest.

Roche's role pales in comparison with longtime Rumsfeld crony Richard Perle. Perle stepped down as chairman of the Pentagon's Defense Policy Board last spring after it was revealed that he was using his position on the board to solicit investments for his firm, Trireme, and consulting contracts on defense-related matters from companies like Loral and Global Crossing.