http://www.nytimes.com/2004/10/02/business/02boeing.html

October 2, 2004

Ex-Pentagon Official Gets 9 Months for Conspiring to Favor Boeing

By LESLIE WAYNE

ALEXANDRIA, Va., Oct. 1. - A former top Air Force official was sentenced to nine months in prison on Friday after acknowledging that she had favored the Boeing Company in multibillion-dollar Pentagon contracts while seeking jobs at the company for herself and family.

The official, Darleen A. Druyun, pleaded guilty in April to one count of conspiracy for negotiating a job with Boeing overseeing its business with the Pentagon. On Friday, at a sentencing hearing in Federal District Court here, details emerged on the extent of her favoritism toward Boeing as well as the difficult negotiations during which she admitted to misleading government investigators.

Ms. Druyun said that Boeing would not have been selected for some military projects or would have received lower payments if not for her efforts to obtain jobs for herself, her daughter and her son-in-law.

The hope of obtaining the jobs, she said, led her to favor Boeing in the selection and pricing of several major projects, including a $20 billion leasing agreement for 100 airborne tankers, a 2002 reworking of a NATO early warning system, a $4 billion upgrading of the C-130 aircraft and a $412 million payment on a C-17 contract.

The new facts, and an admission by Ms. Druyun that she had also misled investigators after pleading guilty to one count of conspiracy last April, resulted in Ms. Druyun's having her sentence increased. The information came out in an amended statement made public at the hearing and elicited gasps when read by the assistant United States attorney, Robert W. Wiechering.

"I am truly sorry for my actions," said Ms. Druyun, 56, who left her job as one of the top procurement officers at the Air Force in late 2002 after 30 years to accept a $250,000 executive position at Boeing.

In a statement accompanied by tears, she spoke of feeling "deep shame" and apologized to "my nation, my Air Force, my family and the courts for what I did."

When Ms. Druyun pleaded guilty in April, she was eligible for a prison term of up to six months under sentencing guidelines. As a result of having lied to investigators after entering her plea, the guidelines require a prison term of 10 to 16 months.

Ms. Druyun was fired from Boeing in November along with the former chief financial officer, Michael M. Sears, who negotiated Ms. Druyun's employment contract and who has agreed to plead guilty to similar charges. In addition, Boeing's former chief executive, Philip M. Condit, resigned shortly after the firings. Ms. Druyun's daughter recently resigned from Boeing, but her son-in-law still works there.

Additional investigations are also being conducted by the Department of Justice and the Pentagon.

After pleading guilty in April, Ms. Druyun told government investigators that her job discussions with Boeing had not influenced her actions at the Pentagon or harmed the government. Only after failing a lie detector test did Ms. Druyun admit that her decisions as an Air Force official were shaped by a desire to curry favor with Boeing.

Specifically, Ms. Druyun agreed to a higher price for Boeing aerial refueling tankers than she thought appropriate and gave proprietary pricing data to Boeing "as a 'parting gift to Boeing' and because of her desire to ingratiate herself with Boeing, her future employer," according to court papers signed by Ms. Druyun and the government. That deal is currently suspended.

In addition, Ms. Druyun admitted to selecting Boeing over four others for a $4 billion program to upgrade C-130 avionics out of gratitude to Boeing for having hired her daughter and son-in-law. Ms. Druyun now thinks that an objective analysis would not have given Boeing the contract, court papers said.

A $100 million payment to Boeing for a NATO early warning system was also cited in the court papers, in which Ms. Druyun admitted that she felt a lower settlement amount was more appropriate. That payment is being renegotiated by the Air Force.

At the moment, the Department of Defense Inspector General's office is investigating all deals negotiated by Ms. Druyun, once one of the highest-ranking women at the Pentagon.

"We view this as a case of an individual who engaged in personal misconduct," said Col. Dewey Ford, an Air Force spokesman. "Independent of this issue, our Air Force senior leadership has implemented changes within our acquisition community that will reduce the likelihood that this will ever happen again."

Harry C. Stonecipher, Boeing's president and chief executive, said: "I have the highest confidence in the integrity and systems of the Boeing Company, and we will exert all energy to address any inadequacies that need to be corrected. Whatever we find, we have the will and a process to deal with it."

In handing down the sentence, Judge T. S. Ellis III said that "you stand convicted of a very serious crime" and added that "we are at war and your position was all the more important."

Ms. Druyun will serve nine months in prison, followed by seven months of community confinement in South Carolina. She also must pay a $5,000 fine and is required to speak to high school and college students on ethical issues as part of a required 150 hours of community service.

The United States attorney, Paul McNulty, called the sentence "fair" and said that "Darleen Druyun owed her primary allegiance to the American taxpayer.''

"Instead she put her own personal interests ahead of the United States Air Force."