Top TSA Officials in Cheating Scandal
Also Ran Private Consulting Firm!

By Annie Jacobsen

March 15, 2008

Most top-salaried government officials remain anonymous suits behind the scenes — unless they get caught in a scandal. The name Mike Restovich became public last fall when the security operations assistant administrator for the Transportation Security Administration (TSA) was caught encouraging colleagues to cheat on covert bomb detection tests being performed by the Federal Aviation Administration (FAA).

Congress ordered hearings. TSA chief Kip Hawley and Mike Restovich were both ordered to testify, but only Hawley showed up.

Restovich was removed from his position and sent overseas to work as “DHS attaché to the United Kingdom.”

“When we have TSA management tipping off airport security officials about covert testing, we have a credibility and accountability problem,” Homeland Security Committee Chairman Bennie G. Thompson told fellow members of Congress.

But that’s not all.

Pajamas Media has learned that Michael “Mike” Restovich and fellow TSA senior executive Morris “Mo” McGowan ran a private security consulting company while working as high-ranking officials with TSA. Their company, Group 2M Consulting, LLC, was filed with the office of the secretary of state of Texas on April 15, 2004, a copy of which can be downloaded here:

At the time, Mike Restovich was the Federal Security Director of Dallas Love Field Airport. Morris “Mo” McGowan was the Assistant Federal Security Director.

Both men held then, and apparently continue to hold now, top secret security clearances with the U.S. government. Consulting in the private sector simultaneously is in direct conflict with federal policy and specifically prohibited by two statutes of Department of Homeland Security employment contracts, a copy of which was obtained by Pajamas Media (available HERE, with the relevant paragraphs highlighted in yellow)
At TSA, the two men have followed similar career trajectories, first working together as officials at Dallas Love Field and later being promoted to work at TSA headquarters. Morris “Mo” McGowan took Restovich’s place as security operations chief after the cheating scandal broke.

When asked to answer questions for Congress about why he and other TSA brass were “try[ing] to ‘cheat’ its way through its mid-term exams,” Restovich did not show up and was instead dispatched overseas.
TSA would neither confirm nor deny if in his new role as DHS attaché, Mike Restovich is a government employee receiving a salary and benefits, or if he is a paid consultant.
In the online business networking group LinkedIn, Mike Restovich is listed as “DHS attaché to United Kingdom” and also as “General Partner with Group 2M (security and investigations industry).”
In his online biography, his tenure as a senior field executive with Homeland Security is listed as having ended in 2007.

In 2006, Mike Restovich was awarded the Silver Medal by DHS Secretary Chertoff, “in recognition of his integrity, patriotism, and empowered leadership.”

Pajamas Media contacted DHS to see if Secretary Chertoff was aware of Mike Restovich’s private security consulting business, Group 2M Consulting, LLC, when he awarded him the Silver Medal. DHS spokesperson Laura Keehner declined to provide any further information on the matter.

TSA deputy chief counsel Elizabeth Buchanan initially agreed to be interviewed for this report but later canceled that interview.
TSA’s Office of Public Affairs declined to provide further information on Mike Restovich, Morris “Mo” McGowen, or the security consulting company the two men formed while working as TSA officials.

In 2006, Morris “Mo” McGowan was the recipient of the TSA Leadership Award.
Annie Jacobsen writes about aviation security and homeland security for a variety of newspapers, magazines and blogs. She is the author of the book, Terror in The Skies, Why 9/11 Could Happen Again.
http://pajamasmedia.com/2008/03/top_tsa_officials_in_cheating.php#c100286

