Talking tankers: Senate holds hearing over data release

The U.S. Senate Armed Services Committee (SASC) today held a hearing to discuss the $35 billion KC-X tanker competition. The hearing, requested by Sen. Maria Cantwell in December 2010, sought to determine whether inappropriate and unauthorized proprietary data gave Airbus an unfair advantage in preparing its bid for the tanker contract.

In his opening statement, SASC Chairman Sen. Carl Levin, said the hearing will focus on “the nature of the information released by the Air Force; the steps that the Air Force took to determine what happened and to determine if there was any damage to the fairness and integrity of the source selection process; and any remedial actions taken by the Air Force.”

Sen. Cantwell issued a statement immediately following the hearing, calling for a Department of Defense Inspector General report to further investigate the data release. “Today’s hearing did not get at the core of the problem,” said Cantwell. “The tanker competition is a price competition, and EADS saw Boeing’s proprietary data. EADS now has an unfair competitive advantage to adjust its bid to undercut Boeing.”

Boeing submitted the following statement by Boeing Defense, Space & Security President and CEO Dennis Muilenburg to the SASC:

“Mr. Chairman, thank you for this opportunity to provide a statement to the Senate Armed Services Committee regarding the release of contractor proprietary data in the KC-X competition. I am not in a position to comment on specific actions taken by another company. I can, however, provide the facts regarding how Boeing handled the data it received. In all respects, Boeing's conduct was consistent with the highest standards of ethically responsible behavior.

• On November 1st of last year, Boeing was notified by the Air Force that a classified IFARA package was available for Boeing to receive from Wright Patterson Air Force Base (WPAFB). Boeing understood the package contained Boeing’s interim IFARA evaluation data and score. Boeing retrieved the package and brought it to St. Louis for review and analysis, following strict protocol for the transport and handling of classified data.

• An analyst on the Boeing tanker program received the IFARA data package from Boeing Security in St. Louis that evening, and noted there were two disks and a cover letter. The analyst took the materials to a classified lab for review with another Boeing analyst. One of the analysts inserted the first disk into a Boeing classified laptop. The analyst reviewed the file structure and located the Excel file they believed would contain the Air Force Fleet Effectiveness Value (“FEV”) for Boeing. The analysts opened this file, confirmed it contained the Boeing KC767 FEV score, and printed this classified table. An analyst then copied the contents of this first disk to the classified laptop hard drive, and removed the first disk from the computer.

• The analyst then inserted the second disk into the laptop, and reviewed the file structure of that disk more closely in an attempt to discern what the difference was between the first and second disks. The analyst then noticed that the parent folder name of the second started with the prefix “K30B.” At that point, the Boeing analysts became concerned that the second disk could potentially contain competitor data. The analysts immediately removed the second disk from the laptop drive, and confirmed that the titles on the first disk did indeed contain references to “K67B” and the titles on the second disk contained references to “K30B.” At no point did the Boeing analysts open any files on the second (“K30B”) disk, nor did they make any copies or print outs of the second disk data. Our analysts did not forward the files or in any other way provide further access to the data to any other person.

• The cover letter, both disks, as well as the classified laptop used to open them, were all immediately sealed by security and locked in classified safes, and the analysts contacted the appropriate Boeing personnel to report the incident. Boeing notified the Air Force by phone and email that night, and received instructions the next day to repackage the materials and return them to WPAFB in Dayton. Boeing followed this direction, and couriered the materials back to Dayton that same day (November 2nd).

• On November 8th, the Air Force requested that Boeing also deliver its classified laptop computer to the Defense Computer Forensics Laboratory in Maryland on November 10th. Boeing complied with this direction.

Boeing’s behavior in this instance is emblematic of our conduct throughout this competition. We have competed fairly and aggressively. We have not sought extensions of time, we have complied with every deadline, and we have followed the strictures and procedures established by the Air Force acquisition authority to the letter. And you can be sure that Boeing will do everything in its power to ensure the integrity of this competition because of its importance to our USAF customer and our military men and women that we are honored to serve.
Mr. Chairman, Senator McCain, and members of the Committee: American industry relies on the integrity of the Defense Department’s acquisition processes. Your review of this matter is greatly appreciated.”