Tue Jan 4, 2005 12:59 PM ET
By Andrea Shalal-Esa

WASHINGTON (Reuters) - The former U.S. Air Force arms buyer at the center of the biggest Pentagon contracting scandal since the 1980s began a nine-month sentence at a women's prison in Florida this week, prison officials said on Tuesday.

Darleen Druyun, 57, was taken into custody at the Marianna, Florida women's prison, about 60 miles west of Tallahassee, at 9 a.m. Monday, a prison official said.

"She self-surrendered at 9 a.m.," the official said.

Druyun was sentenced on Oct. 1 to nine months in prison for violating federal conflict-of-interest laws by negotiating a $250,000-a-year job with Chicago-based Boeing Co. while still overseeing the company's business with the Air Force.

After she completes her jail term at the Marianna women's prison camp, which houses low- and minimum-security female prisoners, Druyun must also serve seven months in a halfway house or under home detention.

At her sentencing, Druyun shocked defense and industry officials by admitting that she favored Boeing in contracts as far back as 2000, in part because the company had hired her daughter and future son-in-law at its St. Louis facility. The daughter has since resigned from Boeing.
.....

By R. Jeffrey Smith
Washington Post Staff Writer
Thursday, December 2, 2004; Page A33

"Everyone's nervous," Acting Undersecretary of Defense Michael W. Wynne warned in a confidential e-mail to Air Force Secretary James G. Roche on July 8, 2003.

It was two days before the Bush administration was to send its first detailed report to Congress about a controversial Air Force plan to lease refueling tankers from the Boeing Co., and a few days after a fierce backroom struggle over its language between critics of the plan and Air Force enthusiasts. Wynne's anxiety, it turned out, was well-founded. Rather than solidifying congressional support, the report's release sparked more intense scrutiny of the most costly government lease in U.S. history, and ultimately helped end the government careers of some of those involved in preparing the report.

From a program initially seen by Boeing and the Air Force as a clever way to acquire a new tanker fleet without having to budget for it and buy the planes outright, the lease has now developed a reputation as the most significant military contracting abuse in 20 years, according to a letter sent to the Pentagon last month by Senate Armed Services Committee Chairman John W. Warner (R-Va.) and two other committee members.

Three Boeing officials have resigned in connection with the controversy; two have pleaded guilty in federal court to ethics violations. Wynne has been unable to win confirmation as an undersecretary of defense, as a result of the "hold" placed by Sen. John McCain (R-Ariz.) on most defense promotions to gain leverage in McCain's continuing battle for access to the Pentagon's internal communications about the deal. Air Force Gen. Gregory S. Martin, chief of the Air Force Materiel Command, withdrew from consideration for a more senior post after tussling publicly with McCain about the gravity of the ethics violations.

Roche and Marvin Sambur, his top acquisition manager, announced their resignations from the government two weeks ago, just before McCain splashed some acerbic and revealing internal Air Force e-mails (quoted portions of which appear in italics below) about the plan into the Congressional Record. Roche said he never intended to serve longer; Sambur said he stepped aside partly to help ease tensions with Congress, which blocked the leasing plan this summer.

The significance of the $30 billion tanker program to its supporters is reflected in the extreme language Roche and Sambur used in the e-mails to describe what they believed was at stake. The two were deeply invested in its success, and although it was principally an Air Force -- rather than a Defense Department -- initiative, they worried that any setback would be ruinous for them and others at the Pentagon.

I will not give your enemies the tools to bury us! Sambur told Roche on June 25, 2003, during a dispute over the wording of the report to Congress. Two weeks later, Roche accused dissenting government officials in an e-mail on July 8, 2003, of wanting me to sign a suicide note. BUT I WILL NOT. This whole drill has gotten out of hand!

Roche, a former executive at the Northrop Grumman Corp., is well-known for his take-no-prisoners political style. In one e-mail, he compared himself to World War II Navy Fleet Adm. William F. Halsey Jr., whose motto he quoted as: "Strike fast, strike hard, strike often."

Both Roche and Sambur, a former executive at ITT Defense with a similar style, have said the lease was a good deal because it allowed the Air Force to acquire the planes faster than if they were purchased. But the e-mails indicate they saw themselves as primarily allied with Boeing and its congressional supporters in the dispute, rather than others in the Bush administration who considered the deal a costly rip-off and violation of federal procurement rules.


Their missives, as a result, provide an unusual glimpse into part of what scholars described more than 20 years ago as the "Iron Triangle" -- the enduring alliance between the military services, the defense industry and their congressional advocates.

Roche and former Northrop executive Ralph Crosby were once rivals at the firm, said sources who know them both. When Crosby was appointed in August 2002 as the head of the U.S. office of the European Aeronautic Defense and Space Co. -- the parent of Airbus, a fierce Boeing rival with its headquarters in France -- Roche sent an e-mail to William Bodie, his top public relations aide, saying: Well, well. we will have fun with Airbus.


Roche's hostility to Airbus was also reflected in an e-mail debate on April 16, 2003, between Wynne and Roche about inviting Crosby to lunch. Wynne opened the discussion by telling Roche and Sambur that he wanted Crosby to say how much a refueling tanker built by Airbus would cost.

Wynne explained: They came in a couple of weeks ago and offered to build the majority [of the tankers] here in America. . . . I am not sure where this will lead, but the benefits of competition may be revealing.

Roche replied: Mike, you must be out of your mind!!! Crosby has lots of baggage, as does Airbus. We won't be happy with your doing this.

Wynne replied with a reference to Pentagon rules against sole-source contracting: But where will the competition come from?

Roche replied by invoking U.S. anger over France's failure to support the U.S.-led invasion of Iraq: Neither you nor I can attend the Paris Air Show, we are getting into a possible flap over inviting the chief of the FAF [French Air Force] to a gathering next September, and you are inviting them to lunch? Hello? Within minutes of the invite, Crosby most likely used your call to butter his personal croissant in Paris, and EADS would then inform the [French presidential office] . . . in seconds. Be careful!

