Morning Report 6/7/05
High-Priced Launch at the Pentagon's Racket Club

Service is great, say defense execs. Especially the Air Force.

White House

Reason to swear: Back in July 2001, ex-Northrop Grumman exec James Roche (center), ex-General Dynamics exec Gordon England (to his left), and ex-Enron exec Thomas White (far right) are sworn into office as secretaries of the Air Force, Navy, and Army, respectively. Administering the oaths is Alberto Gonzales, while Don Rumsfeld and George W. Bush look on.

Take the scandalous Iraq war out of the Bush regime, and you'd still have to send the racket squad over to the White House and Pentagon.

New documents revealed by the Washington Post this morning about Boeing indicates that bailing out defense contractors is more than just part of doing bidness. The documents show that an already monumental defense scandal may be even more gargantuan than originally thought.

Former Air Force Secretary James Roche takes yet another beating in this tale of corporate welfare—e-mails reveal him as a lackey for Boeing at the public's expense.

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The Post story, however, doesn't mention that Roche has been rewarded for his public service: On May 25, he was named to the board of directors of Orbital Sciences Corp., a rocket-building firm whose three main clients for launch are the Defense Department, NASA, and Boeing.

Orbital Sciences created a new seat on its board especially for Roche, who was finally fired by Don Rumsfeld when Roche's egregious cheerleading for fat defense contracts became too public. Roche will still be able to get through to anyone at the White House and to the Pentagon inner circle. And that's good for Orbital Sciences and the White House and the Pentagon: The company's future is closely tied to the Bush regime's touted "national missile defense" program, otherwise known as No Defense Contractor Left Behind.

The Post story also doesn't mention that on May 26, the very next day after Roche was named to Orbital Sciences' board, the company's offices and plants in suburban D.C. and suburban Phoenix were raided by the Defense Criminal Investigative Service. The whole Orbital Sciences shebang was shut down and searched by the feds while employees were shooed away from the crime scenes in Dulles, Virginia, and Chandler, Arizona. The East Valley Tribune in suburban Phoenix reported:

    Agents descended on the Chandler plant shortly after police were notified of the raid about 7 a.m., said Chandler detective Livi Kacic.

    Afterward, security guards patrolled the area, turning employees away and advising them not to speak with the media. Employees contacted by the Tribune declined to comment. Employees also were given a toll-free number to call that would inform them when they could return to work.

What exactly these feds did inside the offices and plants is not known. Was it a terrorism probe or a fraud probe? Fraud probes have focused on the cozy relationships between defense contractors and the Pentagon, so this is kinda creepy: These particular feds are a branch of the Defense Department's Inspector General service. If it's a fraud probe, this is the Pentagon investigating the Pentagon.

No offense to the feds, but will there be shreds of evidence or evidence in shreds?

Orbital Sciences' official response to the raid, via press release:

    The company said that it "is not aware that it has violated any federal contracting laws, policies or procedures, and that it "strongly supports the U.S. government's procurement integrity processes."

Not everyone is so sanguine about those who do business with Boeing. As a May 27 AP story said:

    In the Eastern District of Virginia, U.S. Attorney Paul J. McNulty has created a task force to ferret out instances of procurement fraud. McNulty's office prosecuted a former top executive for Boeing Co. for illegally negotiating a $250,000 job for an Air Force contracting officer while she held sway over a potential multibillion-dollar contract sought by Boeing.

That contracting officer be Darleen Druyun, who went to the slammer along with the top Boeing exec, Mike Sears. She has nothing to bitch about. Druyun, long an extremely powerful procurement official in the Pentagon, finally admitted that she was little more than a pimp, peddling Boeing's raggedy ass to the taxpayers to the exclusion of other whorish companies. Renae Merle of the Washington Post profiled Druyun's fall in a story last year posted by CorpWatch's excellent War Profiteers site.

