Pentagon May Subpoena Boeing, Air Force

Pentagon May Subpoena Boeing, Air Force
1 hour, 22 minutes ago Add Business – Reuters to My Yahoo!

By Andrea Shalal-Esa

WASHINGTON (Reuters) – The Pentagon (news – web sites)’s inspector general may issue a subpoena to Boeing Co.(NYSE:BA – news) and the U.S. Air Force for all written materials on a $22.4 billion deal to lease then buy 100 Boeing 767 tankers, congressional and administration sources said on Monday.

They said Inspector General Joseph Schmitz is considering the unusual move as he investigates possible impropriety in the lease proposal that critics including U.S. Sen. John McCain have blasted as a sweetheart deal for Boeing.

The Pentagon’s in-house watchdog agency kicked off its investigation based on documents provided by Boeing to Senate Commerce Committee Chairman McCain, an Arizona Republican.

But investigators, including an FBI (news – web sites) agent, want to see a complete and full record of documents related to the case, the sources said.

“So far, they’re only seeing what Boeing agreed to provide to McCain’s committee,” said one source familiar with the investigation. “They need to see it all.”

McCain has also asked Air Force Secretary James Roche to hand over all records of his dealings on the plan, but Roche had not complied as yet, a McCain aide said.

Pentagon officials say they will not provide emails to McCain’s committee because they are “pre-decisional.”

Roche, facing hearings before the Senate Armed Services Committee (news – web sites) for his nomination to be the next secretary of the Army, has until Sept. 25th to respond to McCain’s request.

McCain, also a member of the armed services panel, has said he could resort to a subpoena to get the records.

An aide to McCain said it was “absolutely appropriate” for the issue to come up at Roche’s confirmation hearing.

Boeing spokeswoman Deborah Bosick reiterated that the Chicago-based company did not believe it had received any proprietary information throughout the lease negotiations.

“If asked to support the investigation, we clearly will,” she said. Boeing has given McCain more than 8,000 documents.

The Air Force had no immediate comment on news of the possible subpoena by Schmitz, whose Web site describes him as “the principal adviser to the Secretary of Defense for matters relating to the prevention of fraud, waste, and abuse.”

The Air Force has conceded that the proposed lease will cost more than a straight purchase, but says it would allow it to begin replacing its aging fleet of KC-135 tankers sooner.

Three out of four congressional committees have approved the lease deal, but the Senate Armed Services Committee put off its vote and asked Defense Secretary Donald Rumsfeld to consider a smaller deal involving only 25 tankers.

Deputy Defense Secretary Paul Wolfowitz is now reviewing a response drafted by the Air Force and Pentagon officials.

The IG investigation centers on whether Darleen Druyun, a former Air Force official who now works for Boeing, improperly shared pricing data from European rival Airbus SA with Boeing.

Investigators are also looking into the actions of William Bodie, an assistant to Roche, and Air Force acquisitions chief Marvin Sambur, congressional and administration sources said.

McCain also plans to send a letter to Schmitz this week raising concerns about some members of the Pentagon’s Defense Policy Board who are also consultants to Boeing and lobbied senior defense officials on the lease, a McCain aide said.

For instance, one Jan. 23, 2003 email from Boeing lobbyist Andrew Ellis, says two consultants, David Jeremiah, a retired Navy admiral, and Ronald Fogleman, a retired Air Force general, who also serve on the Pentagon advisory board are “both engaging in OSD (Office of Secretary of Defense) circles.”

The 30-member group was in the spotlight in March, when its chairman, Richard Perle, resigned amid allegations of conflicts of interest for his representation of companies with business under consideration by the Pentagon.