Airbus was not the leasing program's only enemy, according to Roche's and Sambur's e-mails. Sometimes top Pentagon officials, such as Gen. Richard B. Myers, chairman of the Joint Chiefs of Staff, caused problems by deviating from the Air Force orthodoxy that replacing the tankers was urgent.

Reacting to an interview with Myers published on April 9, 2002, in which Myers said that the existing tanker fleet was adequate for future needs, Gen. John P. Jumper, Air Force chief of staff, told Roche: I don't think there was malice. . . . We just have to articulate the problem we are trying to fix.

In the summer of 2003, the Pentagon's office of Program Analysis and Evaluation (PA&E) also stoked Air Force pique by dissenting from its claim that leasing would essentially cost the same as buying the planes. In fact, said PA&E director Ken Krieg in a memo on June 20, 2003, to Wynne and others, lease costs would exceed purchase costs by $1.9 billion to $6 billion, depending on the accounting method used. He said the deal violated Pentagon procurement rules.

Roche sent Wynne -- the more junior official, according to Pentagon protocol -- an e-mail two days later, warning that the bureaucrats who opposed the 767 lease have come out of the woodwork to kill it. . . . Ken Krieg's memo . . . is a cheap shot, and I'm sure has already been delivered to enemies of the lease on the Hill. It was a process foul. And Ken needs to be made aware of that BY YOU!

Roche went on to say that PA&E was trying to set the Air Force up to be destroyed by Sen. McCain. . . . As you might imagine, I won't give them the chance, but I will make it clear who is responsible to Don [Rumsfeld]. I refuse to wear my flak jacket backwards to protect against friendly fire. Wynne then sent Krieg an angry note, and Krieg responded by suggesting a face-to-face meeting with Roche to clear air. He explained in an e-mail that: I am trying to get the strategy to drive the deal; the deal and contract to set the numbers; the numbers [price] to be reopened . . . without a lot of hype.

Roche gave no ground in his reply: Kenny, I love you, and you know that. I think you have been had by some members of the famous PA&E staff. You never should have put what you put in writing. It will now be used against me and Don Rumsfeld.

Roche and Sambur also resented an effort by analysts at the Office of Management and Budget to insert into a July 10, 2003, Pentagon report to Congress a single paragraph confirming that leasing the refueling tankers could cost at least $1.9 billion more than buying them.

Sambur e-mailed Roche on July 8 of that year: What they are forcing us to say is that IF Congress gave us permission to PURCHASE under the same [terms] . . . then the lease is DUMB financially. Robin [Cleveland, a senior OMB official] wanted it in the text and Mike [Wynne] got her to accept it as a footnote.

Sambur added that he had spoken the previous week to Rep. Norman D. Dicks (D-Wash.), whose district includes Boeing offices: Dicks told me to hold firm and not to go along with Robin.

Roche, apparently alarmed by Wynne's willingness to accept the insert, also sent an e-mail to Deputy Defense Secretary Paul D. Wolfowitz's top political aide, warning that OMB's attempt to include the paragraph was a bureaucratic trick to make a fool out of Don [Rumsfeld] as well as the Air Force.

Roche also told Wynne in an e-mail: McCain and others who oppose the lease will leap to this number! Why is this so hard for you to see, Mike?

But Wynne defended his decision the following day: I believe that addressing this point in this fashion takes the teeth out of their criticism. This will not embarass at all the Secretary [of Defense]. . . .This followed one full week of negotiation to remove it from the text and get it to only footnote status. . . . I think you . . . are letting a minor math point get in front of a major policy win.

In the run-up to these discussions, OMB's Robin Cleveland had sent the résumé for her brother, Peter, then a law student, to Roche on May 9, 2003, saying: I would appreciate anything you can do to help with NG [Northrop Grumman]. Within an hour, Roche forwarded the e-mail to Stephen Yslas, a senior Northrop lawyer, at the firm's Los Angeles headquarters:

STEVE -- I know this guy. He is good. His sister (Robin)is in charge of defense and intell at OMB. . . . If Peter Cleveland looks good to you, PLS add my endorsement. Be well. Roche then forwarded a copy of his e-mail to Cleveland, saying: Be well. Smile. Give tankers now (Oops, did I say that?. . .). Cleveland, for her part, congratulated her brother a week later on getting a job interview with Northrop, telling him in an e-mail: Hope it works before the tanker leasing issue get[s] fouled up.

Northrop in the end did not hire Cleveland's brother, and by July 8, the Air Force was less solicitous of her. Sambur on that day sent Roche an e-mail saying: It is worth a shot speaking to Robin, or are you like me in that you would rather take poison?

Cleveland declined to comment through OMB spokesman Chad Kolton. He said that after the e-mail exchange about the job was discovered and shared with Senate investigators two months ago, OMB Director Joshua B. Bolton sent it to the Justice Department to check for compliance with conflict-of-interest statutes; no result has been announced.

Various e-mails make clear that leasing enthusiasts repeatedly assured top Pentagon officials that the deal was cost-effective and untainted by scandal. Despite the internal budget critiques, a special assistant to the defense secretary, Richard Greco Jr. -- now the Navy comptroller -- said in a January 2003 memo to Wolfowitz that the price is essentially neutral to a buy.
...
When asked about the controversy at a news conference last week, Rumsfeld laid most of the blame on Druyun and the fact that she had "very little adult supervision above, below or on the side" while she steered contracting benefits to Boeing. He added, "I'm told that when Secretary Roche and Assistant Secretary Sambur came in, they looked at that situation, were uncomfortable with it, and began taking authorities away from her and trying to reestablish a different arrangement.

"Obviously," Rumsfeld added, "there's something needs to be changed."