Comments
TSA Insider :
So we have sufficiently established that Mike Restovich is a cheat, but is he also a liar? Currently on the LinkedIn website, Restovich lists himself employed as the "General Partner" of Group 2M Consulting, LLC, and in such capacity, he has been contracted to be the "DHS Attache to the United Kingdom". Legitimate, right? Not hardly.
What the above article didn't mention, was that on March 10, 2006, Restovich's security consulting company was closed down by the State of Texas for failure to pay taxes. Yes, that's right, just two months before Restovich was awarded the Silver Medal by DHS Secretary Chertoff, the State of Texas was shutting down his company. Oh, and if your wondering what the Silver Medal is awarded for, let me enlighten you. Restovich was given the award for his "integrity, patriotism, and empowered leadership". I wonder if Secretary Chertoff knew at the time he was crowning a tax cheat?
Which brings us back to the question, is Mike Restovich also a liar? Well how is it possible that Restovich is advertising online that he is the "General Partner" of a company, that doesn't exist anymore? It sure looks like a liar, walks like a liar, and quacks like a liar.
So what we have here folks is a Liar and a Cheat being awarded for his "integrity, leadership, and patriotism". This seams to be the status quo in the upper echelons of the TSA. "Hey old buddy, if I give you an award, will you give me one too?"
All I know is, as a TSA employee, if I had a security consulting business on the side, I'd be investigated by the TSA Goon Squad, and probably terminated. And if I failed to pay my taxes on that business, I'd be terminated, lose my security clearance, and be banished from federal employment forever -- unless of course I was a TSA manager. Then I'd be given a prestigious award, given a highly paid consulting job representing DHS, and shipped off overseas so I wouldn't have to testify before congress about all my cheating and lying.
Oh, in case your wondering, you can see the tax cheat documents yourself here:
[www.oscwatch.org/Documents/TSA/R...]

Boeing Management Fails its Workers Yet Again

Truly sad news Friday. Even I wanted Boeing to win the KC-X competition, if controls were put in place to protect the warfighter and taxpayer from continuing Boeing management fraud.

It is rightly just, then that the stock "tanks" today, after the tanker loss, fittingly negating the value of Boeing mismanagement stock options upon whose value they commit much of the fraud I witnessed. Hopefully employees will not be affected to any extent by such a loss to the stock price. Hopefully most Boeing employees did what I did, which was to never put any 401K money in Boeing stock and always sell Sharevalue shares at the earliest opportunity. I did so because I, just as most Boeing employees should have experienced and acted accordingly, knew how really badly the company was run internally and a few of the skeletons Boeing management was hiding in the closet as far as the fraud I witnessed as I was threatened with my job if I too did not engage in it.

Regardless of what has been said of why Boeing lost, I believe strongly that what the Air Force knew independent of any external source of Boeing management's continuing "ethical" problems half a decade past the Druyun/Boeing scandal that made Boeing the most risky proposal before it.

Indeed, the workers at Boeing are blameless in this loss. Boeing management is solely responsible for this loss for many reasons. Boeing would have likely won the original tanker contract if Boeing top management had not decided to ensure it was iced by bribing the top A/F procurement official with favors for her and her family. That directly led to this "recompete" in which the political climate and Boeing management's public reputation are very different than what they were before the Druyun scandal. Boeing management mistruths (intentional or unintentional) told to the press and investor community about the state of the 787 program didn't help either.

People should realize, even though the outcome is unpalatable to any American who wants to protect American jobs and our ability to produce our own aircraft in times of war, that there was a competition held between two different contractors. Due to that very fact that a competition was held meant that Boeing could lose it, especially since the post Druyun reforms at the Air Force, which "took," as opposed to the "reforms" in Boeing management.

One thing this loss proves is clear: The majority of employees at Boeing who thought we shouldn't have to sign a yearly "Code of Conduct" because of the illegal and unethical actions of our management were right. It was simply an effort by Boeing management to spread the blame away from where it laid--at their feet. This and other meaningless actions in response to the Druyun/Boeing scandal led to the still largely unreformed corrupt management team in place at Boeing today, some of whose unethical and illegal continuing actions are detailed on my website.

It is this unreformed Boeing management team and their enablers in the Boeing Legal and Office of Internal Governance departments (that should be instead disabling such management corruption) that are to blame for the tanker loss and Boeing being seen as the highest risk company to do business with.

So, if you are a Boeing worker like I was, when you go to work on Monday you won't have far to look for who really is to blame for the loss of the tanker contract. You won't have to look across the ocean to another country. Or even out of state. You only have to look at your Boeing manager--they are the group of people that failed you--yet again--by their search of ever greater "value" to their bottom lines by any means, legally, ethically, or not. They outsourced your jobs on legacy programs and the 787 to maximize their bottom lines and take away yours. The results of their war on their own employees has backfired, as any rational management would have known. Almost every employee is counting the hours, minutes, and/or seconds to retirement, hating how they are really treated by management as a disposable and unwanted commodity, wondering if Boeing management's next attempt to maximize their bottom lines will take away their job as well.

