Air Force Reopens Bidding

Boeing Co. must compete again for an Air Force contract worth more than $3 billion to upgrade avionics on C-130 Hercules cargo planes because of a conflict of interest involving the original awarding of the contract.

Michael Dominguez, acting secretary of the Air Force, announced his decision in a letter Tuesday to U.S. Comptroller Gen. David Walker. The decision came two months after a government agency concluded that the awarding of the contract in 2001 had been tainted by Darleen Druyun, then-acquisitions chief for the Department of the Air Force.

The original award was worth $4.1 billion and Boeing will keep the continuing development portion worth about $1 billion. The production phase -- producing and installing the electronics upgrade kits -- will be rebid sometime in 2009 or 2010, the Air Force said.

Lockheed Martin Corp., L-3 Communications Holdings, Inc. and BAE Systems protested the award in October after Druyun told federal prosecutors that she improperly influenced Boeing contracts.

The Government Accountability Office upheld the protest in a report issued Feb. 24.

Dominguez said the Air Force would reimburse the protesting companies for the cost of filing their complaints to GAO, “including reasonable attorneys fees.”

The C-130 is one of the world’s most widely used aircraft, with about 1,400 in service, including 490 with the Air Force.

Druyun, 56, was sentenced to nine months in prison Oct. 1 for discussing a job with Chicago-based Boeing while negotiating an Air Force contract for aerial refueling tankers, a conflict-of-interest violation. She also admitted to awarding the C-130 upgrade contract to Boeing out of gratitude for employing her daughter and future son-in-law.

Pentagon officials said Feb. 14 that Druyun, who went to work for Boeing in January 2003, may have improperly influenced eight contracts.

“We continue to focus on the successful execution of this important program, building on the extensive development work we have completed to date and the strong performance ratings we have received from the Air Force,” Boeing spokesman Doug Kennett said. “The system will enter flight test early next year, on schedule.”