"I saw Rudy DeLeon," head of Boeing's D.C. office, "at the Kennedy Ctr," began the e-mail from Bill Bodie to his boss, Secretary of the Air Force James Roche, "and politely asked the Great White Arab Tribe of the North to unleash their falcons on our behalf for once."
THIS WEEK'S BAD BOEING NEWS
• Air Force e-mails released by Sen. John McCain throw light on the 767 tanker scandal.
By Rick Anderson
• "Go Boeing!" and other impartial Pentagon e-mail. MORE
• Lockheed says in a civil suit that Boeing's competitive behavior constitutes racketeering. MORE
Bodie, an Air Force special assistant, on that April day in 2002 was hoping the Great White Arab Tribe—his boss' pet name for Boeing—would put its formidable lobbying machine to work twisting the arms of military and congressional officials opposed to the $23.5 billion Boeing aerial-refueling-tanker deal.
Top Air Force officials at the time hoped to lease 100 Boeing planes—767s to be built in Everett and converted to aerial tankers in Wichita. And, in fact, the Boeing tribe commenced a nearly three-year lobbying campaign, only to see it all collapse under its own false weight. Last week, the Pentagon officially announced it will put the tanker proposal out for bid again, raising the possibility that Boeing's dreaded European rival, Airbus, could end up with the job. "We respect the department's decision and look forward to the competition," says Boeing spokesperson Doug Kennett in a prepared statement. Airbus, according to U.S. Sen. John McCain, R-Ariz., and others, should have won the tanker bid in the first place. But then–Air Force acquisition officer Darleen Druyun steered the deal to Boeing, in return for a cushy vice presidency with the company, and even allowed Boeing to jack up the price. Last week, the deal began caving in at the Pentagon, as well, where Secretary Roche announced his resignation, along with Marvin Sambur, assistant secretary for acquisition—Druyun's former boss.
The plan that was supposed to boost Boeing's fortunes after 9/11 has instead shaken its ethical and financial base and littered the ivory tower with corporate casualties, among them: Chief Executive Phil Condit, who resigned; Chief Financial Officer Mike Sears, who hired Druyun and is now facing a prison term; and Druyun, recently sentenced to nine months in prison. Nearly a dozen federal probes and reviews are under way, and other executives might fall. According to court documents recently filed in U.S. District Court in Florida, Boeing Chief Executive Harry Stonecipher was allegedly aware of Druyun's activities and was himself given proprietary business documents by Druyun regarding another Boeing rival, Lockheed Martin. (A Boeing spokesperson says the claim is flatly untrue.) Lockheed, which is suing Boeing over alleged civil racketeering violations in connection with stolen documents and a cover-up, has laid out what it calls a 14-year stretch of related illegal activity by Boeing. The civil case could be a blueprint for federal prosecutors, should they decide to bring criminal racketeering charges.
Druyun, at least, is accepting responsibility for her role, says McCain, and, "To some extent, Boeing has accepted responsibility for its [actions]. The Justice Department and others are continuing to ferret out others who may be responsible." That still leaves the Air Force to clean house, McCain says. "Air Force leadership remains content laying all the blame at the feet of a single individual, Darleen Druyun. I'm not buying it."
To keep the heat on, McCain recently released the latest array of embarrassing, if not incriminating, tanker e-mail. He earlier disclosed Boeing e-mails, dating back to 2001, that urged the Air Force to draw up a proposal tailored to Boeing planes, which the Air Force eventually did, giving Boeing five months to rewrite the official specifications. He also revealed some of Boeing's relentless lobbying to approve a deal that McCain says was one of the all-time taxpayer rip-offs. And McCain released an October 2001 letter from U.S. Rep. Norm Dicks, D-Bremerton, to President Bush, asking the White House to spend "at least $2.5 billion for the purchase or lease of these aircraft." Dicks and U.S. Sen. Patty Murray, D-Wash., have fought McCain all the way, seeking passage of the lease deal.
The latest e-mails offer a peek inside the Pentagon's efforts to land the new tankers. They indicate Boeing worked in concert with Air Force brass, led by Secretary Roche, a onetime Northrop Grumman executive, even though lower-level Pentagon officials opposed the deal. Among the missives is an April 9, 2002, e-mail from Sambur, the recently resigned acquisition official, to Secretary Roach, regarding a "call from Boeing":
Boss: Gerry Daniels [Jerry Daniels, head of Boeing military aircraft and missile systems] called to discuss the tankers. He started the conversation by reminding me that McCain was a minority view and if the AF brought the deal forward it would easily pass. I stated that the AF would not bring this forward unless it was a good deal. Apparently, he never took this message seriously as he was surprised at this response. I explained our business model and indicated that if Boeing could not fir into this model we would shake hands and disengage. I arranged to have him and his team share our model. I ended the conversation by telling him that the AF's reputation was at stake and we are committed to getting a good deal or else there would be no deal. Boeing must take some risks given the future value of this initial contract. We are pointed towards an end of May conclusion as to whether to disengage.
Responded Roche: "I love Ya, Big Guy. Give it to the Blue Eyed Arabs of the North (the expression we used for Boeing)."
That seemingly cautious initial approach turned to a more cooperative effort by Boeing and the Air Force as the deal progressed and then came under fire. Bodie was told by Roche in April 2002 that U.S. News and World Report was planning a story, and Bodie responded: "Okay, I've gone to battle stations. Leroy knows and will call friendly staffers like Cortese to give them a heads up, and perhaps to do something. . . . I will get with Sambur first thing to rehearse talking."
A year later, watching the deal head for the drain, a bunker mentality seemed to set in. Roche wrote to another official: "We are running aground because [acquisitions and the budget office] want me to sign a suicide note [a proposal that would scuttle the deal]. BUT I WILL NOT. This whole drill has gotten out of hand!" He added in a related memo: " . . . You don't want to be put in a position of embarrassing Don [Rumsfeld]; nor do I." In one of the last e-mails, Roche wrote to an acquisition official, who resisted the deal and had laid out some revealing cost details in writing: "Kenny, I love you, and you know that. I think you have been had by some members of the famous [acquisitions] staff. You never should have put what you put in writing. It will now be used against me and Don Rumsfeld."
After Roche's resignation last week, the Air Force said he and Sambur were not forced out, but resigned "of their own volition."