Ironically, Boeing management was being two-faced on this contract, which didn't help its credibility with the Air Force either. Boeing did exactly what Northrop did on the 787 program--Northrop Grumman outsourced most of the work overseas--bringing in airplane sections built overseas to a Southern state whose work force is more adept at picking banjo next to river banks rather than anything remotely as complex as building airplanes--much less large and complex military airplanes, even though they will "only" be "snapping together" the airplane sections and performing testing and delivery. Perhaps this is in a way yet another rebuke, similar to the 787 delay debacles, to Boeing management by way of the Air Force for for the war Boeing has waged against its own employees. Maybe someone at the Air Force thought this was poetic justice for the noted outsourcing weakening our country much more than the Northrop Grumman outsourcing can ever do due to the many fewer planes whose work will be outsourced on the tanker program compared to the outsourcing by Boeing mismanagement on the 3500 or so projected 787s and other programs, both legacy and future, on which outsourcing will be used more and more as time goes on. Ironic, don't ya think?

How does Boeing go forward and win the next major contracts? The answer is obvious--remove the source of the risk that the Air Force found unnacceptable in the tanker competition, and the sole reason for the loss of the tanker contract--get a new management team. Not just a few new faces in Chicago like in past Boeing management produced debacles, but any manager in any way tainted by corruption must go in order for Boeing to win again. That's a hell of a lot of managers, and many first lines as well, as I can attest.

I feel just as any employee does in this devastating loss. Even I, one of Boeing's most informed whistleblowers, advocated a Boeing win on this contract, if the proper controls were put in place, which I was confident was possible. It is sad our government has changed our procurement rules to allow apparently unlimited foreign content.

Our state officials may protest in Congress, but some of them know full well just how bad Boeing management still is and how they still use any means--ethical and legal or not--to meet financial targets.

Corrupt and incompetent Boeing management has long been the nemesis of the company's reputation and of its own workers. A new management team could fix that. Perhaps this loss, if it has a silver lining, will be the catalyst that makes that happen sooner rather than later. The joy Boeing workers would have expressed hearing of a win instead of the loss of the tanker contract would be greatly exceeded by news of such a management change to a management that is not at war with its own workers and country, except when they bid on military programs.

February 14, 2008, the story broke about New York Governor, Eliot Spitzer accusing the Bush administration of preventing states from helping consumers avoid predatory lending practices. Alex Chadwick talks with Steve Tripoli about what the president could have done to stem the subprime mortgage crisis.

http://www.npr.org/templates/story/story.php?storyId=18991472

What is particularly curious about this is considering that Karl Rove was recently in the news, being accused of trying to collect dirt on another Governor in another state (see article posted last week in this blog previously-see below). One can only wonder if the outing of Spitzer’s infidelities hitting the news last week are just another example of Karl Rove’s work. Quite a contingency plan to shut up, or neutralize one’s critics.

GFS

Sorry Rove: Phone Records Uphold Simpson's Claims

Simpson Responds to RoveBy Paul Kiel - February 26, 2008, 3:07PMYesterday we brought you Karl Rove's expansive denial of Republican lawyer Dana Jill Simpson's testimony to Congress and comments to 60 Minutes. Simpson responded last night on MSNBC's Dan Abrams show: "Since Karl Rove has said that and he feels so good saying that, what I want him to do is go and swear before the United States Congress and swear what he's saying is true."Simpson also responded to accusations from the Alabama Republican Party that Simpson had never worked for the party and no one had ever heard of her. She said that phone records would show conversations with party officials in Alabama and Washington, D.C. in 2002 and 2006.During a House Judiciary Committee hearing on the Don Siegelman case in October, Rep. Artur Davis (D-AL) produced phone records showing that Simpson had spoken with William Canary, a Republican operative, on the day in 2002 that she said Canary had told her on a conference call that his wife and another U.S. attorney would "take care" of Siegelman.

Did Ex-Alabama Gov. Get a Raw Deal?