...
Keeping a defense contractor’s “record of bribes” as a “trump card”; “torturing” a defense contractor “slowly”; pressuring dissenting elements within the Office of the Secretary of Defense whose job it was, particularly in the absence of a Defense Acquisition Board, to vet this procurement program; signing off on a plan to get the chairman of the Defense Science Board to “quietly help” on the tanker lease inside the OSD; doctoring and improperly withholding documents requested by Congress: this is the picture that we’re getting on what happened with the tanker proposal, and we’ve received only a few documents from six out of thirty people we’ve asked for! This is the picture we’re getting, but no one among Air Force leadership stands up to assume responsibility. Instead, what we get from Air Force leadership are deeply troubling statements in the press about how rosy things are. For example, in a recent op-ed appearing in Defense News, Dr. Sambur describes the current acquisition process as “healthy” and “on track.”
...

By Alan Bjerga
Knight Ridder Newspapers

WASHINGTON - Sen. John McCain told the Pentagon on Monday not to rush a study crucial to the future of an embattled plan to replace Air Force tankers, a plan that's ignited Washington's biggest military procurement scandal in a decade.

In a letter to Deputy Defense Secretary Paul Wolfowitz, McCain cited e-mail communications between an Air Force general and a Rand Corp. vice president in which the Rand executive expressed concern that an "analysis of alternatives," or AoA, the Pentagon hired Rand to do couldn't be done properly under the time frame the Pentagon set.

"This is not an AoA and should not be advertised as an AoA," Natalie Crawford, Rand vice president, wrote Air Force Lt. Gen. John Corley in May. "One could do an AoA in five months on only the most trivial of topics. This is not a trivial topic."

In another e-mail, written in July, Crawford referred to the study as an "impossible task."

McCain, the Republican senator from Arizona and Congress' leading skeptic of the tanker plan, suggested to Wolfowitz that, in light of the e-mails, Rand should be given more time to study ways to update the Air Force tanker fleet.

He also criticized the Air Force for apparently concealing the study's problems from the Pentagon. But Air Force spokesman Lt. Col. Frank Smolinsky said Monday that officials had discussed Rand's concerns with the Pentagon.

"The best that we can determine at this time is all the concerns that were related by the Rand Corp. to General Corley were passed on," he said.

Wolfowitz said in a letter last week that after the Pentagon receives its recommendation from Rand it will require competition for any tanker plan.

The Rand analysis, which is expected to be released in early December, ...

Defense Secretary Donald Rumsfeld ordered the Rand study last spring, in part to quell questions about a decision to acquire Boeing tankers that critics charged was made without proper competition.
...
---
(Bjerga reports for The Wichita Eagle.)

DAILY BRIEFING November 30, 2004


Air Force officials want more information about acquisition improprieties

By George Cahlink
gcahlink@govexec.com
Air Force officials want to question former acquisition chief Darleen Druyun about how she steered billion of dollars in contracts to Boeing without raising suspicions, according to Marvin Sambur, assistant secretary of the Air Force for acquisition.
...
"Whatever she did it wasn't fairly obvious," Sambur said in an interview Monday. "We asked the prosecutors if we could speak to Darleen to see how she was able to manipulate [the system]. We want to find out 'Hey, is there an Achilles' heel in the system that you were able to exploit?' "
...
Sambur said the recent announcement that he and Air Force Secretary James Roche were resigning before the start of President Bush's second term was driven in part by the Druyun scandal. He conceded that he and Roche had become "lightening rods" for criticism surrounding Druyun and the controversial tanker lease proposal, and that was affecting the service's relationship with Congress.

"God knows why because, from my point of view, I was the one who cleaned up her act in terms of getting her to retire six months after I came here. All the things that she admitted to having done, happened before my watch. She was here for 10 years. I was here for six months," said Sambur.

... Sambur, who was Druyun's immediate boss, said he began taking authority away from her and sharing it among managers outside of Washington. He said he never suspected Druyun of wrongdoing, but believed that she held too much sway over how the service spent billions of dollars. Druyun retired from the Air Force in 2002.

Sambur echoed concerns raised by Defense Secretary Donald Rumsfeld last week ... Sen. John McCain, R-Ariz., insists that Air Force leaders should be held accountable for the scandal. "I simply cannot believe that one person, acting alone, can rip off taxpayers of possibly billions of dollars. This appears to be a case of either a systemic failure in procurement oversight, willful blindness or rank corruption," ...

Sambur said he was "frustrated" by McCain's remarks and the suggestion that Air Force leaders besides Druyun favored Boeing in tanker talks. He said the Air Force was simply following a congressional mandate that it lease tankers from Boeing. "If you don't like [the deal], it does not mean I was doing something illegal," he said.

washingtonpost.com

'Go Boeing!'

Sunday, November 28, 2004; Page B06

THE MORE the Boeing tanker deal is scrutinized, the worse it looks. The tanker leasing arrangement, now thankfully dead, was questionable on its face, the result of a back-door legislative maneuve...

The pile of internal e-mails tenaciously extracted by Sen. John McCain (R-Ariz.) show an Air Force leadership more bent on stifling dissenting views from within the military than on determining the best deal for taxpayers; inappropriately cozy with some contractors and personally biased against others; and resolutely uninterested, even now, in determining what went wrong.
...
Mr. Roche is not the only one whose conduct is troubling. Even as she was negotiating with the Air Force about whether the tanker lease was a good deal, Office of Management and Budget Associate Director Robin Cleveland asked Mr. Roche to intercede with former colleagues at Northrop Grumman to help Ms. Cleveland's brother get a job there....

