The Last Inspector - Boeing Fraud & FAA Fraud Risking Safety

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.

Letter Just Sent to Assistant Secretary of the Air Force Sue C. Payton Concerning the KC-X Tanker Contract.

This letter is self-explanatory in nature. It was my duty to warn the Air Force before they entered into a contract with Boeing:

February 25th, 2008

The Honorable Sue C. Payton
Assistant Secretary of the Air Force for Acquisition
1060 Air Force Pentagon, Room 4E964, AF/AQ
Washington, DC 20330-1060

Dear Assistant Secretary Payton:

This urgent letter is to inform you of matters that I have witnessed that I believe should strongly bear upon how you should go about structuring the KC-X contract and how you perform contract negotiations should The Boeing Company be selected over the Airbus/Northrop team as supplier of the KC-X Aerial Refueling Aircraft.

First, I want to make my motivations in giving you this crucial information clear: I am not trying in any way to influence you to select the Airbus/Northrop proposal for the KC-X instead of the Boeing offer. Instead, quite the opposite is true, although that is not related to this letter other than as background information. I do hope you ultimately select the Boeing RFP even considering the corruption I detail below that I witnessed that is still entrenched deeply within Boeing management following the former tanker contract debacle and other Boeing ethical and legal lapses that have been aired publicly for several years now.

My opinion as a loyal former Boeing employee and U.S. citizen that can trace my roots in this country to eighteen years after the Plymouth Colony was settled and some 138 years before our country was founded is that it is essential for the economy of our country, the preservation of aerospace manufacturing jobs in this country, and therefore the preservation of military aircraft production capacity within the United States, that Boeing is ultimately selected as the winner of the competition for the KC-X contract.

That said, I can now get to the essential crux of this letter, which is how best you and your KC-X procurement team can structure a contract should, as I hope, Boeing wins the competition, in order to protect the Air Force, Air Force personnel who will fly on and use these tanker aircraft, and the American taxpayer from the consequences of the fraud still ongoing within management at Boeing today several years after Boeing’s much self-publicized “ethics reforms.”

As a former Boeing Quality Assurance Inspector until just over a year and a half ago, when I was terminated per the direction of the highest management levels at the company for collecting information in order to bring this continuing fraud in Boeing management to light, I witnessed this management fraud in Boeing Commercial Airplanes Quality Assurance on a daily basis. Knowing not only the lives of the public were being intentionally placed at higher risk by corrupt Boeing management because of this fraud, but the lives of our brave military personnel were placed at much higher risk illegally, as well, to maximize Boeing’s bottom line, I knew I had to act to stop this brazen fraud before more lives of the public and our military that fly on Boeing Commercial Airplane platforms were inevitably lost, so I reported this rampant fraud in QA throughout BCA to the FAA in early 2002, well before the former tanker contract debacle.

By the way, this letter is in no way related to Boeing Corporate Headquarter’s retaliation against me as noted above. I knew the day I decided to try to bring Boeing’s illegal actions I witnessed to justice that I would be ultimately removed from my job by Boeing as retaliation for attempting to bring Boeing management’s fraudulent actions to an end as I knew Boeing management’s corrupt modus operandi almost better that they knew it themselves at that point, when Boeing’s “win at any cost” “ethic” was in full swing, as it had not been publicized yet.

The fraud that I witnessed and reported to the FAA in early 2002 is a fraud that sadly continues to this day, due to a relationship with the arm of the FAA that I reported it to that mirrors to some extent the bias that was unfortunately shown by a few former officials in the Air Force before those officials were removed from their posts following the reforms instituted after the 2003 tanker procurement scandal. While the Air Force, under your new leadership team’s hard work and integrity, is totally reformed now and is up to the task in performing your duties with the utmost integrity for the benefit of the taxpayer and our military you represent, the same cannot be said of the FAA and Boeing management involved in the continuing fraud I witnessed. And it is this continuing fraud that, if not noted and addressed by your team as it relates to the KC-X program, poses a grave threat to military personnel who fly on or use the services of the KC-X tanker, and an unreasonable danger to the wise use of American taxpayers’ dollars. Possible challenges to the hard won reputation of the procurement agency for the program also exist if this ongoing corruption at Boeing and the FAA is not properly addressed before a contract is signed, and is not properly mitigated during the life of the program.

The fraud I witnessed on a daily basis at Boeing is something you have likely heard of. While my coworkers and I referred to it as “rollerstamping,” this fraud does have other names in the industry, such as “hot stamping,” or perhaps its most apt description: Product Substitution.

As you well know, the safety, quality, and reliability of military as well as commercial airplane platforms that are produced must be ensured by strict adherence to inspection, testing, and other quality assurance processes. Without such processes, no matter how well intentioned the people are that do the actual construction of those aircraft and their many component parts, inevitably faulty and/or incomplete aircraft will be produced because all humans by nature make mistakes, especially on fast paced and complex tasks requiring high levels of skill, such as in aircraft manufacturing.