Did Ex-Alabama Governor Get a Raw Deal? CBS News Sunday 24 February 2008 60 Minutes reports on bribery conviction of Don Siegelman in a case criticized by Democrats and Republicans.New York - Is Don Siegelman in prison because he's a criminal or because he belonged to the wrong political party in Alabama? Siegelman is the former governor of Alabama, and he was the most successful Democrat in that Republican state. But while he was governor, the U.S. Justice Department launched multiple investigations that went on year after year until, finally, a jury convicted Siegelman of bribery. Now, many Democrats and Republicans have become suspicious of the Justice Department's motivations. As correspondent Scott Pelley reports, 52 former state attorneys-general have asked Congress to investigate whether the prosecution of Siegelman was pursued not because of a crime but because of politics. Ten years ago life was good for Don Siegelman. After he became governor, many believed he was headed to a career in national politics. In 1999, Siegelman's pet project was raising money to improve education, so he started a campaign to ask voters to approve a state lottery. He challenged Republicans to come up with a better idea. "You tell us how you're going to pay for college scholarships. You tell us how you're going to put state of the art computers inside every school in this state," he said. But now the applause has long faded. Today, Siegelman is at a federal prison camp in Louisiana. He's doing seven years. The main charge against him was that he took a bribe, giving a position on a state board to businessman Richard Scrushy, who had made a big donation to that lottery campaign. There was a star witness, Nick Bailey, a Siegelman aide who had a vivid story to tell. "Mr. Bailey had indicated that there had been a meeting with Governor Siegelman and Mr. Scrushy, a private meeting in the Governor's office, just the two of them," says Doug Jones, who was one of Siegelman's lawyers. "And then, as soon as Mr. Scrushy left, the governor walked out with a $250,000 check that he said Scrushy have given him for the lottery foundation." "Had the check in his hand right then and there? " Pelley asks. "Had the check in his hand right then," Jones says. "That Scrushy had just handed to him, according to Bailey's testimony?" Pelley asks. "That's right, showed it to Mr. Bailey. And Nick asked him, 'Well, what does he want for it?' And Governor Siegelman allegedly said, 'A seat on the CON Board.' Nick asked him, 'Can we do that?' And he said, 'I think so,'" Jones says. The CON board regulates hospital construction, and Scrushy ran a healthcare company. Both Siegelman and Scrushy were convicted in federal court. But, as 60 Minutes found out, the imprisonment of Don Siegelman is not nearly as simple as that. "I haven't seen a case with this many red flags on it that pointed towards a real injustice being done," says Grant Woods, the former Republican attorney general of Arizona. Woods is one of the 52 former state attorneys-general, of both parties, who've asked Congress to investigate the Siegelman case. "I personally believe that what happened here is that they targeted Don Siegelman because they could not beat him fair and square. This was a Republican state and he was the one Democrat they could never get rid of," Woods says. Now a Republican lawyer from Alabama, Jill Simpson, has come forward to claim that the Siegelman prosecution was part of a five-year secret campaign to ruin the governor. Simpson told 60 Minutes she did what's called "opposition research" for the Republican party. She says during a meeting in 2001, Karl Rove, President Bush's senior political advisor, asked her to try to catch Siegelman cheating on his wife. "Karl Rove asked you to take pictures of Siegelman?" Pelley asks. "Yes," Simpson replies. "In a compromising, sexual position with one of his aides," Pelley clarifies. "Yes, if I could," Simpson says. She says she spied on Siegelman for months but saw nothing. Even though she was working as a Republican campaign operative, Simpson says she wanted to talk to 60 Minutes because Siegelman's prison sentence bothers her conscience. Simpson says she wasn't surprised that Rove made this request. Asked why not, she tells Pelley, "I had had other requests for intelligence before." "From Karl Rove?" Pelley asks. "Yes," Simpson says. Rove was a strategist in Alabama. Simpson says she worked with him on several campaigns. 