“Questions still linger about company’s other deals,” says Schatz

(Washington, D.C.) — Citizens Against Government Waste (CAGW) commended, with reservation, the announcement today by the Air Force suspending 3 Boeing rocket units from contracts for violations relating to a bidding competition for the Evolved Expendable Launch Vehicle (EELV) Program.  Boeing could be reinstated within 60-90 days or sooner if there is a “compelling national need.”  The Air Force says that it expects the units will be reinstated without any problems.

“The suspension will hopefully show that corporate espionage does not pay,” CAGW President Tom Schatz said.  “The government should only award contracts to reputable, law-abiding companies.  Companies, such as Boeing, that have not shown exemplary behavior can not be trusted with taxpayer dollars.”

The controversy surrounds a contract for the EELV program, originally won by Boeing, worth $1.38 billion.  It called for Boeing to build 19 of the 28 missiles needed to launch spy satellites and other communications instruments involved in the program, while its competitor, Lockheed Martin, built the other 9.  It is now alleged that Boeing won this contract unfairly.  The company has been accused of possessing secret Lockheed documents concerning the rocket project on which both companies were working.  Engineer Kenneth Branch, the manager of Lockheed’s rocket team, brought the documents with him when he came to McDonnell Douglas in June 1996 for a job interview.  Boeing, who had since purchased McDonnell Douglas, hired Branch in January of 1997.  After Boeing won the contract, Branch and his supervisor were fired following an internal investigation that discovered the illegal papers.

“While this is a step in the right direction, it is merely a slap on the wrist for a company that has had a reputation for such behavior in the past,” Schatz continued.  “More importantly, today’s suspension shows that Congress needs to scrutinize the current tanker lease deal between the Air Force and Boeing that is nothing more than a boondoggle bailout for Boeing at the expense of taxpayers.”

In the fiscal 2002 Defense Appropriations Bill, Boeing was granted the right to lease 100 767 fuel tankers to the Air Force at a cost of $21 billion.  The Air Force claims that efficiency will rise by “replacing” the older KC-135 tankers. Critics, including the General Accounting Office, assert that it is much more economical to upgrade these old tankers, at a cost of only $3.2 billion, a would-be savings of $17.8 billion for taxpayers.  The Air Force released new data on Monday indicating that the deal will cost an additional $6.8 billion in training and maintenance costs.  Congress is required to approve the deal and is currently holding hearings.

“Congress needs to do what is best for the military and the taxpayers and put an end to this sweetheart deal,” Schatz concluded.  “It is an enormous risk for the government to be dealing with a company with such questionable ethics.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.