US: Pentagon Acquisition Needs Cultural Change

WASHINGTON - Some lower-level U.S. Air Force and Pentagon officials do not yet fully recognize the need to overhaul defense procurement to make it more transparent and avoid problems of the past, the U.S. military's top internal watchdog said on Thursday.

Department of Defense (DOD) Inspector General Joseph Schmitz told Reuters in a telephone interview that he issued guidelines for all defense agencies on "internal controls and integrity" after the Pentagon's biggest procurement scandal since the late 1980s.

The former No. 2 Air Force acquisition official, Darleen Druyun, is serving nine months in prison for violating federal conflict of interest laws in a scandal that also sent a top former Boeing Co. official to jail and spawned reviews of more than a dozen major arms contracts.

"There are some cultural changes that have to take place. I'm certain that within the acquisition organization of the Air Force and the DOD there are some people that don't get it yet, but ... I'm confident that the leadership at the top gets it," Schmitz said.

Schmitz, who departs next week to take a job with a private defense firm, singled out the Pentagon's new top arms buyer, Kenneth Krieg, as one individual who understood the need for change.

The inspector general's office is still investigating some contracts for possible wrongdoing, he said.

Schmitz's office also concluded in June that many top Pentagon and Air Force officials bypassed normal procedures in an "inappropriate" rush to complete a $23.5 billion deal with Chicago-based Boeing for 100 refueling planes.

He declined to elaborate on the status of the ongoing investigations, or to give an update on his June statement that at least one other former or current defense official could face criminal charges in the case.

In a sign that change is taking time, the Air Force caught lawmakers and even Krieg by surprise last week when it quietly issued a request for information from companies on replacing its aging tanker fleet.

That move apparently prejudged the outcome of a comprehensive review of alternatives that is not due to be completed until October. The Air Force withdrew the request late on Wednesday, saying the move had been "a bit premature."

Schmitz said his office was working closely with Pentagon leaders to learn from the "unfortunate chapter" of the Druyun case, and improve the transparency of the acquisition system."

That was also part of an overall shift in corporate America following the Enron accounting scandal, he said.

"This is a proactive and constructive effort by this office to provide some leadership and oversight for the department as it kind of pulls through and deals with the lessons learned from the Darleen Druyun matter," he said.

Schmitz said he was personally cognizant of the scandal and had carefully distanced himself from any matters involving his new company, the privately held Virginia-based Prince Group, before beginning any discussions about his new job.

"Even before meeting with the potential employer, I recused myself, as is the prudent thing to do," Schmitz said. "I erected the normal firewalls to prevent any potential conflicts from becoming actual conflicts."

He said he required the entire inspector general's office to participate in an ethics workshop, something also being done by other acquisitions officials within the Pentagon.

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