...one of the most distressing aspects of this entire episode has been the military's stonewalling response to what Mr. Roche, in an e-mail, termed "the enemies of the lease on the Hill." At a meeting last November, following the Druyun firing, according to one e-mail, Defense Secretary Donald H. Rumsfeld "asked if in light of that should we take a second look at her involvement in any tanker lease related matters in order to deflect possible criticism from the [Senate Armed Services Committee] and unfavorable publicity." You would have hoped Mr. Rumsfeld would want to take a "second look" to figure out what went wrong in his operation, not to deflect criticism or avoid bad press. Mr. McCain put it well in a Senate floor speech: "This appears to be a case of either a system failure in procurement oversight, willful blindness or rank corruption. Either way, full accountability among Air Force leadership is in order."

© 2004 The Washington Post Company

            Q     As the leader of the department, are you concerned that there's this perception that one person, one Air Force official, is able to take billions of dollars of procurement -- that's what the senators ask.  They ask how could one person have done this?

            SEC. RUMSFELD:  I've spent time thinking about that, and as a matter of fact, I wrote down some thoughts about it.  It's interesting.  I'm not going to have the facts correct, so I won't try to give you numbers.  But she was -- let's for the sake of argument say she was there for a 10-year period, roughly, that spanned a couple or three, two or three administrations.  She was a civilian deputy undersecretary of the Air Force for acquisition, was her title.  There was also a military deputy undersecretary for acquisition, and above her was an assistant secretary for acquisition and a secretary of the Air Force, and then off to the side is the undersecretary for acquisition and logistics and AT&L -- technology and logistics -- all of whom are involved in acquisition.

            It turns out that during her 10-year tenure, the secretary of the Air Force changed two or three times, with periods of acting.  The assistant secretary of the Air Force for acquisition changed several times, with periods for acting vacancies.  And as you know our entire department operates generally somewhere between 20 and 25 percent vacant in presidential appointees, Senate-confirmed, because of the nature of the ethics reviews, the FBI reviews, and the Senate confirmation process, which means we end up with about a quarter of the people who are supposed to be here operating the department not there at any given moment.  The third key position was the military assistant under -- assistant -- or undersecretary for -- or under -- what was it called?  Deputy.  (Laughter.)  Deputy assistant secretary for acquisition is the military side, and I'm told that there's some rules that apply there that -- from I think Goldwater-Nichols -- that that individual can't make major acquisition decisions.

            So what you had with all these vacancies over a 10-year period, you had a -- the only continuity was that single person, who's now plead guilty and is going to go to jail.  When you have that long period of time with that person the only continuity and no one above her and no one below her, over time I'm told what she did was acquire a great deal of authority and make a lot of decisions, and there was very little adult supervision above, below or on the side.

            Now is that how it happened?  Well, first of all you have a person who's a criminal, who broke the law in there.  And then the question is how could a criminal, over a sustained period -- (chuckles) -- succeed without being noticed, which is, I think, your question and certainly the question I asked myself, and it's worrisome.  And I think that part of the -- I've given you part of the answer.  You have too much turbulence on the military side, too much turbulence plus vacancies on the civilian side, and a person who has continuity -- the only one with continuity -- who is going to break the law.  And what they were able -- what she was able to do over a period of time is acquire enough authority and enough -- apparently enough buffers around her that others didn't have transparency into what she was doing.  I'm told that when Secretary Roche and Secretary -- Assistant Secretary Sambur came in, they looked at that situation, were uncomfortable with it, and began taking authorities away from her and trying to reestablish a different arrangement in that office, and that that was one of the reasons that apparently she began negotiating for her departure, because her authorities were being eroded.

            Now is that definitive?  No.  Is it an impression I have at this point?  Yes.  Have I stopped looking and worrying and thinking about it?  You bet I haven't.  It's a serious thing when you've got a war going on and you have someone in the department conducting -- engaging in criminal activity, which she confesses to, of that magnitude, that it's not caught. Obviously, there's something needs to be changed, and I think a lot has been changed.  But we're going to have to make sure that doesn't happen elsewhere.

December 1 - 7, 2004

Lockheed says in a civil suit that Boeing's competitive behavior constitutes racketeering. Is a criminal probe next?

by Rick Anderson
Seattle Weekly

Is there a federal criminal racketeering case in Boeing's future? Attorneys for Lockheed Martin outlined that possibility in court papers filed in Florida. Lockheed is suing Boeing, claiming its aerospace and defense rival conspired to steal business secrets and cover up the act, allegedly a violation of the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act. Lockheed contends Boeing used stolen Lockheed documents to gain an edge in a multibillion-dollar Air Force satellite contract. It is seeking to discover expanded evidence of "overt acts" stemming principally from continuing U.S. investigations into the Boeing aerial-refueling-tanker lease deal. Court documents also refer to a separate federal grand jury probe involving Boeing in Los Angeles. Lockheed maintains that incidents related to these cases can be linked to show a 14-year "pattern" of illegal activity by Boeing.

By Renae Merle
The Washington Post
Sunday, November 21, 2004, 12:00 A.M. Pacific

WASHINGTON — In the macho world of the Pentagon, Darleen Druyun was rare: a woman who had scaled the heights of power, controlled billions of dollars in weapons programs and could punish or reward global corporations and the men who ran them.

Once the most-feared woman in the world of military contracting, Druyun, 57, helped direct the Air Force's $30 billion procurement budget — nearly three times the size of the Army's.
...
Druyun is an imposing figure with a sharp — and sometimes vulgar — tongue, who was right at home in the male-dominated Pentagon world. Her renown as a tough government negotiator and stickler for the rules led her superiors to rely on her judgment, according to industry insiders.

For nearly 40 percent of her time at the Pentagon she had no supervisor at all. Her rise to power coincided with a governmentwide push to build closer relationships with contractors.

