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Washington, D.C. - Rep. Howard L. Berman today released a report prepared at his request by the non-partisan U.S. General Accounting Office (GAO) that reveals serious irregularities in the awarding of the contract to develop the “exoatmospheric kill vehicle” or EKV – a critical component of the National Missile Defense (MND) program. The study dramatically describes how a Boeing Company team inappropriately used internal Raytheon documents in an attempt to gain advantage and how this wrongdoing ultimately resulted in the abandonment of a competition that had already cost the taxpayers $800 million. The report proves that such a critical mission decision was not made on technical or merit-based grounds, but by default.
The report also highlights the inherent conflict of interest that occurs when a contractor, in this case Boeing, is allowed to both compete for, and simultaneously judge a competition for a subcontract -- a practice that Congressman Berman noted is “disturbingly more and more common.”
“This study revealed a horribly flawed process and some inexplicable conduct by missile defense officials and contractors, both in pursuing the most effective system and in protecting U.S. taxpayers,” said Berman about the report’s findings.
“If Boeing had not been both the Lead System Integrator and one of the subcontractors would this type of incident would have resulted in the abandonment of the EKV competition and the forsaking of a technology developed with $400 million in public funds?” asked Berman.
Berman continued, “Although some conflicts of interest are inevitable in today’s rapidly consolidating defense industry, there is no doubt that additional rules or regulations are needed to create firewalls to help prevent corporate conflicts of interest from driving decisions involving public money.”
The report also revealed that the GAO was unable to locate any documentation memorializing the selection of Raytheon for the EKV contract and that Boeing admitted that no such documentation exists. Berman exclaimed, “The lack of documentation surrounding such an important and expensive decision is astonishing.”
The termination and reprimand of several of the employees involved in the incident is documented by the report as is the lack of sanctions placed against the Boeing Company or any division of that company. In addition, the report brings to light some of the early recommendations by the Army to pursue debarment of a component of Boeing, or alternatively, a financial settlement. It also reveals that these efforts were dropped because of the apparent risks and costs of litigation and the belief that litigation was “inconsistent with its partnership with Boeing as the Lead Systems Integrator contractor.”
Berman stated, “while I am not conceptually opposed to efforts to develop a rational national missile defense system, I am very disturbed by the lack of sound procurement policies in the program and am very concerned because the Bush Administration continues to make the program less subject to oversight. This report demonstrates the real dangers associated with such a trend.”
Congressman Berman learned of the real reasons for the kill vehicle “downselect decision” while working with the GAO on a previous study about allegations of fraud in the EKV flight test (Press Release). He then commissioned GAO to investigate and verify the information. The actual GAO report can be viewed on the GAO’s website ( www.gao.gov/new.items/d03324r.pdf).
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