Pentagon reportedly probing C-17 program

The Pentagon’s internal watchdog is examining whether the Air Force and Boeing Co. had inappropriate contacts about a multibillion-dollar push to buy more C-17 transport planes, a source familiar with the matter said Thursday.

The review follows a request by Arizona Sen. John McCain, Republican presidential contender and the man whose dogged investigation helped kill in 2004 a $23.5-billion deal for 100 Boeing 767 aerial refueling tankers for the Air Force.

That tanker investigation revealed unusually close ties between the Air Force and Boeing and ultimately led to prison terms for a former top Air Force weapons buyer and a high-level Boeing executive for conflict-of-interest violations.

The Department of Defense inspector general’s office decided to examine the C-17 issue after an initial probe, said the source, who asked not to be identified.

The inspector general’s review comes after the Government Accountability Office twice this year upheld protests about a $15-billion deal with Boeing for combat search and rescue helicopters, compelling the Air Force to reopen that competition. The contract award is expected in the spring.

The Air Force launched a new tanker competition after the procurement scandal and expects to award a contract to Boeing or its rival Northrop Grumman Corp. in the first quarter of 2008.

At issue in the case of the C-17, which is made in Long Beach, is whether the Air Force wrongfully induced or encouraged Boeing to spend its own money to maintain suppliers for C-17 production.

In fact, the military has already set aside $500 million for the closing of the C-17 production line, now scheduled for 2009.