All this background noise is not to say that this morning's Post story isn't a blockbuster. R. Jeffrey Smith's story starts this way:

    For the past three years, the Air Force has described its $30 billion proposal to convert passenger planes into military refueling tankers and lease them from Boeing Co. as an efficient way to obtain aircraft the military urgently needs.

    But a very different account of the deal is shown in an August 2002 internal e-mail exchange among four senior Pentagon officials.

    "We all know that this is a bailout for Boeing," Ronald G. Garant, an official of the Pentagon comptroller's office, said in a message to two others in his office and then-Deputy Undersecretary of Defense Wayne A. Schroeder. "Why don't we just bite the bullet," he asked, and handle the acquisition like the procurement of a 1970s-era aircraft—by squeezing the manufacturer to provide a better tanker at a decent cost?

    "We didn't need those aircraft either, but we didn't screw the taxpayer in the process," Garant added, referring to widespread sentiment at the Pentagon that the proposed lease of Boeing 767s would cost too much for a plane with serious shortcomings.

    Garant's candid advice, which top Air Force officials did not follow, is disclosed for the first time in a new 256-page report by the Pentagon's inspector general. It provides an extraordinary glimpse of how the Air Force worked hand-in-glove with one of its chief contractors—the financially ailing Boeing—to help it try to obtain the most costly government lease ever.

The watchdog Project on Government Oversight (POGO) has been boing-boinging Boeing about this for quite a long time, and so has John McCain. The Arizona senator may have a hard time releasing info on Vietnam P.O.W.'s and M.I.A.'s, as my colleague Syd Schanberg says in a fresh piece, but McCain has no problem outing Boeing and its sleazy Pentagon pals. POGO reported last January:

    A new letter from Senator John McCain takes Secretary of Defense Donald Rumsfeld to task for the Pentagon's refusal to turn over documents he has requested regarding the Boeing tanker leasing deal scandal.

    The stonewalling "may amount to an obstruction of the congressional investigation," and continues "to call into question whether the DoD is proceeding in good faith," according to Senator McCain.

McCain's constantly nipping at Jim Roche's heels:

    According to the letter, "partial production on only about 7 out of 36 request categories have been produced." Senator McCain demands to know who has made the decisions to withhold the documents. In particular, he wants to know who "countermanded the Deputy Secretary's instructions" to produce the documents. He also wants the identity of the person who withheld emails between former Air Force Secretary James Roche and White House official Robin Cleveland among other documents. The letter is copied to the U.S. Attorney who is handling the criminal investigation in the scandal and others.

POGO gave a pretty good rundown at the time:

    The list of casualties from the tanker scandal keeps growing. In November [2004], Air Force Secretary James Roche and Air Force acquisitions chief Marvin Sambur resigned only a few days before Senator John McCain made public a series of Air Force internal e-mails that offered a disturbing glimpse into the mechanics of the tanker deal. Former Boeing CFO Michael Sears will be sentenced February 18, 2005, after pleading guilty. Acting Undersecretary of Defense Michael W. Wynne has been unable to win confirmation because of a "hold" placed on his nomination by Senator John McCain.

Sears wound up in the slammer, and Wynne has been placed on permanent hold. On May 25, the Senate Armed Services Committee finally approved the nomination of someone else for that job of Pentagon procurement chief.

Meanwhile, Jim Roche appeared to have landed on his feet, courtesy of the new seat on Orbital Sciences' board of directors. But was the federal raid on that company related to Roche's new presence there?

Finally, we have to admit that Americans need protection. But a flock of high-priced missiles and rockets won't help, because the real threats waddle into D.C. under the radar and launch lunches with their Pentagon pals.

While the Bush regime continues to show little regard for public welfare—the tax cuts, the war on Social Security—corporations and their lackeys are putting on the feedbags.

Instead of national missile defense, I'd settle for some barbed wire around the public trough to keep the pigs like Roche from snuffling their snouts around in it.


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