60 Minutes contacted Rove. Through his lawyer, he denied Simpson's allegations. One of Rove's close Alabama associates was Republican consultant Bill Canary. Simpson says she was on a conference call in 2002 when Canary told her she didn't have to do more intelligence work because, as Canary allegedly said, "My girls" can take care of Siegelman. Simpson says she asked "Who are your girls?" "And he says, 'Oh, my wife, Leura. You know, she's the Middle District United States Attorney.' And he said, 'And then Alice Martin. She is the Northern District Attorney, and I've helped with her campaign,'" Simpson says. "Federal prosecutors?" Pelley asks. "Yes, Sir," she says. Bill Canary denies the conversation ever happened. He told 60 Minutes he never tried to influence any government official in the case. His wife Leura Canary and Alice Martin are top federal prosecutors in the state. Both were appointed by President Bush, and their offices investigated Siegelman. Details of some of those investigations leaked to the press. And Siegelman lost his 2002 re-election campaign narrowly to Republican Bob Riley. Two years later, as Siegelman geared up to run again, the Justice Department took one of its Siegelman investigations to trial-an indictment involving an alleged Medicaid scam. "He's indicted. He goes to trial. That's a pretty big deal to have your former governor on trial. Everybody's there. The government gives their opening argument. The judge says, 'I want to see you in chambers because this case, there's no case here,'" Grant Woods says. Woods says the judge threw the case out, without a witness testifying. "The case is so lame that he throws it out," he says. Vindicated, Siegelman focused on winning the 2006 election. And that's when Jill Simpson says she heard the Justice Department was going to try again. She says she heard it from a former classmate and work associate Rob Riley, the son of the new Republican governor. "Rob said that they had gotten wind that Don was going to run again," she says. "And Rob Riley said what about that?" Pelley asks. "They just couldn't have that happen," Simpson says. Asked how they were going to prevent that from happening, she says, "Well, they had to re-indict him, is what Rob said." Simpson told this same story, under oath, to Congressional investigators in a closed session. Rob Riley told 60 Minutes he never talked to Jill Simpson about this. Four months after Simpson says they spoke, Siegelman was indicted on new charges. Doug Jones, Siegelman's lawyer, says one of the prosecutors told him that Justice Department headquarters in Washington had ordered a top to bottom review of the case. Today, the Alabama prosecutors deny that it was Washington - but whoever ordered it, there was a big boost to the investigation. "They started over. People started getting subpoenas that had never gotten subpoenas before, for testimony, for records. The governor's brother, his bank records started getting subpoenaed. The net was cast much wider than had ever been cast before," Jones says. "You know, on the other hand, what's wrong with the Department of Justice vigorously investigating a case if they think there is an indictment to be made on public corruption charges?" Pelley asks. "Well, you still have to investigate crimes, not people. It undermines the entire system of justice because at that point anybody can be a target. Any prosecutor can look across the table and say, 'You know what? I just don't like you,'" Jones says. The prosecution was handled by the office of U.S. Attorney Leura Canary, whose husband Bill Canary had run the campaign of Siegelman's opponent, Gov. Riley. "Why would you do it that way?" Woods asks. "Why wouldn't you say, 'You know what? We're going to bring in someone from another jurisdiction to do it. There's a lot of United States attorneys around the country. We'll have somebody come in and do this case.' That's not what happened in Alabama. Every time they had the chance to go the extra mile to be independent and objective, they didn't do it." Leura Canary handled the case for eight months. When defense attorneys objected, she turned it over to her assistants and says that she had nothing further to do with it. In this new investigation, prosecutors zeroed in on that vivid story told by Siegelman's