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US: Probe of Boeing, Documents Expanded

by Renae MerleWashington Post
April 28th, 2004

A criminal investigation into whether Boeing Co. used stolen Lockheed Martin Corp. documents to win an Air Force contract has grown to include an examination of NASA contract competitions, sources close to the inquiry said yesterday.

Matthew L. Jew, a former Boeing employee who quit in April, has told investigators under a grant of immunity that Lockheed data were used in several Air Force and NASA competitions, according to a government source who declined to be named because of the sensitive nature of the investigation. Also, Boeing contends that it fired one of Jew's co-workers, Richard Hora, because he possessed proprietary Lockheed documents.

The investigation by the U.S. attorney in Los Angeles began last year after Boeing said several employees had thousands of pages of Lockheed documents related to a rocket launch competition. Two former Boeing employees have been indicted in that case, and the Air Force penalized the company $1 billion.

The widening investigation was reported by the Wall Street Journal on Tuesday.

The news comes as Chicago-based Boeing struggles to regain the Pentagon's confidence. Boeing's space business is suspended from competing for new contracts as a result of the rocket-launch case, and last week, in an unrelated case, a former senior executive pleaded guilty to conspiracy for accepting a job with the company while still working for the Air Force and negotiating a major contract with Boeing. The ethical breaches helped prompt the resignation of Boeing chief executive Philip M. Condit.

The new revelations could also boost a Lockheed lawsuit against Boeing related to the original Air Force rocket-launch competition.

An Air Force spokeswoman, Angela Billings, declined to comment on the investigation but said a suspension of Boeing's space business would remain until the "the Air Force is confident Boeing is performing responsibly, and procedures have been put in place to ensure they continue to do so in the future." Spokesmen for NASA and Lockheed Martin declined to comment.

"We're working with our customers to try to restore their faith and confidence in the integrity of this company," said Daniel Beck, a Boeing spokesman. There is no evidence Boeing won contested contracts by using proprietary Lockheed documents, he said.

Hora, a former Lockheed employee, was hired by Boeing in July 2001 to generate "competitive assessments" for the company's space business. In September 2001, Hora suggested changes to a cost estimate Jew had generated for a proposed Lockheed rocket, according to a Boeing letter obtained by The Washington Post. Jew adopted some of the suggested changes and revised the cost analysis, the letter said.

In February 2002, Hora distributed a cost analysis to several Boeing employees, saying, "I have a unique insight into" the rocket's costs, according to an e-mail attached to the letter. Hora said he had spent several years working on the Lockheed rocket program, the e-mail said.

Hora also possessed Lockheed proprietary documents from January 2002, even though he began working at Boeing in 2001, according to a Boeing document.

A Boeing ethics officer was alerted to Hora's cost analysis, which seemed to include nonpublic Lockheed information, and began an investigation, Beck said. Hora was fired in December 2003. It is unclear how much Lockheed data Hora had in his possession, but Boeing documents say they were kept at his office and home.

Messages left for Jew and Hora were not returned. Hora has filed a wrongful termination suit against Boeing.

The issue came to the forefront in April when Jew quit at Boeing and was granted immunity by the U.S. attorney's office. It is unclear whether Jew named Hora as the source of the Lockheed data.

During Boeing's internal investigation of the original Air Force allegation, Jew had said he was unaware of any nonpublic Lockheed information, Beck said. "He signed a statement saying that he was being truthful and did not talk about being in possession of any of this [nonpublic] information," Beck said.

Boeing identified three competitions that may have been affected by Hora's work: the Mars Reconnaissance Orbiter; Pluto Kuiper, a planetary exploration mission; and a bundle of 19 rocket launches. Lockheed won the Mars Reconnaissance Orbiter and Pluto Kuiper competitions, and Boeing was awarded the $1.2 billion rocket launch contract without a competition, the document said.

But Lockheed has questioned whether future rocket launch competitions can be done fairly and if other programs have been affected.

Staff researcher Richard Drezen contributed to this report.





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