"I was surprised that someone who was around (during the Ill Wind investigation) would be in essence doing the same things that Ill Wind was all about," said Joseph Aronica, the lead prosecutor in that investigation, now a lawyer with Duane Morris. "I guess these things in a way are cyclical. She may have thought no one was looking any more."
...
But no sooner had she climbed the heights of Air Force procurement than she became involved in a controversy over work she had done three years before. She and four other Air Force officials were accused by Pentagon inspector general of improperly funneling $349 million to McDonnell Douglas in 1990 to keep the C-17 transport aircraft program on track.
After a separate Air Force investigation found no wrongdoing, Defense Secretary Les Aspin dismissed one general and disciplined three others, saying the program was poorly managed. Druyun was cleared.
...
The fortunes of defense contractors rested on Druyun's decisions on competitions, her policy decrees and her awards of bonuses. In 1999, she emerged as the Pentagon's top advocate of the F/A-22, a boon to Lockheed, the fighter jet's manufacturer.
...
... Druyun told Sambur that she intended to retire. Federal regulations restricted what kind of job Druyun could take in the defense industry, but she soon forged a handshake agreement to join the executive ranks of Lockheed, the Pentagon's largest contractor.

Meanwhile, Druyun also met with Lockheed's largest rival, Boeing, about a job, according to court documents. She initially used her daughter Heather as intermediary. In e-mails to Sears, Heather said that her mother insisted on a position with considerable responsibility.
...

Saturday, November 20, 2004
...
Given my day job, I can't really comment in detail here. I not only enjoy my anonymity, I also don't leak, so I ain't gonna tell anyone anything they don't already know.

But the whole Druyun Affair is eating the Air Force alive...

...
I believe the Air Force line, and not only because I'm professionally obligated to parrot it. I *still* can't fathom the whole Druyun-going-to-jail thing. Sure, she's admitted she's guilty, but part of me wonders how much of this is a witch hunt, blowing things way out of proportion.

Besides, having known many of the second-tier personalities involved in these issues, I simply cannot fathom widespread corruption.

Hey, I am no rube. I understand Washington. I understand all too well how something like Ill Wind could have happened. But these are honorable Air Force men and women, who, had they known something unethical-- let alone illegal-- was going on, they would not have stood for it.

Right?

Right???

Anyways. . . like I said, this is only the beginning. And I have a feeling it may get worse before it gets better. Part of me wants to look for another job, to run away from dealing with the fallout from this (and dealing with it while, oh, there's a war on-- i.e., other things we should be paying attention to).
...

Commentary by Brig. Gen. Frederick F. Roggero
Director of Air Force Public Affairs

11/22/2004 - WASHINGTON (AFPN) -- A recent newspaper article raised some important points that need to be clarified so they don’t distract our Airmen as they fight the war on terrorism.

First, our senior Air Force leaders’ very highest priority has always been the best defense for our nation.

Secretary of the Air Force Dr. James G. Roche aggressively executed his direction by the current chairman of the Senate Armed Services Committee in 2001 to "take the gloves off and fight ... fight hard for resources, fight hard for your department." He took this task seriously so the Air Force could achieve another goal, also directed by this chairman, "that the United States of America maintain its superiority in the skies."

Dr. Roche understood that to follow this directive he had to tackle the troubling issue of aging aircraft, a problem he pointed out in this same testimony. Dr. Roche’s professional judgment led him to begin that work by jump-starting the recapitalization of the nation’s large Eisenhower-era tanker fleet.

Dr. Marvin R. Sambur, assistant secretary of the Air Force for acquisition, also realized the dependence of air superiority and mobility on a weakening backbone of aging tankers, but was wrongly accused of writing e-mails that improperly pushed the lease deal. In fact, the DOD inspector general confirmed Dr. Sambur was executing a negotiating technique designed to obtain the best terms for the government and was subsequently cleared.

As is done with all four-star generals, the Senate Armed Services Committee chairman charged General Gregory Martin, commander of Air Force Materiel Command, and Air Force Vice Chief of Staff General Michael Moseley to always provide their professional judgment when testifying before Congress, even if those opinions differed from others. These officers stuck to that commitment, and when asked their opinions regarding the replacement of aging aircraft in open sessions of Congress, they provided truthful answers based on their combat leadership and multiple command experiences. They understood the needs of the joint warfighters and provided that information, honestly demonstrating the Air Force core values of integrity, service and excellence.

It is also important to understand that our senior Air Force leaders were engaged from the start of their administration in correcting the acquisition process faults highlighted by former Principle Deputy Assistant Secretary of the Air Force for Acquisition and Management Darleen Druyun’s crimes. In fact, almost immediately upon Dr. Sambur’s confirmation, he recognized the potential for abuse existed within the principal deputy position. Well before any evidence of wrongdoing, Dr. Sambur moved to strip Ms. Druyun of her authorities and then eliminated the position upon her departure.

The fact the system worked and she was caught and is being punished for her crimes proves the accountable nature of the system and restores integrity to the Air Force acquisition process.

Finally, the Air Force has been as forthcoming as possible in providing information requested by Congress. More than 800,000 pages of information have been turned over and the Air Force has made good-faith efforts to be transparent throughout, including responding forthrightly to all requests for documents based on guidance from DOD officials.

In short, the Air Force is earnestly working in good faith with the Congress to defend this great nation. Any perception otherwise is a distraction we can ill afford in this time of war.

It is time to get back to the business of defending this country. Our fellow soldiers, sailors, Marines and airmen are fighting and dying in Iraq and Afghanistan and we have a war to win.

By Renae Merle
Washington Post Staff Writer
Friday, November 19, 2004; Page E01

Citing unreleased documents, Lockheed Martin Corp. alleged in a court filing that former Air Force official Darleen A. Druyun shared with senior Boeing Co. officials proprietary Lockheed information during a 1990s rocket launch competition.

The November court filing relies on notes from a meeting Druyun attended and an e-mail from Harry C. Stonecipher, Boeing's chief executive, but details from both are redacted in the version made public. Lockheed declined to release an unedited version.