aide, Nick Bailey, who said he saw the governor with a check in his hand after meeting Richard Scrushy. Trouble was, Bailey was wrong about the check, and Siegelman's lawyer says prosecutors knew it. "They got a copy of the check. And the check was cut days after that meeting. There was no way possible for Siegelman to have walked out of that meeting with a check in his hand," Jones explains. "That would seem like a problem with the prosecution's case," Pelley remarks. "It was a huge problem especially when you've got a guy who's credibility was going to be the lynch pin of that case. It was a huge problem," Jones says. And there was another problem with the prosecutor's star witness: Nick Bailey was a crook. Unknown to Siegelman, Bailey had been extorting money from Alabama businessmen. Facing ten years in prison, Bailey agreed to cooperate with prosecutors to get a lighter sentence. 60 Minutes went to talk to Bailey. The Justice Department wouldn't let our cameras into the prison, but we met with him for hours. Bailey told 60 Minutes that before the Siegelman trial, he spoke to prosecutors more than 70 times, and he admitted that during those conversations he had trouble remembering details. He told 60 Minutes the prosecutors were so frustrated, they made him write his proposed testimony over and over to get his story straight. If Bailey's telling the truth, his notes, by law, should have been turned over to the defense. But Siegelman's lawyers tell 60 Minutes they never saw any such notes and never had a chance to show the jury just how much Bailey's story had changed. No one at the Justice Department would be interviewed for this story, but they did send a statement which read, in part, "This case was brought by career prosecutors ... based upon the law and the evidence alone. After considering that evidence ... a jury of Mr. Siegelman's peers found him guilty beyond a reasonable doubt." But Grant Woods, the former attorney general of Arizona, says the case should never have gone to trial. "The prosecutor's gotta look at it and say, 'Hey, is this the sort of thing that we're really talking about when we're talking about bribery?' Because what the public needs to know here is there is no allegation that Don Siegelman ever put one penny in his pocket," he says. Richard Scrushy did make donations totaling $500,000 to that education lottery campaign, and after serving on the hospital board under three previous governors, Scrushy was re-appointed by Siegelman. But Woods says that's politics, not bribery. "You do a bribery when someone has a real personal benefit. Not, 'Hey, I would like for you to help out on this project which I think is good for my state.' If you're going to start indicting people and putting them in prison for that, then you might as well just build nine or ten new federal prisons because that happens everyday in every statehouse, in every city council, and in the Congress of the United States," he says. "What you seem to be saying here is that this is analogous to giving a great deal of money to a presidential campaign. And as a result, you become ambassador to Paris," Pelley remarks. "Exactly. That's exactly right," Woods says. Siegelman was campaigning in the 2006 Democratic primary as he went to trial. "We're going to turn this bus into what we call the night shift, because after the trial every day we're gonna be hittin the trail every day," he said. But he lost in the primary. After two months, the jury deadlocked twice, then, voted to convict on its third deliberation. Many legal minds were shocked when federal judge Mark Fuller, at sentencing, sent Siegelman directly to prison without allowing the usual 45 days before reporting. "He had him manacled around his legs like we do with crazed killers. And whisked off to prison just like that. Now what does that tell you? That tells you that this was personal. You would not do that to a former governor," Woods says. "Would you do that to any white collar criminal?" Pelley asks. "No, I haven't seen it done," Woods says. "Help me understand something. You're blaming the Republican administration for this prosecution. You're saying it was a political prosecution. You are a Republican. How do I reconcile that?" Pelley asks. "We're Americans first. And you got to call it as you see it. And you got to stand up for what's right in this country," Woods says.

