at the head of the table, Air Force Maj. Gen. Stephen Goldfein, the
highest-ranking officer in the room, leaned forward and told the
officers and others assembled before him that they should steer a
multimillion-dollar Air Force contract to a company named Strategic
"I don't pick the winner, but if I did, I'd
pick SMS," Goldfein said to the seven-person group that was selecting a
contractor to jazz up the Air Force's Thunderbirds air show with giant
video boards, according to a lengthy report by Defense Department's
inspector general. The head of the selection team almost immediately
"caved," giving in to what he believed was a fixed process, while
another member of the team called it "the dirtiest thing" he had ever
It was during that meeting in November 2005, according to the 251-page report, obtained by The Washington Post,
that a controversial $50 million contract was awarded to a company that
barely existed in an effort to reward a recently retired four-star
general and a millionaire civilian pilot who had grown close to senior
Air Force officials and the Thunderbirds.
In a probe that lasted
more than two years, investigators concluded that Goldfein and others
worked inside the Air Force contracting system to favor SMS and its
owners, despite an offer by the company that was more than twice as
expensive as a competing bid.
Goldfein, who is now vice director of the Pentagon's
Joint Staff, was found to have gone to great lengths to see the
contract awarded to SMS, while senior Air Force leaders socialized with
the company's partners. According to the report, Goldfein even arranged
for President Bush to record a video testimonial in the White House Map Room that was included in the SMS contract proposal, demonstrating the company's credibility and access.
report offers a blow-by-blow account of how a small Air Force contract
spun out of control, highlighting conflicts of interest in the
selection process, officers stacking the deck in favor of friends, and
others influencing a system designed to eliminate such favoritism in
spending taxpayer dollars.
"The investigation found that the
December 2005 award to SMS was tainted with improper influence,
irregular procurement practices, and preferential treatment," according
to a redacted copy of the report. "Lower priced offers from qualified
vendors and capabilities in-house were bypassed in an apparent effort
to obtain services from [redacted], president of SMS, who had a
longstanding relationship with senior Air Force officers and members of
Goldfein and four unidentified officers have
received administrative punishments, and investigators are scrutinizing
the 99th Contracting Squadron at Nellis Air Force Base in Nevada in
light of "irregularities" and "systemic weaknesses" that appear to
plague the unit.
Goldfein declined to comment, but he told
investigators that he "never interfered with the evaluation or
selection process and never directed anyone to do or not do anything."
But other members of the selection team said the process seemed "fixed"
from the beginning.
"I am deeply disappointed that our high standards were not adhered to," Air Force Secretary Michael W. Wynne said yesterday.
inspector general's report comes during a stretch of difficult news for
the Air Force, including recent problems with the handling of nuclear
weapons and nuclear missile technologies and the discovery of
significant flaws in older F-15 fighter jets. While the Thunderbirds
show contract was $50 million -- minor compared with billion-dollar
aircraft contracts -- the inappropriate actions came just a year after
former Air Force contracting official Darleen A. Druyun pleaded guilty
to favoring Boeing in a tanker deal and was sent to prison.
Pentagon press secretary Geoff Morrell said Defense Secretary Robert M. Gates
is aware of the findings. "He is satisfied the matter has been
thoroughly investigated and the Air Force is taking appropriate
disciplinary action and corrective measures," Morrell said.
idea behind the Thunderbirds contract emerged in 2005, when Ed Shipley,
a close friend of the Thunderbirds who regularly flies aircraft in Air
Force shows, suggested ways to keep audiences entertained while the
aircraft circle around to do stunts. Shipley, who made millions in
direct television marketing videos, came up with an idea for
"Thundervision," and his new company, SMS, pitched a $50 million,
Gen. John Jumper, then the Air Force chief of
staff, asked his vice chief at the time, Gen. T. Michael "Buzz"
Moseley, to see if he could make it happen. Moseley met with Goldfein
and Shipley in April 2005 and made money available for the project,
ordering subordinates and contracting teams to look into it.
officials dismissed the idea of giving the contract outright to SMS and
set up a team to investigate bids. But a majority of people on the
selection team were members of the Thunderbirds -- officers who knew
Shipley as a friend and Goldfein as the commanding general of the Air
Warfare Center. The Thunderbirds commander at one point said, according
to the report: "If it's not SMS, we don't want it."
also found Gen. Hal Hornburg, who retired in December 2004, was a
"silent partner" of Shipley's who joined SMS in early 2005. Moseley is
a friend of Hornburg's and knew Shipley. Neither Shipley nor Hornburg
Investigators detail how Moseley -- now the Air
Force's chief of staff -- socialized with Shipley and Hornburg in the
months after the contract process started. Moseley and his wife, along
with Hornburg and his wife, gathered at Shipley's home in Pennsylvania
in July 2005, and they shared informal e-mails.
Moseley was not
accused of wrongdoing but said in an interview this week that he
probably should have backed away from Shipley and Hornburg as the
contract progressed. But he emphasized the need for personal
relationships to cultivate ideas and said that he knew there were
strict boundaries regarding such contracts and that he never crossed
them. He said he instructed subordinates to "do the right thing."
His account is supported by e-mail records in the report. "In perfect hindsight, there are some things that the U.S. Air Force
could have done differently," he said. "There are some things that
people along the way, me included, could have done differently."
said he wishes that officers who noticed problems in the process had
simply said "stop." The contract was canceled in early 2006 after an
Arizona company lodged complaints. The U.S. attorney's office in Nevada
declined to prosecute the case in May 2007.