NATION As punishment, Air Force strips rocket contracts from Boeing Co.

Boeing was found with thousands of pages of a competitor's trade secrets.
LOS ANGELES TIMES
The U.S. Air Force slammed Boeing Co. with one of the harshest punishments ever imposed on a defense contractor, taking away at least $1 billion worth of rocket contracts and suspending the aerospace giant from rocket work.
The Air Force said Thursday it was punishing Boeing for what it called "serious violations of federal law" by illicitly obtaining thousands of pages of trade secrets from rival Lockheed Martin Corp.
Air Force Undersecretary Peter B. Teets said the amount of Lockheed Martin documents in Boeing's possession -- more than 25,000 pages -- was "extraordinary."
Teets stopped short of saying whether Boeing had used the documents to beat out Lockheed for the lion's share of rocket contracts in a 1998 competition. But he said that the "quality of information was sufficient to provide great insight into Lockheed Martin's proprietary cost and pricing."
"Boeing is responsible and must be held accountable for the actions of its employees," Teets said at a Pentagon news conference. "We cannot tolerate anything less than complete honesty in our procurement process, and we believe this suspension and launch reallocation is necessary."
Harshest sanctions
Defense analysts and lawyers said the sanctions were the harshest ever to be levied against a major defense contractor, and Teets himself said he could not recall any company receiving such a stiff punishment.
"This remedy basically denies Boeing the ability to become the industry leader in the launch business for the foreseeable future," said Loren Thompson, a longtime defense analyst and professor at Georgetown University. "It's quite a blow."
The Air Force said it would take away seven rocket contracts, worth about $1 billion, from Boeing and give them to Lockheed, leaving Boeing with 12 contracts and giving Lockheed 14. In the initial competition, Lockheed had only seven contracts.
In addition, the Air Force said it would suspend the three Boeing units, responsible for developing, building and servicing the Delta IV rockets from seeking contracts. Teets told reporters the suspension could be lifted in as little as 60 to 90 days if the Air Force "determines that corrective actions are in place."
Helping with facility
The Air Force said it also will help Lockheed Martin build a West Coast launch facility for its Atlas V rocket at Vandenburg Air Force Base near Lompoc, Calif., at an estimated cost of $200 million. Most of the rockets, which are used to boost military satellites into space, are launched from Cape Canaveral, Fla.
Boeing has insisted that the Lockheed documents did not give it an edge in winning contracts.
The Air Force investigation found that the Lockheed documents had been brought to Boeing by Kenneth Branch, a former Lockheed engineer who worked on that company's rocket proposal. Branch was hired in 1997 by McDonnell Douglas Corp., which was later acquired by Boeing.