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Boeing tankers deal put on hold Original Source Link: (May no longer be active)
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Boeing tanker deal put on hold as Pentagon waits for probe results
By Katherine Pfleger
Seattle Times Washington bureau
WASHINGTON — A senior Pentagon official has ordered the Air Force to delay signing a contract for up to 100 Boeing-made tankers until independent investigators look into alleged improper conduct surrounding the deal.
Deputy Defense Secretary Paul Wolfowitz wrote that he is "ordering a pause" on the signing of any contracts while the Pentagon investigation is completed. He also promised that congressional committees will have "ample time" to review any eventual contracts between Boeing and the Air Force.
"The department remains committed to the recapitalization of our aerial tanker fleet," he wrote Senate Armed Services Committee Chairman John Warner, R-Va. "Nonetheless, I believe that it is prudent to reassess this matter before proceeding."
Wolfowitz's letter adds more uncertainty about the future of Boeing's controversial tanker deal, even as the company gets ready to start tanker production.
The delay comes on the heels of Boeing Chairman Phil Condit's resignation Monday. Incoming CEO Harry Stonecipher said his first priority was restoring the faith of Boeing's top customer, the U.S. government.
Last week, Boeing fired Chief Financial Officer Mike Sears for speaking with an Air Force employee about a job before she had recused herself from handling Boeing contracts, including the tanker negotiations. The employee, Darleen Druyun, who had become a Boeing vice president, also was fired.
The company said both tried to cover up the breach of company policy, which may also have violated the federal Procurement Integrity Act. Through a law firm last week, Sears denied any misconduct.
Pleased by the pause, Sen. John McCain, R-Ariz., the tanker deal's loudest congressional critic, sent a letter to Wolfowitz yesterday. He said he understands Boeing intends to start assembling a wing of the first aircraft Dec. 12.
"I am sure that your commitment to a 'pause' in your letter reflects, not this plan or adherence to a notional delivery schedule, but a genuine concern for the interests of taxpayers and a good-faith interest in obtaining a complete and thorough independent investigation," McCain wrote.
Boeing spokeswoman Leslie Nichols said the company "did have a plan to start this month," though she couldn't confirm the date. "There are some parts in the factory for the wings," she said.
However, Nichols said she did not know what the plan is now. "We're supposed to be on hold" until the plan is approved, she said.
Rep. Norm Dicks, D-Bremerton, one of the deal's staunchest supporters, said the company has spent some of its own money on the tankers.
"There is no evil intent here. This is optimism," Dicks said, adding he thought the deal could be resolved in the first couple of months of next year. "All that means is that if they don't ever get the contract, then they are going to lose some money on this."
Congress first approved a plan to lease 100 midair refueling tankers, built on the 767 airframe, in December 2001. The inspector general has been reviewing various aspects of the deal since last summer, and at one point gave the go-ahead, with limited conditions, to sign a contract.
But skepticism grew this fall over the process that led to the deal and the added costs of leasing — perhaps some $6 billion. So Congress approved a compromise to lease 20 tankers and buy up to 80 later, saving $3 billion to $5 billion from the original $22 billion deal.
Then, news broke about alleged ethical lapses by Boeing employees. How long the review will take is unclear.
Throughout the debate, the Air Force has said it needs the tankers. If there is no reason for further delay after the inspector general's assessment, "the Air Force intends to work expeditiously with the appropriate entities to implement the lease and purchase," the service said in a statement.
Wolfowitz's letter indicated the review was an inquiry into the allegations surrounding Druyun's and Sears' firings, and any negative effect that may have had on Air Force contracts. In response, Warner said the inquiry should "pursue the trail of evidence wherever it leads."
He says that should include all members of the Defense Department and Air Force — "both military and civilian, top to bottom" — who participated in negotiating the proposed tanker lease.
Keith Ashdown at Taxpayers for Common Sense, one of a half-dozen watchdog groups following the deal, said he never thought "the political winds would change this much, where this thing would be motionless for as long as it appears like it is going to be."
Seattle Times reporter Dominic Gates contributed to this story. Katherine Pfleger: kpfleger@seattletimes.com or 206-464-2772
Exclusive engine unlikely for 7E7, Boeing official says
LONDON — Boeing is unlikely to seek an exclusive engine for its proposed 7E7 jet to keep the price of the aircraft down, the company's head of product and services marketing says.
Boeing is counting on the 7E7, which will carry about 250 passengers, to take back eroding market share from Airbus. Using the same engine may help Airbus compete against the planned aircraft.
"The engine would be great on the next-generation Boeing 747," said Randy Tinseth at a briefing for journalists in London. "It would also fit really well on an Airbus A330 model."
Boeing may offer engines from as many as two of the three companies that build jet engines: General Electric, Rolls-Royce and United Technologies' Pratt & Whitney unit. A decision is likely next year, Tinseth said.
The company plans to deliver the first 7E7, which will be 20 percent more fuel-efficient than comparable-sized aircraft, in 2008.
About half the fuel savings will come from a newly designed engine.
Boeing's directors probably will decide this month whether to approve the 7E7 even after Chief Executive Officer Phil Condit's resignation Monday, Tinseth said.
— Bloomberg News
Copyright © 2003 The Seattle Times Company
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