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PENTAGON QUESTIONS AWACS DEAL

16 Apr 04. The Pentagon’s inspector general found that officials followed improper procedures in 2001 and 2002 in negotiating the price of a $1.32bn contract with Boeing Co. to upgrade some NATO radar aircraft.

As a result, it is unclear whether the price tag is reasonable, the inspector general said in a report released this week. Boeing said it would renegotiate the deal. Pentagon officials said they expected a lower price.

In 2001 and 2002, the U.S. military’s senior negotiator with Boeing was Darleen Druyun, then the principal deputy assistant secretary of the Air Force for acquisition and management. The final price was agreed upon Sept. 26, 2002, according to the inspector general’s report.

In fall 2002, Druyun was also allegedly in negotiations with Boeing’s chief financial officer, Mike Sears, for a job, and was reviewing a proposal for a multibillion-dollar air tanker-leasing contract between the company and the Air Force, a matter under separate investigation. Druyun started with Boeing in January 2003. The other senior negotiators were a German brigadier general, representing NATO’s early-warning program, and Jim Albaugh, the chief of Boeing Integrated Defense Systems.

The report does not specify any wrongdoing by Boeing in the NATO radar planes deal. The planes, E-3 Airborne Warning and Control System jets, are used to manage air battles over large areas. The report says the $1.32 billion figure should have been analyzed against independent estimates to ensure it was a fair deal.

Druyun has not been charged with a crime, though she has been under investigation by a grand jury in connection with the tanker deal. A document filed last week in federal court in Alexandria indicates that she plans to plead guilty to conspiracy on April 20. The charge carries up to five years in prison.

Boeing fired Druyun and Sears in November. The company alleged that Sears improperly contacted Druyun about the job as she played an influential role in deciding whether Boeing should get a contract to lease or sell 100 aerial tankers to the Air Force. The tanker contract, worth as much as $23 billion, was eventually awarded to Boeing. It is on hold while investigations are under way. Last week, the Pentagon’s inspector general said significant changes should be made to the deal before it is allowed to proceed.

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