"High-level Boeing officials discussed their proposal strategy and Lockheed Martin's pricing with Ms. Druyun shortly before final EELV [rocket launch] proposal submissions," according to Lockheed's filing. "The inescapable conclusion is that the very apex of Boeing's management structure was privy to and willing to exploit the bribery scheme between Boeing and Druyun in connection with the EELV competition."
...

11/22/04; Vol. 19 No. 17

By Richard Rector

The federal government has long imposed unique ethical responsibilities on its contractors. Following the defense procurement scandals of the 1980s such as Operation Ill Wind, Congress considerably increased the number and types of ethical considerations governing federal contracts.

The result is a maze of ethics-related statutes and regulations with which companies and their employees must comply or face civil, administrative or criminal sanctions. Despite this labyrinth of mandated ethics, the regrettable conduct of Darlene Druyun once again has cast a shadow on the government contracting community, and the effects may be felt for years to come.
...
Last month, Druyun admitted that she had acted against the government's interest by favoring Boeing in certain contract matters:
...
• As the selection authority for the $4 billion procurement to upgrade the avionics of the C-130 aircraft, she chose Boeing over four competitors, despite her belief that an objective selection authority may not have selected Boeing.
(Emphasis mmine)

Nov. 22 (Bloomberg) -- The pentagon will open to new bidders a contract to provide aerial-refueling tankers to the U.S. Air Force after Congress withdrew an earlier proposal worth $23 billion to Boeing Co., Deputy Defense Secretary Paul Wolfowitz said.

``After we have selected an appropriate alternative, we intend to require competition,'' Wolfowitz wrote late Nov. 19 to John Warner, the Virginia Republican who chairs the Senate Armed Services Committee...

Loren B. Thompson, Ph.D.
Issue Brief
October 15, 2004

The Wall Street Journal reports today that Pentagon officials are investigating whether Boeing was improperly awarded a multi-billion-dollar contract to develop the nation's next generation of photo-reconnaissance satellites. Known as the Future Imagery Architecture, the program has been afflicted from its inception by cost growth, schedule delays, and performance shortfalls. It has also led analysts to reassess Lockheed Martin's management, which was widely criticized for losing big competitions to Boeing in which Lockheed was thought to have an edge. These include the Future Imagery Architecture, the
C-130 Avionics Modernization Program and the Evolved Expendable Launch Vehicle.

It's tempting to try to connect these and other questionable awards into a conspiracy of epic proportions, but as of today, the evidence is ambiguous at best. Boeing has admitted that middle-level managers misused thousands of pages of proprietary Lockheed Martin documents in the launcher contract, and the Air Force has reversed the original award to favor Lockheed. But the launcher competition hasn't been tied to Druyun, and Boeing denies knowledge of improper behavior on her part favoring its interests.

It isn't clear how to fix the damage Druyun has done. Most observers expected Lockheed Martin to win the $4 billion contract for upgrading electronics on C-130 transports, because it built the planes and had won similar contracts in the past. But other companies were also competing, and they too potentially lost business as the result of a biased selection process. Boeing has gone on to win other C-130 upgrade contracts with the Navy and foreign militaries, at least partly on the strength of its work on the original contract. Even if Lockheed Martin can be compensated for its direct losses, how do you factor in the loss of confidence it suffered among investors? And how can you calculate any loss incurred by taxpayers?

And then there's the question of how to prevent similar abuses in the future. Political appointees and senior officers come and go with such frequency that it's not uncommon for career civil servants who stay in one job series to accumulate great power based on their superior knowledge of processes. Yet these officials often earn little more than the median household income in nearby Fairfax County, even though they oversee billions of dollars in programs. Is it realistic to expect that the prospect of post-government employment won't influence their actions, when they know private-sector counterparts with similar experience are making some multiple of their income? Congress has barely begun to ask such hard questions.

By R. Jeffrey Smith
Washington Post
November 20, 2004

Air Force Secretary James G. Roche asked a lobbyist for Boeing Co. to use the company's Washington contacts to "quash" a deputy undersecretary of defense and make him "pay an appropriate price" for objecting to the Air Force's decision to lease Boeing 767 tanker aircraft, according to e-mails released Friday by a Republican senator critical of the tanker deal.

Roche also pressured independent military cost analysts who questioned the high price of the lease, described other internal Pentagon critics as "animals," and ridiculed executives at European Aeronautic Defense & Space Co. and Airbus, the European consortium that offered a competing plan, the e-mails show. He told his top public relations aide to "blow … away" the EADS chairman for raising questions about the Air Force decision to work with Boeing.
...
Sen. John McCain (R-Ariz.), who has conducted an equally vigorous campaign against the lease, said in releasing the internal Pentagon communications in a speech on the Senate floor that the missives reflected a "systemic Air Force failure in procurement oversight, willful blindness or rank corruption."

McCain said top Air Force officials had recently been trying to "delude the American people" into believing that a single person was responsible for misconduct in the $30-billion leasing plan — namely, Darleen Druyun, the Air Force contracting official who pleaded guilty to overpricing the tankers as a "parting gift" to Boeing before she became one of the company's executives.

"I simply cannot believe that one person, acting alone, can rip off taxpayers out of billions of dollars," said McCain, who said he would keep pursuing internal Defense Department and Bush administration communications until "all the stewards of taxpayers funds who committed wrongdoing are held accountable."

Roche and Marvin Sambur, the Air Force's top acquisition manager, announced their resignations several days before McCain's speech. ...
Druyun expressed fury in a Sept. 5, 2002, e-mail to Roche about published remarks by an Airbus executive about the lease plan, for example. Calling his remarks "slime," she added: "His day of reckoning will come hopefully." Roche's response was "Oy. I agree." He also said he wished Druyun could have "tortured him slowly" over a period of years.

You can help Middle Georgia!!

Congressman Marshall would like to understand the role which Druyun may have had in pushing Robins workload to other locations (government or contract). These could be acquisition programs shifted to Wright Patterson or Hanscom for example or contracting out Robins workloads (often before Robins could even start the work). Druyun also made rulings or Air Force policy which steered programs or types of work elsewhere.

