Ball Revives Protest of NPOESS Sensor Award to Boeing

Ball Aerospace & Technologies Corp. refiled a bid protest over a U.S. Air Force satellite-sensor contract that a Defense Department audit has found was improperly awarded to Boeing back in 2001.

Roz Brown, a spokeswoman for Ball, said the company is protesting despite the fact that the instrument in question, the Conical Microwave Imager Sounder (CMIS), has been canceled. CMIS was to be part of the civil-military National Polar-orbiting Operational Environmental Satellite System (NPOESS), which is being restructured.

Brown said that Ball’s decision was based on a July 14 report by the Pentagon inspector general that concluded that the CMIS competition was rigged in Boeing’s favor by Darleen Druyun, who at the time was the Air Force’s second-highest ranking procurement official.

Druyun left the Air Force in 2002 to take a job with Chicago-based Boeing. She was fired along with Boeing Chief Financial Officer Michael Sears in 2003 when the company found that she had been hired while still overseeing contracts for which Boeing was competing. She was subsequently indicted and pled guilty in 2004 to doing favors for Boeing including negotiating a lease of tanker aircraft that was higher than she thought it was worth.

The CMIS award was one of eight Boeing contracts ordered reviewed in February 2005 by Mike Wynne, then the acting undersecretary of defense for acquisition, logistics and technology, in light of the Druyun ethics scandal. Wynne is now secretary of the Air Force.

Boulder, Colo.-based Ball originally filed a protest with the U.S. Government Accountability Office shortly after the CMIS contract, with a potential value of $300 million, was awarded to Boeing Satellite Systems International of El Segundo, Calif. But the company subsequently withdrew its complaint citing “business reasons,” according to the Pentagon inspector general’s report.

The CMIS instrument was intended to measure atmospheric temperature and humidity, cloud cover and ocean surface wind. It was canceled this year as part of a restructuring aimed at reining in the cost of the NPOESS program.

Conrad Lautenbacher, administrator of the National Oceanic and Atmospheric Administration, the Air Force’s civilian partner on the NPOESS program, told the House Science Committee June 8 that the CMIS program had run into “too many technical challenges and risks.”

Maj. Regina Winchester, a spokeswoman for the Air Force, said the decision to cancel CMIS and pursue an alternative sensor was unrelated to the Pentagon inspector general’s investigation

Brownsaid company lawyers are still reviewing the possible compensation that it would seek as part of its protest.

That compensation, some experts believe, could be significant. Loren Thompson, chief operating officer at the Lexington Institute, a think tank here, said that the fact that CMIS was canceled may have little bearing on the government’s potential liability in this matter.

Procurement case law generally holds that events that follow a contract award do not mitigate the government’s liability, Thompson said. That, in theory, could enable Ball to pursue compensation equivalent to the value of the CMIS contract, he said.

“In this case, Ball could argue that had it won, the sensor might not have been canceled and it has lost a considerable stream of revenue,” Thompson said.

Short of that, Ball could seek to recover its investment in developing its proposal for the instrument, as well as the money spent on the initial protest, said Ken Boehm, chairman of the National Legal and Policy Center in Falls Church, Va.

Ball also could pursue a civil suit against Boeing on the matter, Boehm said. However, companies the size of Ball often are reluctant to take on industry giants in matters such as this for fear that it could adversely affect their subcontracting opportunities , Boehm said.

The defense industry’s post-Cold War consolidation has left the few remaining prime contractors with considerable clout, Boehm said. Boeing, for example, serves as lead systems integrator for major Pentagon programs like the Future Combat System and the Ground Based Midcourse Defense System and as such is responsible for awarding billions of dollars worth of subcontracts, he said.

“If you get cross with Boeing, you could miss two decades of business,” Boehm said.

Joe Tedino, a Boeing spokesman, said in a written statement that the company continues to believe that it won the CMIS competition based on merit.