Military

Management Accountability Review of the Boeing KC-767A Tanker Program

Office of the Inspector General of the Department of Defense
Report No. OIG-2004-171 May 13 2005
(Project No. D2005AE-0092)

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Executive Summary

Objective of the Review. Our overall objective of the review of the Boeing KC-767A Tanker Program was to determine what happened, who was accountable, and what actions must be taken to prevent a similar situation from happening again.

Scope and Methodology. To accomplish the objective, the review team analyzed selected e-mails and memorandums from the Department of Defense and the Boeing Company; interviewed members of the Office of the Secretary of Defense and the Department of the Air Force, both military and civilian, including the then-Secretary of the Air Force and the then-Assistant Secretary of the Air Force (Acquisition), who were involved in the Boeing KC-767A tanker aircraft lease; and evaluated prior Department of Defense Office of the Inspector General reviews of the Boeing KC-767A Tanker Program to gain insight into what happened and who was accountable during the structuring and negotiating of the proposed lease contract for the Boeing KC-767A Tanker Program. During the review, we included significant events along a timeline from inception of the idea until Congress terminated the Secretary of the Air Force authority to lease tanker aircraft (Appendix B).

Results. Senior officials of the Air Force acquisition community and the Office of the Secretary of Defense were focused on supporting a decision to lease tanker aircraft from Boeing rather than developing objective acquisition information that would have questioned, as a matter of procedure, whether such a decision was appropriate. Although required by Department of Defense directive, officials of the Office of the Secretary of Defense and the Air Force did not comply with the Office of Management and Budget circulars, the Federal Acquisition Regulation, and the DoD 5000 series of guidance to ensure that a tanker replacement aircraft was acquired to satisfy user needs with measurable improvements to mission capability and operational support, in a timely manner, and at a fair and reasonable price. Instead, the Air Force used Section 8159 of the Department of Defense Appropriations Act for FY 2002 to justify its inappropriate acquisition strategy with the primary goal to expeditiously lease 100 Boeing KC-767A tanker aircraft to replace its aging KC-135E tanker aircraft fleet. In doing so, as explained in DoD Inspector General Audit Report No. D-2004-064 of March 29, 2004, the Air Force "demonstrated neither best business practices nor prudent acquisition procedures to provide sufficient accountability for the expenditure of $23.5 billion for the KC-767A tanker program."