Boeing Playing Defense in New Session

Posted January 16, 2004 at 4:55pm

Senate sources say the Boeing Co., which is already under fire from the Pentagon, will face increased heat from Capitol Hill in the next few weeks.

The company will be the focus of a series of hearings early next month by the Senate Armed Services Committee, which is delving into Boeing’s so-called “revolving door” hiring of former Pentagon officials.

It is still unclear whether Boeing officials will be called to testify.

John Ullyot, a spokesman for Armed Services Chairman John Warner (R-Va.), said the timing and the format for the hearings are still unclear, but added that the issue of defense contractor hiring will be dealt with “promptly.”

The storm surrounding Boeing is tied to ongoing internal and Justice Department investigations of Darleen Druyun, a former Air Force acquisition officer turned Boeing official who oversaw Pentagon contracts.

The highly publicized firing of Druyun and Boeing’s chief financial officer, Mike Sears, over the circumstances leading to Druyun’s move to Boeing has cast a shadow over the Pentagon’s proposed $20 billion acquisition of Boeing-made mid-air refueling tankers.

The drama played out on Capitol Hill toward the end of the last session, when the Senate was trying to hammer out a Defense appropriations measure, agitating many lawmakers on Armed Services. And revisiting the issue could resurrect memories of the tanker battle that many on the Hill would like to forget.

One variable that could determine how much scrutiny Boeing will face is Sen. John McCain (R-Ariz.), an outspoken critic on the hiring matter who has pushed the Pentagon to take action against Boeing for the Druyun firing.

McCain, the No. 2 Republican on the Armed Services panel, could hold his own set of hearings at the Commerce, Science and Transportation Committee.

As of last week, McCain had not decided whether the Commerce panel, which he chairs, will address the matter or leave it to Armed Services, according to spokeswoman Rebecca Hanks.

With government contract-related issues cutting across the territory of other committees, Boeing may also have to worry about facing other panels.

A spokeswoman for the Senate Governmental Affairs Committee said the panel has not finalized its hearing agenda for the new session, adding that the panel’s leaders have not ruled out the possibility of addressing the matter.

Because Boeing has been in Congress’ crosshairs for months, the Senate hearings could result in legislation that would place tighter restrictions on the lobbying activities of former Pentagon officials. That, in turn, could affect how defense contractors conduct business with the Defense Department.

Since 1997, Boeing has hired a number of former Pentagon officials, including an acquisition officer, a Navy vice admiral, a deputy secretary and an auditor. Meanwhile, rival Lockheed Martin has pulled in an Air Force general, a Navy rear admiral and a top acquisition officer, among others.

While Boeing declined to answer questions regarding Congressional scrutiny, a spokeswoman said: “Boeing has rules and procedures in place that reflect and support government regulations. We are prepared to take and have taken appropriate actions when and if those rules are not followed.”

The company’s hiring practices have angered watchdog groups, McCain and other lawmakers — all of whom are pressing the Pentagon to take action.

Some lawmakers, such as Warner, do not feel the Pentagon’s internal review has delved far enough into the matter.

In a Dec. 2 letter to Deputy Defense Secretary Paul Wolfowitz, Warner said the internal Pentagon inquiry should “go further” than its current parameters and “pursue the trail of evidence wherever it leads, in accordance with standard [inspector general] procedures.”

Such a review could bring on a spate of unwanted headlines involving other defense contractors.

But one Senate aide was surprised that Warner would want to revisit such a contentious issue.

“It would open him up to some criticism,” one Democratic aide said of Warner, who with Sen. Carl Levin (D-Mich.), the committee’s ranking member, pushed through a controversial compromise during the last session on the air refueling tanker deal, part of the Defense appropriations measure sent to the White House for approval.

After behind-the-scenes haggling, McCain managed to convince Warner to revisit the tanker deal. The compromise, pushed as a cost-saving measure, proposed to lease 25 Boeing refueling aircraft and purchase 75, but was later revised to a 20-80 lease-buy deal.

Wolfowitz rejected the Armed Services compromises, but later gave in under increasing pressure from Capitol Hill.