Pentagon delays Boeing contract

? The Pentagon will delay plans to acquire 100 air refueling tankers from Boeing in light of a scandal at the aerospace giant that has led to the dismissal of two executives and the resignation of Chairman and CEO Phil Condit.

Deputy Defense Secretary Paul Wolfowitz said the Pentagon’s internal auditor would examine whether the conduct of the two executives had any negative impact on the contract to lease 20 tankers and buy 80 more.

The Air Force initially proposed leasing all 100 tankers in an attempt to quickly update its aging fleet. Sen. John McCain, R-Ariz., and other lawmakers had criticized the proposal as wasteful and lawmakers worked out the compromise to lease only 20 planes and buy the rest. The change was expected to save billions from the original plan, estimated around $21 billion.

In a letter Monday to leaders of the House and Senate Armed Services committees, Wolfowitz described the delay as “a pause.” He said the Pentagon “remains committed to the recapitalization of our aerial tanker fleet and is appreciative of the compromise that will allow this arrangement to move forward.”

“Nonetheless, I believe that it is prudent to reassess this matter before proceeding,” he said.

Senate Armed Services Chairman John Warner responded to Wolfowitz in a letter Tuesday, calling the pause “a prudent management step.”

He said the Pentagon should do nothing about the planes until the findings of the Pentagon inspector general had been made available for review by Congress. Warner said the inspector general should examine the actions of all Pentagon and Air Force personnel involved in negotiating the lease contract.

Wichita in holding pattern

Work on development of the tanker modifications already is under way at Boeing’s Wichita, Kan., facility. Boeing-Wichita spokesman Dick Ziegler said he would not characterize the Pentagon’s actions as a disappointment but called it “merely a pause” as Wolfowitz described in his letter.

“We have been given no change in direction. We are merely waiting until the actions can be completed,” Ziegler said. “We are ready, willing and quite able to begin work.”

Boeing is the largest private employer in the state of Kansas.

The delay further threatens Boeing’s ailing 767 jet production line in Everett, Wash. Production of some parts for the tankers was to have begun there in January.

The backlog of commercial orders to be built has shrunk to 26 jets, as of October, according to Boeing. Orders have dried up since the Sept. 11 terrorist attacks, as commercial airlines have struggled to stay in business and regain profitability. The rate on the line already has slowed to one jet every 1 1/2 months, workers have said.

The fear is that like production of the 757 passenger jet, which will shut down next year, Boeing soon will have to decide the feasibility of keeping the 767 line going — and for how long. Boeing has already laid off almost 40,000 people in two years.

The Pentagon has not said how long the inspector general’s examination would last. The Air Force said that after the review was completed, “should there be no reason for further delay, the Air Force intends to work expeditiously” to lease and buy the tankers.