Quit Crying, Boeing
http://www.fool.com/investing/general/2008/03/13/quit-crying-boeing.aspx
Rich Smith
March 13, 2008
So, Boeing (NYSE: BA)? It turns out you can't win 'em all. What's more, you don't deserve to win -- so pipe down and suck it up.

As you've probably heard by now, Boeing has filed its long-anticipated protest on the KC-X Tanker contract. Boeing included a laundry list of complaints, criticizing how the U.S. Air Force interpreted Boeing's cost/price data, alleging it overemphasized the plane's ability to carry cargo as opposed to fuel, and underemphasized the plane's survivability in combat. Boeing said that the Air Force assigned "identical ratings across all five valuations factors: (1) Mission Capability, (2) Risk, (3) Past Performance, (4) Cost/Price, and (5) Integrated Fleet Aerial Refueling Assessment" to both Boeing's KC-767AT offering, and Northrop Grumman's (NYSE: NOC) KC-30. (Which means what? Boeing is arguing for a tie?) Boeing summed it up by calling the selection process "seriously flawed" and "replete with irregularities."
Seriously flawed
Interesting word choice there, Boeing. "Seriously flawed," you say? I wonder whether the Air Force's selection process was as "flawed" as, say, the border fence that Boeing and partners built for Homeland Security. Boeing itself called that one flawed. And the Government Accountability Office concluded that Boeing's fence "did not fully meet user needs, and the project's design will not be used as the basis for future ... development."
Of course, there's a difference between building fences and building multimillion-dollar aircraft. (Building fences is easier.) But if I recall correctly, Boeing hasn't been doing so hot lately at the airplane-building business either. For example, before losing the Air Force contract, it won bids to provide refueling tankers to both Japan and Italy. Boeing finally delivered its first tanker to Japan in February, a year later than it had agreed to. Italy's still waiting for its first delivery -- two years overdue.
And then there's the highest profile plane job of all: Boeing's vaunted 787 Dreamliner, fast evolving into Boeing's Logistical Nightmare Liner. Boeing initially promised to deliver 112 Dreamliners to its customers over the course of 2009. But as we learned just yesterday, a massive bungling of the logistical supply chain threatens to reduce that number to as few as 45 Dreamliners, and counting ... backward.
All of which the Pentagon might want to consider when deciding whether to give Boeing and its partner Textron (NYSE: TXT) the contract to build a new jeep for the Army. I mean, maybe building a jeep is easier than erecting a fence, but it seems to me that someone like the General Dynamics (NYSE: GD)/AM General team would be more qualified for this kind of work.
Replete with irregularities
And then there's the matter of "irregularities." Here again, we find Boeing tap-dancing through a minefield of unintended allusions. I mean, what could be more "irregular" than trying to win a contract by stealing documents from a competitor -- as Boeing was accused of doing in 1998, when competing with Lockheed Martin (NYSE: LMT) for $1 billion in rocket contracts?
More recently, and even more on point, I wonder if Boeing remembers how it got itself into this life-or-death struggle with Northrop in the first place. Here's a hint: In 2003, Boeing was accused of misconduct in its dealings with a Pentagon procurement official responsible for negotiating a lease of 100 new refueling tankers. It seems that in exchange for assisting Boeing on Airbus' bid for the contract (Airbus parent EADS allied with Northrop in winning the latest tanker contract), she got a job at Boeing HQ upon retiring from the military. Nice. That one cost Boeing a cool $615 million fine, and cost Boeing CFO Mike Sears his job.
Back to the present
So now comes Boeing, complaining about being on the receiving end of "serious flaws" and "irregularities." Well, boo-hoo.
Now, I don't mean to be callous -- for all I know, Boeing's KC-767AT really was the better plane. Could be the Pentagon really didn't give the boys from Illinois a fair shake on this deal. The way both parties to this dispute are spinning the facts, it's impossible for an outsider to know which way is up. For example, on the day Boeing filed its complaint, victorious Northrop magically discovered that its contract win would create 48,000 new U.S. jobs, instead of the 25,000 it had previously announced. (If you take either of those numbers at face value, I've got a border fence in Tucson I'd like to sell you.)
What I do know is that by waving the red flag of Made-in-the-USA-ism, and challenging the award of the tanker program to another U.S. contractor (albeit one partnered with a European ally), Boeing holds up the deployment of the tankers by at least the 100 days that the GAO will take to rule on its challenge. Furthermore, the GAO's decision is not binding, so if Boeing loses, it could appeal to federal court, dragging out the process for months or years to come. A similar GAO challenge launched by L-3 Communications (NYSE: LLL) back in 2006 delayed the transfer of a Pentagon translation contract to rival DynCorp (NYSE: DCP) by more than a year.
Moral of the story
Boeing has a choice to make. It can continue to play the hypocrite, and perhaps reap tens of billions of dollars in reward, if it manages to outplay Northrop and EADS in the public relations war. Personally, I'd rather see Boeing admit its past failures, and fix the work that it's already won before it starts whining about the unfairness of not winning new work.
Like my mama used to tell me, "Clean up your old toys first, and then you can play with a new one."

