CIA tapped for tanker contract fight

Boeing and its congressional supporters are using a classified CIA briefing on questionable business practices to try to discredit a rival that beat out the aircraft maker for a $35 billion defense contract.

Boeing officials say they are not pressing members of Congress to ask the CIA for the briefing, but acknowledge that it has come up in lobbying visits to lawmakers and their staffs.

{mosads}The CIA briefing and the issue of corporate bribery “has come up in conversations on the Hill, but is not the focus of our discussions,” said Douglas Kennett, a Boeing spokesman. “What we are pushing are the issues surrounding our protest.”

At least one lawmaker, Rep. Todd Tiahrt (R-Kan.), a strong Boeing supporter who was once employed by the Chicago-based company, requested and received the CIA briefing at the beginning of April.

The briefing discusses past practices involving a number of different countries and foreign-based companies, including the European Aeronautic Defence and Space Company (EADS), which won the Air Force contract to build new refueling tankers with Northrop Grumman.

Tiahrt described it as highlighting practices sometimes used by foreign companies and countries to gain contracts, and said it was “not as specific as I had hoped.”

The world’s two biggest aircraft makers are involved in an increasingly acrimonious fight over the tanker contract. Boeing did not raise the issue of corruption and bribery during the bidding competition.

Northrop blasted Boeing and its supporters for bringing up the CIA briefing. “Any attempt to try to tie the Air Force KC-45 tanker award to an irrelevant covert report is outrageous,” said Northrop Grumman spokesman Randy Belote. “Again, there appears to be no shortage of acts of desperation on the part of the loser of the tanker program and its supporters.”

Boeing has launched an aggressive lobbying and public relations campaign to overturn the contract the Air Force awarded on Feb. 29. In March, it filed a formal protest against the contract award with the Government Accountability Office.

References to the CIA briefing could backfire because Boeing itself has been tarnished during the Air Force’s search for replacement tankers. Northrop won the contract only after the Air Force opened competition in the wake of the jailing of two Boeing officials convicted for striking a corrupt leasing deal for tankers.

Darleen Druyun, a former Air Force acquisition official who left the government to work for Boeing, admitted in 2004 in court that she steered multibillion-dollar contracts to Boeing while she was seeking employment with the company for herself and members of her family.

Other Boeing congressional supporters said that the existence of a CIA briefing is tangential to the case they are pressing to ensure that the Air Force’s decision is overturned and Boeing is given another chance.

“There may be some other issues related to EADS, but that is not the focus,” said George Behan, chief of staff and spokesman for veteran defense appropriator Rep. Norm Dicks (D-Wash.). Instead, the congressman is raising alarm about the Air Force’s selection process and launch subsidies that Airbus has been receiving from European governments.

Tiahrt, a veteran defense appropriator and a member of the House Intelligence Committee, acknowledged that he requested the CIA briefing, which he said dealt with dubious practices in general. Several companies, including EADS, are cited in the briefing, Tiahrt said.

“It was confirmation of things that I already knew,” said Tiahrt, who as a former Boeing employee is eligible to receive a company pension when he turns 65. He said he did not know the value of his pension, and emphasized that he divested all his investments in Boeing when he rolled them into an IRA.

He said the briefing underscored his view that EADS should not have been allowed to compete against Boeing for the Pentagon contract. “There is enough out there now that the Pentagon should have known that there was a problem.”

Because the briefing was classified, Tiahrt would not give details of its contents. But he said that the CIA briefing, combined with other publicly available information, convinced him that it would be a national security threat for the Air Force to award a contract to EADS.

France, one of the stakeholder countries in EADS, has a reputation for industrial espionage, and Boeing supporters have whispered that this record should have been considered in the tanker decision.

Tiahrt said past actions by EADS could put it in violation of the Foreign Corrupt Practices Act (FCPA), under which bribery and other corporate misconduct can result in a company being restricted or banned from doing business with U.S. government agencies.

Northrop’s partner in the tanker contract was EADS North America, a subsidiary of the Franco-German conglomerate and parent company of Airbus, Boeing’s bitter rival on the commercial aviation market. EADS North America is subject to the FCPA but has no record of violations, company officials said.