Many RAFB connected persons can help educate our Congressman. If you can point out programs which demonstrate how Druyun affected Robins, use the link above to send him information.

I suggest that at first, you only provide him examples of Druyun's hacks at Middle Georgia, using the program name and the value in dollars or jobs. If you can provide leads to documentation/contracts or e-mails indicate that you can do so, but wait to be asked for the backup information.

Then Marshall's staff can then gather the information and start getting together documentation. Here is a way you can affect our local economy for the better! If multiple people let him know the impacts on an overhaul program or a software engineering workload, then he may be able to redress the problem in our favor.

Note: The Air Force is buttoned up and not talking about the issues of Darleen's effects on Robins. It would be good for Congressman Marshall to know if Robins officials have directed workers to shut up, and about what specific programs or data.

DAILY BRIEFING November 19, 2004
By Amy Klamper, CongressDaily

Sen. John McCain, R-Ariz., stood on the Senate floor Friday and read e-mail exchanges between Boeing Co., executives and Air Force officials that he said revealed an improper relationship aimed at securing a $30 billion tanker lease deal.
...
"This appears to be a case of either a systemic failure in procurement oversight, willful blindness or rank corruption," McCain said. "Either way, accountability among Air Force leadership is in order."

McCain's actions ended months of silence regarding the contents of thousands of internal government documents related to the Air Force's contentious plan to lease Boeing aerial refueling tankers.
...
in his floor statement McCain said Roche's e-mails indicate he favored Boeing over its European rival, EADS North America.

In a September 2002 e-mail to Raytheon executive William Swanson Roche wrote, "Privately between us: Go Boeing!" and about EADS North America chief Ralph Crosby, "The widespread feelings about Crosby in the Air Staff, [Gen. John] Jumper especially, will only make their life more difficult."
In a subsequent e-mail to Darleen Druyun, then the Air Force's acquisition deputy, Roche spoke of torturing Crosby "slowly over the next few years until EADS got rid of him!"
Other e-mails confirm Roche brought pressure to bear on top Pentagon officials critical of the lease.
...
Roche and his acquisition chief, Marvin Sambur, resigned their posts earlier this week under a cloud of controversy surrounding the deal.

By Renae Merle
Washington Post Staff Writer
Friday, November 19, 2004; Page E01

Citing unreleased documents, Lockheed Martin Corp. alleged in a court filing that former Air Force official Darleen A. Druyun shared with senior Boeing Co. officials proprietary Lockheed information during a 1990s rocket launch competition.

The November court filing relies on notes from a meeting Druyun attended and an e-mail from Harry C. Stonecipher, Boeing's chief executive, but details from both are redacted in the version made public. Lockheed declined to release an unedited version.
....

Thursday, November 18, 2004

THE ASSOCIATED PRESS

ORLANDO, Fla. -- Lockheed Martin lawyers want to know if a former top Air Force official, recently sentenced to prison, played a role in the awarding of a space-launch services contract that Lockheed claims was tainted by the misuse of trade secrets by a competitor, The Boeing Co.
...
U.S. Magistrate Judge Karla Spaulding agreed last week to let Lockheed lawyers question a Boeing representative about communications with Druyun on six contract competitions, including the rocket launch contract known as the Evolved Expendable Launch Vehicle Program, or EELV.
...
"Any attempt to inject Darleen Druyun into this case is a strategy to sensationalize Lockheed's claims, influence government decisions elsewhere and develop evidence to support Lockheed's bid protest," Beck said.
....

Los Angeles Business Journal,  Jan 5, 2004  by Peter Robison

In a speech in April 2001, Boeing Co. Chief Executive Harry C. Stonecipher, then the company's president, touted the "partnership" he helped create with the U.S. Air Force.

He singled out for praise Darleen Druyun, then the Air Force's second-ranking acquisition official, who had described herself as the "godmother" of Boeing's C-17 cargo plane.

"We all campaigned together, the service, the company and our suppliers, for the needed support in Congress," Stonecipher said at the Air Force-sponsored conference in San Antonio.

But Stonecipher's contribution to a "win at all costs" company culture may come under scrutiny, said Keith Ashdown, vice president of Taxpayers for Common Sense, a Washington-based group that tracks government spending. "He isn't a Boy Scout in this," Ashdown said. "There are ethical issues from his tenure that are still very relevant."

....


Stonecipher arrived at McDonnell Douglas from Sundstrand in 1994--in the midst of another crisis with the Pentagon. The C-17, one of the company's three largest military-aircraft programs, was on the verge of cancellation because of delays and cost overruns.

Stonecipher insisted on monthly quality, cost and performance goals, then touted the improvements during regular meetings with officials in Washington, said Don Kozlowski, a retired McDonnell Douglas executive who was the C-17's senior vice president. The Air Force has since agreed to buy 140 more for $24 billion.

The turnaround made Stonecipher friends in the military. "He's respected as a good, trustworthy manager," said Jacques Gansler, the Defense Department's acquisitions chief from 1997 to 2000.

Stonecipher's military ties also present hazards.

He said in his 2001 speech that the company worked with the Air Force to reduce bureaucracy on the C-17. When lower-ranking managers couldn't resolve annual contract disagreements, program managers "would settle the outstanding differences themselves, without the help of their staffs," he said.

Sen. John S. McCain, R-Ariz., and other critics say that tight relationship helped the company secure a sweetheart deal.

It will look at hundreds of contracts overseen by an ex-Air Force official for possible misconduct.

By Peter Pae
Times Staff Writer
November 10, 2004

Boeing Co. probably will remain barred from seeking military rocket work until all the defense contracts overseen by a former Air Force official who admitted giving the company favorable treatment are reviewed for possible improprieties, a top Pentagon official said Tuesday.

