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Boeing investigated process behind 1998 af contract { September 13 2003 }

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   http://www.washingtonpost.com/wp-dyn/articles/A3191-2003Sep12.html

http://www.washingtonpost.com/wp-dyn/articles/A3191-2003Sep12.html

Boeing Disciplines Employees
Company Investigated Process Behind 1998 Air Force Contract

By Renae Merle
Washington Post Staff Writer
Saturday, September 13, 2003; Page E02


Boeing Co. acknowledged yesterday taking "internal administrative personnel actions" against current employees after completing an internal probe into allegations that it used proprietary Lockheed Martin Corp. documents to win a large military contract.

Chicago-based Boeing, among the Pentagon's largest contractors, alerted the Air Force to the administrative actions, a company spokesman said. The company refused to disclose the results of the probe or even when it was completed. After conducting its own inquiry, the Air Force in July stripped Boeing of $1 billion in business and suspended it from competing for space contracts.

The case centers on a 1998 Air Force contract to launch government satellites, which Boeing won. The issue of Boeing's conduct was revived this year when Lockheed discovered the number -- more than 36,000 pages -- and quality of the documents that were used by Boeing in the bidding. Two former Boeing employees have been indicted by a Los Angeles grand jury.

Boeing officials continue to argue that the case is an example of bad behavior by a few "rogue employees" and did not influence the outcome of the competition. "We feel that we're making great progress with the Air Force in closing out any remaining concerns relating to the" matter, said Dan Beck, a Boeing spokesman.

Beck refused to specify how many employees were punished, but the Wall Street Journal reported yesterday that Thomas Alexiou, a Boeing manager who was removed from the rocket program, and Thomas Aranyos, also a Boeing manager, were among six employees who were disciplined. Alexiou and Aranyos could not be reached for comment.

The administrative actions follow Boeing's firing of two employees and suspension of a third in relation to the contract in 1999.

Boeing is attempting to persuade the Air Force to lift the suspension on the company's bidding for new space contracts. By the end of the year, the Air Force is expected to hold a competition for 15 to 20 rocket launches, potentially worth more than $1 billion.

"It looks like the Boeing onion is being unpeeled a little more each day. It is hardly time to lift the suspension; who knows what else is going to be discovered," said Eric Miller, a defense analyst with the Project on Government Oversight, a watchdog group.

Meanwhile, Boeing's conduct during negotiations with the Air Force to lease and then eventually buy 100 converted 767 planes also is coming under increasing scrutiny.

Sen. John McCain (R-Ariz.), a chief opponent of the deal, has asked the Department of Defense Inspector General's Office to expand its investigation into the proposal. McCain is seeking an inquiry into whether Boeing improperly helped the Air Force formulate an operational requirements documents (ORD) to justify the need to replace the aging fleet of planes. Documents obtained by the committee "call into question the integrity of the ORD that the Joint Staff approved to validate the tanker program," McCain said in a letter to the inspector general's office. This could constitute "anti-competitive behavior," the letter said.

Documents obtained by the committee also show that a senior defense official initially agreed with the Congressional Budget Office analysis that the lease-buy strategy deal did not comply with Office of Management and Budget regulations, McCain said. "Documents suggest that their position was modified as a result of an intense lobbying effort by Air Force officials and Boeing," according to a letter sent earlier this week to Secretary of Defense Donald H. Rumsfeld.

Last week, the Senate Armed Services Committee said it would delay a vote on the $21 billion deal until the Pentagon studied a proposal to lease 25 planes and buy the rest through the normal procurement process. The Air Force has said the proposal would significantly increase the price of the planes.



© 2003 The Washington Post Company



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