That basic fact is acknowledged in the modern regulations and implementing and necessarily mandatory quality assurance procedures that have been put in place over the years to ensure the safety, quality, and reliability of military and commercial aircraft is ensured, and is ensured to the high level required.

However, to Boeing and FAA management, those critical regulations and implementing procedures are only guidelines, if that.

At Boeing, inspectors are expected by management to “look the other way” rather than actually do their critical jobs of ensuring the safety and conformity of Boeing aircraft, and FAA Aviation Safety Inspectors are also similarly expected by their management to “look the other way” from their duties to enforce the FAA regulations at Boeing and to ensure Boeing is adhering to their FAA required quality system.

Is this corruption just speculation? Hardly. I, as well as many others, witnessed it, and I in fact proved it during my dealings with top Boeing and FAA management in my thusfar futile efforts to end this endemic and symbiotic Boeing/FAA fraud.

My reports of this fraud at Boeing to Boeing and FAA management did not have the desired result of reform so inspectors like me could begin to do their critical jobs without the inevitable harassment and retaliation for doing so. The FAA and Boeing chose to cover up and protect this fraud rather than investigate and end it. My refusal to ignore FAA foot dragging on investigating my report did result in corrupt FAA management having to document a few of my many reported Boeing noncompliances so as to be able to say they did an investigation, so they unwillingly corroborated several systemic noncompliances I reported. However, the major and most serious by far noncompliances the “investigation” of my report by Boeing and the FAA uncovered was in proving that the many noncompliances I reported were not just a result of low level Boeing management corruption—they were instead a result of corruption at the highest levels of FAA and Boeing management—a true “working together” corrupt relationship to ensure Boeing did not have to abide by what they saw as too expensive to comply with mandatory quality and safety ensuring regulations and procedures. What Boeing management got out of this corruption is clear as most of their compensation is tied to bottom line driven stock option prices. What the corrupt FAA management involved got out of ensuring Boeing could break regulations, in opposition to their mandated duties, other than “quid pro quo” well paying jobs at Boeing and organizations funded by Boeing is less clear, but time will tell.

Since you are busy, I will spare you the details in this letter as this letter is to only warn you of this fraud so you can take measures to protect the taxpayer and warfighter from it before it is too late to do so. The details of this fraud are on my website, www.thelastinspector.com . I strongly suggest you visit the site to find out the corroborating and disturbing details of this corrupt FAA/Boeing relationship.

As you are intimately aware of the inner workings of the aviation industry as I am, it should not surprise you then that the ethics reforms Boeing said it undertook after the first tanker contract and the Lockheed RFP data theft debacles did not “take,” and Boeing management still relies on unethical and illegal activities to enhance its bottom line. Even unethical and illegal activities that obviously place many citizen and military lives at risk.
Although Boeing has apparently been very careful to not use such unethical and illegal habits in the current tanker RFP until the contract is sewn up, that has not prevented it from engaging is such misconduct in other areas of its business—especially “safe” areas to do so, such as internally in making quality and safety assurance at Boeing one of the most corrupt organizations within Boeing, and in long fostered corrupt relationships with FAA management. The Boeing Legal department is another area where the illegal is tolerated, if not fostered. They were they department of Boeing tasked with covering up rather than ending the Boeing management corruption I reported to them on two occasions. It is no accident an internal Boeing system used by Boeing Legal is called the “elegal” system, and that one of Boeing Legal’s top attorney’s mantra was “you gotta do what you gotta do.” Rather than end the corruption I reported to them, the same Boeing Legal attorney assigned to “investigate” my report was also assigned to personally ensure I was arrested and charged with a crime for collecting data for my continuing efforts to end the noted Boeing/FAA corruption.

However this letter is not about what Boeing has done to me. It is solely to protect the taxpayer from being defrauded by Boeing as it defrauds its current customers via the ongoing product substitution abetted by corrupt management personnel in the FAA, as well as to ensure such fraud is not allowed unwittingly by your organization to place military personnel’s lives at extra risk by your organization not being informed of it.

I have read disturbing articles about the still unreformed FAA being allowed to certify 767 tankers for Japan and Italy. Such certifications are next to meaningless in the current era of FAA management corruption. This is a key area that will have to be changed should Boeing be awarded the contract.

If FAA personnel have to be used on the tanker program in any way, DCMA Quality Assurance personnel must closely supervise FAA personnel to ensure they are actually doing their critical jobs rather than mostly pretending to do them. They must perform independent audits of Boeing quality assurance as well as FAA inspections and certification work with ending and preventing the fraud reported in this letter and on my website in mind during the program. Such heightened oversight activities by the DCMA must be allowed in the contract.

