Boeing official predicts tanker deal to be completed in 2004

The president and CEO of the Boeing Co. defense and space unit said Tuesday that audits and investigations into the proposed lease of its airborne tankers will not keep the deal from moving forward.

"I think the tanker deal will get done this year," Boeing's Jim Albaugh said during a breakfast roundtable. Despite allegations of impropriety surrounding the $23.5 billion program, "supporting the warfighter will come ahead of any other issue that might be out there," Albaugh said.

He added that he has not seen the recent audit by the Pentagon inspector general, which was presented to the Senate Armed Services Committee last week. The report found no compelling reason to kill the deal, but cited numerous concerns with the contract and recommended that it be renegotiated.

The program has been delayed while the Pentagon wraps up three additional studies of the deal -- reviews by the Defense Science Board, the National Defense University and the Pentagon general counsel.

Albaugh noted that in competing for the tanker contract, Boeing's KC-767 met all 26 of the Air Force's requirements, while Boeing rival Airbus, which offered its A330, reportedly met 20 of the requirements.

"We also were told by the customer that our financial package was the best one that they saw," he said, adding that Boeing can still meet all 26 requirements, although some have been modified to drive down the cost of the program.

Albaugh dismissed the impact of a grand jury investigation of Darleen Druyun, a former Pentagon official who went to work for Boeing. Albaugh said the investigation does not "have anything to do with the tanker deal other than to address the question of whether or not the Boeing Co. received proprietary information from Miss Druyun," he said. "Our view, is we did not."

Druyun, a former Air Force acquisition official who was instrumental in negotiating the tanker contract, was accused of sharing information with Boeing personnel before her employment there. Boeing later fired Druyun, along with Michael Sears, a former Boeing executive who recruited her, after an internal review found improprieties in her hiring. Albaugh said the company is working to restore confidence by delivering on promises to its government customers and by remaining open as other issues arise.

"I think our customer understands all the actions that we have taken in order to take what I think was a good ethics program and become an even better program irrelevant to the tanker deal," he said.

Albaugh also rebutted claims that the KC-767 is incapable of refueling Navy and Marine Corps aircraft, noting that the Air Force requires refueling for aircraft belonging to all three services. Albaugh said there has been talk that in the second round of KC-767 tankers, following the Air Force's lease of 20 and purchase of 80 aircraft, the planes would be capable of refueling more than one aircraft simultaneously.

"We could do it in the first spiral, if that's what they required, but they have not asked for that," he said.