The Air Force improperly favored The Boeing Co. on a $4 billion contract to upgrade C-130 cargo planes, congressional investigators said Thursday.
The Government Accountability Office sided with Lockheed Martin Corp., BAE Systems and L-3 Communications Inc., which complained last year that the C-130 contract award was tainted by the involvement of a former senior Air Force official who has admitted giving special treatment to Boeing.
Darleen Druyun, who later took a job at the Chicago-based airplane maker, is serving nine months in prison for violating federal conflict of interest laws.
“The record … shows that the Air Force conducted discussions in a manner that favored Boeing,” according to a two-page summary from the GAO, the investigative arm of Congress.
“On the basis of the record presented, the Air Force has failed to demonstrate that Druyun’s acknowledged bias did not prejudice the three protesters,” the report said.
The GAO said it normally would have recommended an entirely new competition. But because much of the C-130 contract has been in place for more than three years, that may not be practical, the agency said.
The report recommended that the Air Force hold new competitions for the remaining parts the contract and look into how to compensate the three companies that protested the award to Boeing.
A Lockheed spokesman said Thursday the company was pleased by the GAO report.
Boeing said in a statement that its work on the C-130 modernization contract continues on schedule.
“We will await the Air Force’s decision on GAO’s recommendations. In the meantime, Boeing will continue to support the Air Force’s requirement to field a vastly more capable and modernized C-130 fleet under the current development contract,” Boeing spokesman Paul Guse said.
Doug Karas, an Air Force spokesman, said the resolution of the protest allows the Air Force “to continue moving forward in repairing the harm caused to its acquisition system by the illegal and unethical actions of Miss Druyun. We commend GAO’s prompt adjudication of the protest and will address their ruling accordingly.”
Last week, the GAO upheld Lockheed’s protest of a $2.5 billion Air Force contract awarded to Boeing to build precision bombs that can be launched from a fighter plane, bomber or unmanned aircraft. Lockheed had protested the award because of Boeing’s ties to Druyun.
Boeing’s ex-chief financial officer, Michael Sears, was sentenced to four months in prison last week for his role in hiring Druyun.
It was unclear Thursday how much of the $4 billion contract would be reopened for competition. Boeing won a development contract, valued at about $970 million. But officials were not sure how much of the remaining $3 billion would be put out to bid and how much would remain with Boeing.
Keith Ashdown, vice president of Taxpayers for Common Sense, a government watchdog group, called the GAO report “further confirmation that Darleen Druyun unscrupulously steered billions of dollars of Air Force contracts to the doorstep of the Boeing Co.”
The GAO report shows that “not only was Druyun biased, but that the Air Force itself had a rampant institutional bias toward Boeing in relation to the C-130,” Ashdown said. “Once again, Boeing has proven that having the right connections and friends in high places is more important than producing a high-quality product.”
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