Boeing will likely pursue language that FAA and FAA delegated Boeing personnel do as much of the inspection and certification work as possible in the contract. After this letter, the motivations of such language should be much more transparent. Language must be inserted in the contract to give the DCMA the authority, headcount, and budget with which to perform the much increased oversight functions that will prevent FAA/Boeing fraud on the program from being used to pump up Boeing’s profits from the program via the noted product substitution currently enabled by “quality assurance” at Boeing and the reduced certification costs lack of real FAA oversight provides.

Such real oversight by the DCMA would uncover problems in the production system hidden for years by the noted Boeing and FAA non-oversight of Boeing’s engineering and production processes. This would add additional costs to the program, but the conforming aircraft that would result would be worth those costs. Drawings and engineering specs that could never be complied with as they were in error and/or conflicting would be uncovered—never fixed because Boeing management thought it would cost too much to fix them and that such fixes were “non-value added” no matter how much the errant engineering confused those who had to try to build per those drawings/specs and how creative mechanics had to become to make what they thought the engineer might have intended. Such evidence of past Boeing and FAA carelessness will be simply more proof of the corruption I am disclosing to you now.

Although I have not been on the Boeing production line for over a year, there is no doubt the FAA/Boeing fraud proven by the handling of my reports continues to this day. I still communicate with Boeing personnel on occasion. Nothing has changed. If the noted fraud was ended by Boeing and/or the FAA, the severe bottlenecks on production programs resulting would have to be made public, and an announcement by the FAA making the public announcement of the ultimately ineffective FAA Special Technical Audit of 1999/2000 seem very insignificant by comparison would have to be done. Neither has happened to date.

As you can see on my website documenting the Boeing and FAA management corruption I and others have witnessed, “working together” fraud in Boeing and FAA management will not be the only Boeing mismanagement and fraud your team will have to be vigilant in preventing in order to protect the interests of the military and our country’s citizens during a Boeing tanker program. Boeing’s past intentional and “unintentional” mismanagement of ITAR controls is an area that will need special emphasis in preventing during a Boeing tanker program. The QRS-11 chip debacle is just one such instance of ignoring such controls that I helped ensure a fair end to for our country. Transfer of ITAR data between commercial and military programs is another area that will need to be of special concern during the program in terms of putting in place controls to prevent such actions by Boeing’s still ethically challenged management during the program, and/or to prevent Boeing management’s past demonstrated disdain for adhering to ITAR controls when more money can be made by ignoring them from affecting how such controls are used on the program.

And then there are the 787 delays and the Japan and Italy tanker delays to consider as far as how to best help Boeing management avoid a repeat of those delays during a tanker program for our government. It is my belief that it was Boeing’s focus on “leaning out” the production and certification processes and focusing on the financial planning aspects of the program rather than planning sufficiently for production of the 787 itself that has resulted in the 787 delays. Schedules planned too tightly in order to meet financial targets ultimately has resulted in the delays thusfar, I believe. Notably, one of the “bright spots” in the 787 program thusfar has been the “smoothness” of certification activities on the program and the FAA siding with Boeing over experts on some controversial certification tests performed and those chosen not to be performed as was required in past new programs. I need not, I trust, give my well informed opinion as to why the FAA has been so accommodating to Boeing’s every wish on the program, and has allowed unprecedented levels of delegation of Boeing personnel to do formerly and exclusively FAA performed certification activities on past programs on the 787 program.

I will let my website give you the rest of the details. Please do not hesitate to contact me if you have any questions for me not addressed in this letter or on my website.

Please do not penalize Boeing workers for the continuing “sins” of their management. I believe, if you heed the warnings in this letter, Boeing and FAA management’s arrogance in continuing to perform unethical and illegal activities if the personal rewards are seen to outweigh the risk can be mitigated completely so that the Air Force will avoid being defrauded and receive the product contracted for, with the required levels of quality, safety, and reliability assured. And our country and the vast majority of Boeing workers not complicit with the noted fraud will reap the benefits of such a key contract to protect our military aircraft industrial base.

I hope one day soon the noted FAA/Boeing fraud will be ended. However, until then, procurement officials like you and the DCMA will have to take actions to protect our country and military from it on programs such as the KC-X tanker program and the P-8A Poseidon program.

Please ensure these warnings are heeded and the contract language is structured to protect the Air Force and the taxpayer from the noted Boeing/FAA fraud. Please delay any contract signing until such contract language is drafted, if necessary.

And please distribute this letter to your Deputy, Lt. Gen. Donald Hoffman, John Young, and any other member of your team that you believe has a need to know this information.

Sincerely,

Gerald Eastman

cc: The Honorable Patty Murray
United States Senate
173 Russell Senate Office Building
Washington, DC 20510
202-224-0238