USAF Hands Down Contractor Penalties In Industrial
After a year-long
investigation, the Air Force today slapped Boeing with some of the
harshest penalties ever. Boeing has been stripped of seven
Delta IV launches in the Evolved Expendable Launch Vehicle Program
to archrival Lockheed-Martin. Three of Boeing's business
units have been indefinitely suspended from doing business with the
All of this, Boeing faces for what amounts to
industrial sabotage. The Air Force investigation concluded that
Boeing only won a majority of EELV launch contracts because it used
thousands of pages of stolen Lockheed-Martin documents in the
"Our inquiry into Boeing found that they were in possession of
thousands of pages of Lockheed Martin proprietary EELV documents
during the 1998 source selection," said Peter B. Teets,
undersecretary of the Air Force.
"As a matter of policy we do not tolerate breaches of
procurement integrity and we hold industry accountable for the
actions of their employees. We believe the suspension is necessary
and we hope all contractors will take note and strive to enforce
the highest integrity standards in their organizations."
The Air Force also suspended three individuals from competing
for contracts -- William David Erskine, former ground operations
lead on Boeing's EELV program; Kenneth V. Branch, former senior
engineer and scientist on Boeing's EELV program; and Larry Dean
Satchell, a former member of Boeing's EELV proposal team.
Last month, a federal
grand jury in Los Angeles indicted Erskine and Branch on charges of
misusing trade secrets. Prosecutors say Erskine recruited
Branch from Lockheed, promising him a very comfortable salary in
exchange for access to Lockheed secrets.
The sanctions against Boeing Launch Systems, Boeing Launch
Services and the Delta rocket program office are open-ended.
They'll end only when Boeing can prove it's changed its corporate
In a written statement to ANN, Boeing CEO Phil Condit
said, "We are extremely disappointed by the circumstances that
prompted our customer's action, but we understand the U.S. Air
Force's position that unethical behavior will not be tolerated. We
apologize for our actions. We will continue to work with the Air
Force to address the issues that caused this suspension.
"Last week, I asked former Senator (Warren) Rudman
(D-NH) to review the company's policies and procedures regarding
ethics and the handling of competitive information. His review will
include looking at any management or cultural factors that could
affect how these policies and procedures are respected and
"To reinforce the impact unethical behavior has on the customer
and the company, a stand-down will take place on July 30 for all
78,000 employees in our Integrated Defense Systems business unit.
These employees will be briefed on today's action taken by our Air
Force customer and the events that caused it, and participate in
specialized interactive ethics and procurement integrity
"As I've said before, I am proud of the 160,000 men and women of
The Boeing Company. The unethical conduct that led to this action
does not reflect the high standards that we exhibit day-in and
day-out to our customers, suppliers and communities. We want to
ensure that Boeing will never again have to face such