The Wall Street Journal reports today that Pentagon officials are investigating whether Boeing was improperly awarded a multi-billion-dollar contract to develop the nation’s next generation of photo-reconnaissance satellites. Known as the Future Imagery Architecture, the program has been afflicted from its inception by cost growth, schedule delays, and performance shortfalls. Experts had assumed that the problems were traceable to excessively optimistic assumptions in Boeing’s original proposal — assumptions that enabled it to displace rival Lockheed Martin from a forty-year franchise in building the nation’s spy satellites. But against the backdrop of a spreading procurement scandal, the program’s difficulties may assume more sinister implications.
There is at present no evidence that Boeing behaved improperly in winning the contract, unless you count lack of realism in its original proposal. But the admission by Air Force acquisition official Darleen Druyun that she steered billions of dollars in business to Boeing has cast a pall over some of the company’s most celebrated successes. It has also led analysts to reassess Lockheed Martin’s management, which was widely criticized for losing big competitions to Boeing in which Lockheed was thought to have an edge. These include the Future Imagery Architecture, the
C-130 Avionics Modernization Program and the Evolved Expendable Launch Vehicle.
It’s tempting to try to connect these and other questionable awards into a conspiracy of epic proportions, but as of today, the evidence is ambiguous at best. Boeing has admitted that middle-level managers misused thousands of pages of proprietary Lockheed Martin documents in the launcher contract, and the Air Force has reversed the original award to favor Lockheed. But the launcher competition hasn’t been tied to Druyun, and Boeing denies knowledge of improper behavior on her part favoring its interests.
It isn’t clear how to fix the damage Druyun has done. Most observers expected Lockheed Martin to win the $4 billion contract for upgrading electronics on C-130 transports, because it built the planes and had won similar contracts in the past. But other companies were also competing, and they too potentially lost business as the result of a biased selection process. Boeing has gone on to win other C-130 upgrade contracts with the Navy and foreign militaries, at least partly on the strength of its work on the original contract. Even if Lockheed Martin can be compensated for its direct losses, how do you factor in the loss of confidence it suffered among investors? And how can you calculate any loss incurred by taxpayers?
And then there’s the question of how to prevent similar abuses in the future. Political appointees and senior officers come and go with such frequency that it’s not uncommon for career civil servants who stay in one job series to accumulate great power based on their superior knowledge of processes. Yet these officials often earn little more than the median household income in nearby Fairfax County, even though they oversee billions of dollars in programs. Is it realistic to expect that the prospect of post-government employment won’t influence their actions, when they know private-sector counterparts with similar experience are making some multiple of their income? Congress has barely begun to ask such hard questions.
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