Boeing : U.S. Probes Boeing-NASA Contacts


Investigation zeroes in on bid status a former space agency official shared with executive

By Andy Pasztor, Andrew Tangel and Aruna Viswanatha 

Federal prosecutors have opened a criminal probe into whether a senior NASA official improperly told a high-ranking Boeing Co. executive about the status of a lunar-lander contract, spurring the company to revise its bid, according to people familiar with the investigation.

The grand-jury investigation, which hasn’t been previously reported, is being led by the U.S. attorney’s office for the District of Columbia and is focused on communication that occurred early this year outside established contracting channels, these people said. Prosecutors, they said, are looking into contacts between Doug Loverro, before he resigned as head of NASA’s human-exploration programs in May, and Jim Chilton, senior vice president of Boeing’s space and launch division.

Mr. Loverro, who wasn’t part of NASA’s official contracting staff, informed Mr. Chilton that the Chicago aerospace giant was about to be eliminated from the competition based on cost and technical evaluations, according to some of the people. Within days, Boeing submitted a revised proposal, they said. The National Aeronautics and Space Administration formally determined the bid changes came too late to be considered, and three other companies won contracts in April totaling nearly $1 billion.

The investigation is in the early stages, according to the people familiar with it, and it isn’t known whether the probe will result in a criminal case. Regardless of how it ends, the investigation heightens scrutiny of Mr. Loverro’s conduct and raises new questions about Boeing’s decision-making and internal contracting safeguards. Several mid-level Boeing officials, including an attorney, were pushed out of the company as a result of the controversy, people familiar with the personnel changes said.

The company has taken steps to improve compliance training following the episode, said a person briefed on Boeing’s internal response.

Boeing, which faces a separate criminal probe into its development of the 737 MAX passenger jet, declined to comment on the investigation or on behalf of Mr. Chilton. A NASA spokesman said it is “inappropriate to discuss personnel actions” but added, “We are confident in our procurement process.” A spokeswoman for the U.S. attorney’s office didn’t respond to requests for comment. Mr. Loverro’s lawyers couldn’t be reached for comment.

Mr. Loverro has told investigators he was trying to help the lunar-lander program and taxpayers rather than pursuing anything ill-intended, according to some of the people familiar with the investigation, by reducing the likelihood that the bidding process would be slowed down by potential challenges or appeals to the outcome.

Mr. Loverro’s communications with Boeing, and the company’s actions following those communications, prompted complaints within parts of NASA, the people familiar with the inquiry said. The complaints sparked a previously reported probe by the agency’s inspector general into whether Boeing gained unusual insight or any advantage in the competition. Weeks after the awards were announced, Mr. Loverro stepped down as an associate administrator under pressure from NASA’s leadership.

In a farewell message to staff sent on May 19, Mr. Loverro suggested he had overstepped his authority or otherwise might have run afoul of contracting rules. He wrote that “risk-taking is part of the job description” of someone in his role. Without elaborating, the message said, “I took such a risk earlier in the year because I judged it necessary to fulfill our mission.”

After Mr. Loverro left NASA, some of these people said, prosecutors opened their probe into whether procurement integrity laws were violated, requesting written statements and issuing at least one subpoena. The inspector general’s civil inquiry has been put on hold pending resolution of the criminal probe, according to people familiar with both inquiries. A spokeswoman for the inspector general declined comment.

In his statements to NASA and Justice Department investigators, these people said, Mr. Loverro indicated his goal was to prevent disruptions to NASA’s lander plans. Prosecutors also are looking at his contact with another bidder, these people said, without identifying that party.

Both of the contacts with bidders might have breached established NASA procedures designed to insulate contracting decisions from improper influence, according to these people, and could have reflected efforts by a newcomer to NASA’s leadership ranks to rev up competition. Mr. Loverro is a former senior Pentagon space official who played an important role in establishing the goals and broad design of NASA’s human-lander program after coming to the agency in December. He didn’t make the final contracting decisions.

At the end of April, NASA chose the three corporate teams to develop landers intended to take astronauts to the moon for the first time in nearly half a century, relying on a blend of startup and established contractors to lead the way with dramatically different technical solutions. Totaling $967 million, the contracts are intended to be a down payment for billions of additional tax dollars NASA plans to spend on lander prototypes and testing. There is no indication the winners — Space Exploration Technologies Corp., Blue Origin Federation LLC and Leidos Holdings Inc.’s Dynetics unit — are part of the Justice Department probe.

Those three companies either declined to comment or couldn’t be reached.

For Boeing, however, the outcome was widely seen as a blow. Industry officials expressed surprise the company wasn’t chosen despite its formidable role in human space exploration stretching back some five decades.

In his farewell message, Mr. Loverro wrote that his exit from NASA had “nothing to do with your performance as an organization nor with the plans we have placed in motion” to land astronauts on the moon by 2024, adding, “My leaving is because of my personal actions.”

Mr. Loverro’s resignation attracted widespread attention partly because it was so abrupt — he submitted his resignation the day before he sent his going-away message — and partly because it came less than two weeks before SpaceX’s flight of the first commercially developed capsule to carry humans to the International Space Station. The Wall Street Journal initially reported the inspector general’s inquiry, and the Washington Post later identified Mr. Chilton as Mr. Loverro’s contact at Boeing.

In the 737 MAX investigation, federal prosecutors at Justice Department headquarters have been gathering evidence for nearly two years. In recent months they have been seeking to build a case against a former Boeing pilot who oversaw regulatory approvals for MAX manuals and pilot training before he left the company, the Journal has reported.

Two of the aircraft crashed within five months, killing a total of 346 people and sparking various investigations into Boeing’s failures to promptly and fully provide design details to regulators during the plane’s initial certification. Boeing has said it met all regulatory requirements in designing the MAX and is working to obtain approval of revisions and fixes to the plane’s design. The former Boeing pilot’s lawyer has said his client didn’t do anything to undermine safety or mislead regulators.

Write to Andy Pasztor at andy.pasztor@wsj.com, Andrew Tangel at Andrew.Tangel@wsj.com and Aruna Viswanatha at Aruna.Viswanatha@wsj.com

 



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