Air Force Buyer Turns Page On Tanker Scandal

Team Infidel

Forum Spin Doctor
Seattle Post-Intelligencer
December 1, 2007 Sue Payton weighs Boeing, EADS bids
By Eric Rosenberg, Hearst Newspapers
WASHINGTON -- When Air Force Secretary Michael Wynne swore in Sue Payton 16 months ago as the service's top weapons buyer, he asked her to infuse "integrity and transparency" into the acquisition process after a tawdry procurement scandal had tarnished the Air Force.
That episode -- based on the Air Force's drive to update its aging fleet of aerial tankers -- resulted in prison terms for a senior Air Force official and an executive with The Boeing Co., and the resignation of the Boeing CEO. Boeing also had to pay a record $615 million fine for that and other infractions.
Three years later, tankers are again at the top of the Air Force's acquisition wish list.
Payton, 57, says she is following the transparency mandate as she weighs competing bids from Boeing and a team of Airbus parent European Aeronautic Defense and Space Co. and Northrop Grumman Corp., both seeking the contract to build the new KC-X tanker, a project valued upwards of $100 billion. The jets would be used to refuel other aircraft in flight as well as for hauling cargo and personnel when not used for refueling.
Payton -- whose husband, Gary, was an Air Force pilot for 23 years, a space shuttle astronaut and currently is a senior Air Force civilian official -- has a big portfolio: She directs an annual budget of $30 billion, runs a weapons-acquisition work force of 24,183 people and manages 127 ongoing major weapons procurements, including the F-22 and F-35 fighter jets and the C-17 transport plane.
But the new tanker contract is emerging as the showcase test for Payton's efforts to turn the page on the Air Force tanker scandal.
The center of that scandal, Darleen Druyun, was the second-highest acquisition executive in the Air Force. She admitted steering huge, multibillion-dollar contracts to Boeing in return for employment for herself, her daughter and a son-in-law. One of those contracts was a $20 billion program to lease 100 tanker jets from Chicago-based Boeing. She served nine months in prison.
Sen. John McCain, R-Ariz., called it "the worst, sleaziest rip-off of the taxpayers that I have ever seen in my 21 years" in Congress.
A key criticism of the previous tanker competition was that Druyun functioned in a bureaucratic vacuum. Then-Defense Secretary Donald Rumsfeld complained that she had "little adult supervision above, below or on the side."
In the run-up to the KC-X contract award, which Payton expects to make in late February, Payton says that transparency is a main theme.
As an example, she points to regular contacts that the Air Force has had with the Boeing and EADS/Northrop Grumman teams to go over the details of their competing bids.
She has assigned 150 people from her staff, working in eight to nine separate groups, to scour the bids and give feedback to the contractors about shortcomings in their bids -- and then giving them time to fix the flaws.
The message that Payton is imparting to the two competitors is that the Air Force is being as open as possible and that there is no favoritism. The idea is that the more open the Air Force is with the competitors up front, the less likely it is that the loser will lodge a formal protest afterwards, thereby delaying the project.
"We are giving (Boeing and EADS/Northrop Grumman) every opportunity to substantiate how they are going to improve their weaknesses and mitigate risk," Payton recently told reporters.
The companies "will know exactly where they stand relative to their capabilities and their cost," Payton said, indicating by her comments that she was well versed in Air Force acquisition issues, both large and small. "We are putting in many more continuous dialog opportunities."
She summed up her approach for the tanker competition: "Communicate, communicate, communicate."
Air Force regulations require a service advisory panel to make a recommendation to Payton. But ultimately, the decision about which tanker to choose will rest with Payton.
She says that the selection will come down to which tanker proposal best meets five broad criteria: mission capability, proposal risk, cost and price, past performance and aircraft design characteristics such as tanker fuel capacity, takeoff performance and fuel consumption.
The lowest cost bid won't necessarily win the contract, she said. That's because the history of military procurements is littered with companies that offer a low price up front only to sock the government later with huge overruns.