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Air Force's Push for Boeing Deal Is Detailed

June 07, 2005|R. Jeffrey Smith | Washington Post

WASHINGTON — For the last three years, the Air Force has described its $30-billion proposal to convert passenger planes into military refueling tankers and lease them from Boeing Co. as an efficient way to obtain aircraft the military urgently needs.

But a very different account of the deal is shown in an August 2002 internal e-mail exchange among four senior Pentagon officials.

"We all know that this is a bailout for Boeing," Ronald G. Garant, an official of the Pentagon comptroller's office, said in a message to two others in his office and then-Deputy Undersecretary of Defense Wayne A. Schroeder. "Why don't we just bite the bullet," he asked, and handle the acquisition like the procurement of a 1970s-era aircraft -- by squeezing the manufacturer to provide a better tanker at a decent cost?

"We didn't need those aircraft either, but we didn't screw the taxpayer in the process," Garant added, referring to widespread sentiment at the Pentagon that a proposed lease of Boeing 767s would cost too much for a plane with serious shortcomings.

Garant's candid advice, which top Air Force officials did not follow, is disclosed for the first time in a new 256-page report by the Pentagon's inspector general. It provides an extraordinary glimpse of how the Air Force worked hand in glove with one of its chief contractors, the financially ailing Boeing, to help it try to obtain the most costly government lease ever.

The inspector general's report, slated for release today at a Senate Armed Services Committee hearing, adds to what Sens. John McCain (R-Ariz.), John W. Warner (R-Va.) and Carl Levin (D-Mich.) have already called one of the most significant military contracting abuses in several decades.

The scandal resulted in prison terms for former Air Force Principal Deputy Assistant Secretary Darlene Druyun and Boeing executive Michael Sears.

Besides documenting precisely who was responsible, the report details the Air Force's vigorous efforts on Boeing's behalf. It also shows how Air Force leaders and Boeing executives jointly manipulated legislation to authorize the deal and later sought to suppress dissenting opinion throughout the Pentagon.

After interviewing 88 people and reading thousands of pages of e-mails, the inspector general's office concluded that four top Air Force officials and one of Defense Secretary Donald H. Rumsfeld's former top aides, Undersecretary of Defense Edward C. "Pete" Aldridge, violated procurement rules, failing to use "best business practices," ignoring a legal requirement for weapons testing and failing to ensure that the tankers would meet the military's requirements.

The report also connects Rumsfeld to policymaking on the lease, recounting a statement by former Air Force Secretary James G. Roche that Rumsfeld had called him in July 2003 to say "he did not want me to budge on the tanker lease proposal" despite criticism.

Earlier, after Roche made what he acknowledged was a "special pleading" for the lease at a key meeting with Rumsfeld on Jan. 31, 2003, Pentagon spokesman Lawrence T. Di Rita jokingly said "that my comments 'were brought to you by the Boeing Co.,' " Roche later told Air Force Chief of Staff John P. Jumper in an e-mail.

Air Force spokesman Douglas Karas said he could not comment on the report in detail until it had been officially released. A Boeing spokesman said the company could not comment on a report it had not read.

The Pentagon ultimately killed the lease deal. Its officials have noted that the department is now conducting special oversight of Air Force weapons buying, in part because of the problems with the Boeing deal.

The report is the most damning of the inspector general's three reviews of the tanker deal. It includes a statement from a cost analyst that "numbers were contorted a lot of different ways to sell the program."

It also suggests that the foundation of the Air Force's tanker lease -- that KC-135 planes were experiencing unexpected corrosion and needed urgent replacement -- was a house of cards.

Druyun improperly used her influence to raise the price paid for the tankers and made incorrect statements to others in the administration, the report states.

The Air Force has long maintained that any defects in the lease proposal were attributable solely to Druyun, who is serving a nine-month sentence in prison for illegally negotiating a lucrative job with Boeing as she supervised the lease negotiations.

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