The review could prolong Boeing's suspension for six months, dealing a blow to efforts by the world's largest aerospace company to recover from scandals that have tarnished its reputation.

........
Wynne said that Pentagon auditors would now begin poring over hundreds of contracts that Druyun handled dating to 1993 when she first began working as a senior acquisition official.

A rocket contract that Boeing won in 1998 will be among those reviewed, Wynne said. Druyun was the so-called source selection authority, or the ultimate decision-maker on that contract.

.... Wynne gave no timetable for the review, " but added that he hoped to have some preliminary report from the group by mid-February.

He said he was creating a second task force consisting mostly of outside experts who would look at "management practices and circumstances" that gave one acquisition official so much power.

Boeing spokesman Dan Beck said the company had been cooperating with Pentagon investigators and was eager to "get back into the business of meeting their launch needs." He added that Boeing was willing to wait to "make sure their concerns are addressed."

Boeing, headquartered in Chicago, is the largest private employer in Southern California with 36,000 workers.

By Amy Klamper, CongressDailyPM
November 10, 2004

Air Force Secretary James Roche and his chief acquisition officer, Marvin Sambur, are expected to resign before the end of the year, according to government and defense industry sources.

Roche and Sambur have been under a cloud because of their association with the Air Force's effort to acquire Boeing KC-767 tanker aircraft.
....
In recent weeks, the Air Force has come under scrutiny for its handling of the tanker deal and other large contracts during the tenure of former Air Force acquisition official Darleen Druyun, who admitted in federal court last April that she gave preferential treatment to Boeing before accepting a senior executive position with the company. This week, the Pentagon widened its investigation into Druyun's actions to include a broad review of acquisition methods across all the military services. And in September the White House initiated a federal probe of Roche, a former Northrop Grumman executive, for allegedly offering to help a senior OMB official land a job for her brother with Roche's former employer in exchange for backing the tanker proposal. Sambur, who was Druyun's boss, also is the subject of a federal probe in which investigators are said to be reviewing 113 of Sambur's e-mails related to the tanker deal. Sambur, former president of ITT Defense, oversees the Air Force's $37 billion annual procurement budget.

By Dale Kasler -- Bee Staff Writer
Published 2:15 am PST Thursday, November 11, 2004

Six years after Sacramento's dying McClellan Air Force Base lost its struggle to hold onto 3,000 high-paying jobs, the Pentagon is reviewing the case as part of a growing investigation into the dealings of a disgraced Air Force contracting officer.

While in charge of Air Force procurement, Darleen Druyun shipped the McClellan workload in 1998 to a team in Utah led by Boeing Co. Since then she's admitted she illegally steered work to Boeing on several occasions because the aerospace contractor had agreed to hire her and two family members. Druyun was sentenced to nine months in prison in October.

While she hasn't said anything about McClellan, her work on the 1998 contract is part of a broad review launched by investigators with the Pentagon. A separate investigation, by Congress' Government Accountability Office, also is expected to get under way, but it's unknown if it would include the McClellan contract.

.....

In addition, the Pentagon has referred to the GAO - the watchdog arm of Congress, formerly known as the General Accounting Office - complaints against Druyun filed by Lockheed Martin, BAE System and L-3 Communications Holdings. The three contractors had complained about Druyun's awarding a $4 billion contract to Boeing to upgrade the C-130 aircraft - a contract that Druyun later admitted was tainted by her desire to curry favor with Boeing.

.....
In 1998, McClellan was a doomed facility but had been given an opportunity to retain $1 billion worth of aircraft-maintenance work. That would have been enough work to keep up to 3,000 highly paid mechanics working for several years after the base's July 2001 shutdown.

To award the contract, the Air Force established a competition in which McClellan and Lockheed Martin bid against Boeing and Utah's Hill Air Force Base.

Druyun, in a decision announced in September 1998, chose the Boeing-Hill team and called it "the clear winner." She said the Boeing-Hill team underbid McClellan-Lockheed $1.1 billion vs. $1.25 billion.

Sacramento officials have said they believed Druyun refereed the contest fairly

Posted 11/9/2004 6:50 PM

U.S. probe widens into dealings of Boeing with Air Force official
WASHINGTON (AP) — The Pentagon said Tuesday it has asked the Government Accountability Office to investigate a wide range of Air Force contracts that involved Darleen Druyun, a former senior official who has admitted giving special treatment to Boeing Co.

The review will include all contracts handled by Druyun during nearly a decade as a top acquisition official of the Air Force, a Pentagon spokesman said.

Acting Pentagon acquisitions chief Michael Wynne said a thorough review was needed to assess whether former No. 2 Air Force acquisitions official Darleen Druyun helped award Boeing the lion's share of a $1.9 billion contract under the Evolved Expendable Launch Vehicle program.

"It's really hard for the Air Force to move forward now that this has all come out," Wynne told reporters at his Pentagon office. "We've got to sweep away any allegations of ethical misconduct."

Washington, DC, Nov. 5 (UPI) -- The Pentagon is considering a massive, independent review of the Air Force's contracting procedures and major weapons programs awarded to Boeing.

DAVE CARPENTER

Associated Press

CHICAGO - Burgeoning military sales lifted Boeing Co. to a 78 percent increase in third-quarter profits, its bottom line thriving despite the ethics scandals that have roiled the aerospace giant for the past year.

The results Wednesday handily surpassed Wall Street's expectations, and Boeing raised its estimate for full-year earnings.

February 15, 2004

The Rise And Fall of A Maverick
During her 30-year federal career, Darleen Druyun charted a course that made her one of the most influential acquisition executives in government. Her career was characterized by an aggressive, risk-taking approach to managing a series of complex, controversial, multibillion-dollar deals

February 15, 2004

Fallen Star
By George Cahlink
gcahlink@govexec.com
The cautionary tale of a celebrated federal executive's corporate flameout