More Than "A Few Individuals"

A recently-revealed USAF memo accuses Boeing of using a competitor's proprietary information not once -- but twice -- in hopes of winning a contract from the Pentagon. In one case, the aerospace giant succeeded for a short time. In the other, Boeing withdrew from the bidding after the anomaly came to light.

In one case, Boeing won a launch contract with the Air Force. Only later did it emerge that Boeing had thousands of Lockheed-Martin documents as ammunition in formulating the winning bid.

The memo also shows the Air Force considered suspending Boeing back in 1999, in the midst of a missile defense contract in which the company was bidding against Raytheon. In that case, Boeing withdrew from the competition before a bid was awarded, leaving Raytheon to win it by default.

"Boeing's misuse of a competitor's proprietary documents by a Boeing 'capture team' is not unique to the (rocket launch) program," wrote the memo's author, USAF Deputy Consul General Stephen A. Shaw. The USAF memo was dated July 24, 2003.

Lockheed-Martin is now suing Boeing in Orlando (FL) federal court, accusing the Chicago-based aerospace company of using the stolen documents to win the 1998 EELV contract from the Air Force. The contract was worth $1.88 billion, according to court documents.

At the time of the Lockheed documents scandal, Boeing's then-CEO Phil Condit said the entire company had been tarnished by "a few individuals." Two Boeing managers were slapped with criminal charges in the wake of the stolen document affair and Condit himself later resigned. 

"The ethics at Boeing have been reviewed and Boeing has enhanced its ethics policies," said Boeing spokesman Dan Beck, who hadn't yet seen the memo. "We have implemented reforms and (are) taking to heart independent reviews of Boeing ethics. We are looking to restore confidence."

But more on that may soon unfold. The Air Force memo says, when Kenneth Branch left Lockheed for Boeing in 1997, he carted off thousands of Lockheed documents along with his picture of Mom and his other office belongings. The memo says he then gave them to William Erskine, Larry Satchell and another, unnamed Boeing manager. The Air Force alleges Erskine had been told to win the contract in question -- the Evolved Expendable Launch Vehicle contract -- "at all costs."

So Satchell went to work, according to the memo, leading Boeing's "capture team." He and his employees were on the lookout for former Lockheed personnel, looking for information about Lockheed's bid.

The memo specifically accuses Erskine, who himself faces federal criminal charges, of hiring Branch on the condition that he turn over the Lockheed documents. "Boeing's ability to bid prices for the launch services that were lower than the prices proposed by (Lockheed Martin) may have been influenced by Boeing's use of the ... documents and information improperly provided to Boeing by Branch," according to the memo.

The conspiracy appears to have spread when Boeing lawyer Mark Rabe was told of the stolen documents by another employee. In June, 1999, Rabe told the Air Force and Lockheed that two Lockheed documents had been found at Boeing -- even though the USAF now says he knew there were more. Lots more.

"The information that Boeing provided to (Lockheed) was false and misleading," said Shaw's memo.

Rabe reportedly discovered six more boxes of documents in Branch's office. He found two more in the company's library. Yet, Rabe didn't disclose the discovery to the Air Force or Lockheed until April of last year.

"At the time of this representation, Boeing knew that it possessed eight additional boxes," Shaw wrote.

FMI: www.af.mil, www.boeing.com