Boeing Watchdog to Monitor Ethics Rules

Reportedly under pressure from the Air Force, Boeing Co. said Tuesday that it had hired an outside watchdog who would independently monitor the aerospace giant’s ethics policies and procedures as it tries to restore its battered reputation.

The unnamed “special compliance officer,” whose salary will be paid by Boeing but report directly to the Air Force, was hired as part of a settlement that the company is negotiating to restore its ability to bid for future military rocket contracts.

“This is going to be somebody who is very focused on the area of ethics and how we are processing and dealing with ethics violations,” said Boeing spokesman Dan Beck. “This can only be a good thing for Boeing and the Air Force.” The hiring was first reported Tuesday by the Wall Street Journal.

The Air Force last summer took away about $1 billion in rocket contracts from Boeing and suspended it from bidding for more military rocket contracts after two former employees were charged with stealing proprietary documents from rival Lockheed Martin Corp.

In addition, a $23-billion Air Force contract to lease and buy 100 refueling air tankers is on hold because of congressional scrutiny. The risk of the deal collapsing increased last month when a former Pentagon acquisition chief pleaded guilty to a conspiracy charge for talking about a Boeing job -- which she eventually got -- while she was overseeing the tanker contract talks.

A defense consultant familiar with the tanker discussions said Tuesday that the deal appears to be in serious jeopardy. Pentagon officials are considering implementing a formal “analysis of alternatives” that would review the need for new tankers, a process that could take up to a year and potentially derail the deal, the source said.

Part of the proposed rocket agreement, which is still under review by the Air Force, includes Boeing hiring a compliance officer who will monitor how Boeing is implementing its revamped ethics program and handling any ethics violations. Boeing is expected to hire four employees to assist the lead watchdog, who also will file regular progress reports to the Pentagon.

A Boeing spokesman declined to identify the individual, but said the company hired the officer two weeks ago and would reveal the name once it reached an agreement with the Air Force to lift the rocket suspension.

Boeing officials confirmed the hiring of a watchdog as it stepped up public efforts to defend the aerial tanker contract.

In full-page ads published Tuesday in major newspapers, including the Los Angeles Times and Washington Post, Boeing Chairman Harry Stonecipher said “recent news reports -- based on draft reports, out-of-context e-mails and misleading allegations -- have misrepresented important issues and merit our factual response.”

In “The Boeing 767 Tanker: Let’s Get the Facts Straight,” Stonecipher said that the tanker requirements were developed by the Air Force, not Boeing as some critics have alleged; that the tanker can refuel aircraft from all the services, not just the Air Force; and that Congress directed the Air Force to negotiate a commercial lease.

“We stand prepared to reopen discussions with the Air Force as soon as the Department of Defense is ready,” Stonecipher said in the ad.