Space Launch Deal Puts Spotlight On Contracting Revolving Door

Peter Flaherty President, National Legal and Policy Center
Font Size:

Washington’s metaphorical “revolving door” keeps on spinning. A recent case involving a former Air Force procurement official is at the center of a high-stakes dispute over the launching of rockets into space, and the huge contracts that go with them.

From March 2011 to January of this year, Roger “Scott” Correll was the official at the Pentagon responsible for procuring launch services from private companies. One of his last official acts before his “retirement” in January was to oversee a deal with a company called United Launch Alliance (ULA) for a whopping 36 future launches. ULA is a joint venture of Boeing and Lockheed.

This month, Correll popped up with a new job with Aerojet Rocketdyne, which just happens to supply rocket engines to ULA. His title is Vice President for Government Acquisitions and Policy, seemingly more than befitting of his role.

Granted, there are not a lot of choices when shopping for firms capable of launching rockets. It comes down to two or three, and it is probable that Correll would have been criticized whatever he did. But what really irks ULA’s main competitor — Space X, founded by PayPal co-founder Elon Musk — is the monopolistic nature of the contract, locking up three dozen launches for several years to come.

A subplot to this story is that not all of Rocketdyne’s engines are made in the United States. Some are made in Russia. Among the planned 36 launches are those for the Atlas V rocket that relies on the Russian-made RD-180 engine for its main thrust. Rocketdyne owns half of a company called RD Amross. The other half is owned by a Russian company called NPO Energomash, which actually builds the engines.

Correll could not have anticipated the turmoil in the Ukraine that has so complicated U.S.-Russian relations, but now his rocket launch deal is even more controversial.

The appearances here could not be worse. Bad appearances are not all that uncommon, however, nor do they violate the law. Occasionally, however, they point to more nefarious activity. That was the case in the Boeing Tanker Deal Scandal of the last decade, exposed by the NLPC, saving taxpayers billions of dollars.

The tankers are flying gas stations that refuel fighters and bombers on long-range missions. The original plan was for the Air Force to lease, rather than buy, a hundred 767s to be used as tankers from Boeing, a windfall for the company.

The central figure in the scandal was Darleen Druyun, the former Air Force official who negotiated the deal with Boeing and soon after took a job with Boeing. Druyun’s was prosecuted criminally after NLPC filed a complaint in October 2003 with the Pentagon Inspector General and the Defense Department Criminal Investigative Service. It was the basis of a front-page Wall Street Journal article the next day.

The complaint detailed how Druyun, while still at the Pentagon, sold her house to a Boeing executive who was also working on the tanker deal and how her daughter had worked for Boeing since 2001.

The complaint specifically raised the possibility that Druyun had negotiated employment with Boeing while still at the Pentagon, which would have been flatly illegal. A subsequent Boeing internal investigation determined it to be true. In November 2003, Druyun and Boeing Chief Financial Officer Michael Sears were fired. One week later, Boeing Chief Executive Officer Phil Condit resigned.

Subsequently, Air Force Secretary James Roche and Air Force Assistant Secretary for Acquisition Marvin Sambur also resigned as a result of the scandal.

In 2004, Druyun accepted a plea bargain and was sentenced to nine months in jail. Boeing CFO Michael Sears, who negotiated Druyun’s employment, pled guilty in November 2004, and was sentenced to four months in prison.