Top News March 10, 2008, 9:32AM EST text size: TT
Northrop Grumman Speaks Out

The defense contractor issues a statement regarding its recent U.S. Air Force contract win
Northrop Grumman Sets the Record Straight Concerning the U.S. Air Force KC-45A Misinformation
Monday March 10, 8:00 am ET

LOS ANGELES, March 10 /PRNewswire-FirstCall/—Northrop Grumman Corporation (NYSE: NOC - News) said today that since the Air Force's selection of the Northrop Grumman KC-45A, numerous erroneous comments continue to be repeated in the media and in Congress. Northrop Grumman wants to set the record straight on the following points:

Northrop Grumman, a Los Angeles-based company with over 120,000 employees, is the KC-45A tanker prime contractor

• A contract between the U.S. Air Force and Northrop Grumman Corporation for the Northrop Grumman KC-45A was signed on Feb. 29, 2008.

• Northrop Grumman KC-45A primary subcontractors include EADS-North America, General Electric, Honeywell, AAR Cargo Systems, Sargent Fletcher, Knight Aerospace Products, Parker and Telephonics.

Jobs
• The Northrop Grumman KC-45A U.S. supplier base includes 230 companies in 49 states.

• The Northrop Grumman KC-45A tanker will support more than 25,000 direct and indirect jobs in the United States—a conservative estimate based upon the US Department of Commerce aerospace industry jobs projection formula.

• Using more recent data from our suppliers and applying the Labor Department's formula for projecting aerospace jobs at the state and regional level, the KC-45A will employ approximately 48,000 direct and indirect jobs nationwide.

• Assembly and militarization of the Northrop Grumman KC-45A tanker will take place in Mobile, Ala., resulting in the creation of 1,500 jobs in the United States.

• Job creation was not a part of the evaluation criteria, in accordance with federal law.

• The Northrop Grumman KC-45A tanker program does not transfer any jobs from the United States to France or any other foreign country.

Repayable Loans / WTO Dispute Issue
• The U.S. Department of Defense ruled that the disputes involving Boeing and Airbus currently being adjudicated by the World Trade Organization were not relevant to the U.S. Air Force's KC-X Tanker competition.

Acquisition Process
• The KC-45A competition underwent the most rigorous, fair and transparent acquisition process in Defense Department history.

• Throughout the process, both competitors in the KC-45A acquisition hailed the Air Force for conducting a fair and open competition.

• The size of the proposed tanker aircraft was not dictated by the Air Force nor was size an established criteria—each contractor was free to propose the best solution and platform to meet Air Force warfighter requirements.

• Both contractors had ample opportunity in the protracted acquisition and source selection process to propose the best aerial refueling capability to meet the warfighter's requirements.

Reduced Risk to the Government
• The first Northrop Grumman KC-45A tanker aircraft was built in July 2007 and flown in September 2007.

• The Northrop Grumman KC-45A Aerial Refueling Boom System has completed 73 test flights totaling more than 200 flight hours. The boom completed the first in-flight fuel transfer on Feb. 29, 2008 passing 2,000 pounds of fuel to a Portuguese Air Force F-16 combat aircraft.

• The Northrop Grumman KC-45A is based upon the Royal Australian Air Force KC-30B Multirole Tanker—which has been built, flown, and is undergoing flight tests. It will be delivered on schedule to the Royal Australian Air Force in early 2009.

• Boeing's proposed KC-767AT tanker and refueling boom were never built, flown or tested.

Industrial Base
• The Northrop Grumman KC-45A tanker program will create a new aerospace manufacturing corridor in the southeastern United States.

• The KC-45A program helps return competitiveness to the U.S. aerospace industry.

Foreign Content
• All modern jetliners are built from a global supplier base, and the two entrants in the KC-45A competition are no exception.

• Boeing's proposed tanker includes parts manufactured in Japan, United Kingdom, Canada and Italy.

• Northrop Grumman tanker includes parts built in the United Kingdom, Germany, Spain and France—countries exempt under the Buy America Law.

• The Northrop Grumman KC-45A will include approximately 60 percent U.S. content. It is America's tanker.

Foreign Suppliers to U.S. Military Programs
• There are numerous examples of transatlantic cooperation on vital U.S. military programs. Foreign suppliers currently play essential roles in the F-35 Joint Strike Fighter, the VH-71 Presidential Helicopter and the C-27J Joint Cargo Aircraft program.

• No sensitive military technology will be exported to Europe. For the KC-45A program, a commercial A330 jetliner will be assembled by American workers in EADS's facility in Mobile. The aircraft will then undergo military conversion in an adjacent Northrop Grumman facility.

• All of the KC-45A's critical military technology will be added by an American company, Northrop Grumman, in America, in Mobile, Ala.

Northrop Grumman Corporation is a $32 billion global defense and technology company whose 120,000 employees provide innovative systems, products and solutions in information and services, electronics, aerospace and shipbuilding to government and commercial customers worldwide.

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