Fallen Star

By George Cahlink

February 1, 2004

The cautionary tale of a celebrated federal executive's corporate flameout.

In the mid-1990s, Darleen Druyun, the hard-nosed and powerful civilian chief of Air Force acquisition, took a rare vacation from her 18-hour workdays at the Pentagon. Her absence provided a chance for her political and military bosses-who thought a career federal executive should not have power over billions of dollars in weapons contracts-to try to cut her down to size. With no good reason to fire her, they instead moved to simply eliminate her job as the service's top contract negotiator.

When a loyal secretary contacted Druyun to warn her, Druyun cut short her vacation and returned to Washington. But she didn't go to her Air Force bosses to complain about the move; instead she paid a visit to her political allies in the Office of the Secretary of Defense. Within a year, her nemeses in the Air Force, a three-star general and a political appointee, had left the service.

"They're gone, but I'm still here," Druyun would later tell a colleague. Druyun's maneuvering to quash the effort to oust her is emblematic of her relentless management style-a style that kept her a step ahead of colleagues and contractors during nearly a decade overseeing Air Force acquisition, but, ultimately, earned her more respect than friends.

It may also have contributed to her downfall. Druyun retired from the Air Force in December 2002 and embarked on a more lucrative career managing missile defense contracts for Boeing, the nation's second-largest defense contractor. But she was fired last fall amid investigations by the Justice Department, the Pentagon and Congress into whether she improperly or illegally entered into talks with a Boeing executive about a job while championing a multibillion-dollar Air Force contract to lease tanker aircraft from the company. The controversy over Druyun's hiring was a key factor in the resignation in December of Boeing's chairman and chief executive officer, Philip Condit.

RISK TAKER

Druyun began her career as a contracting intern in 1970 at Robins Air Force Base in Georgia two years after graduating from Chaminade University in Hawaii. Thirty-two years later, she retired as a member of the Senior Executive Service who oversaw an Air Force procurement budget of more than $30 billion per year.

Druyun is a tall, 57-year-old mother of two adult daughters who wears oversized, saucer-shaped eyeglasses, has the tight-lipped smile of a librarian and a voice as flat as a telephone operator's. She doesn't look like most aggressive, risk-taking executives, but "she inspired a fair amount of terror, which is not necessarily a bad thing for an administrator," says Richard Aboulafia, an aerospace consultant with the Teal Group in Fairfax, Va. "She did not make a lot of friends, but she had a reputation for getting the job done."

As a powerful woman with no military service background, Druyun was a rarity in the male-dominated world of weapons contracting. A generation ago, Druyun could not have become a powerful player at the Pentagon, but her career peaked in an era of profound upheaval in the Defense contracting establishment. By the mid-1990s, the Cold War military spending spree had ended. The Pentagon budget was being scaled backed and the Clinton administration had called for "reinventing" how the government does business.

Druyun seized the mantle of reform. She bullied contractors into lowering prices by reminding them of budget realities. She talked vendors into unprecedented partnerships to save money. She took advantage of new, more flexible acquisition rules to buy commercial products and awards contracts faster. She regularly met with contractors to tell them what they were doing right and wrong. Druyun is credited with saving the Air Force $20 billion in the process.

But the procurement reforms of the 1990s also created a sense in the acquisition community that the old rules no longer applied. Contractors were not to be kept at arm's length, but treated as partners. "The risk-taking, or what the acquisition reformers would call 'innovation,' did go too far," says Angela Styles, who until recently served as head of the Bush administration's Office of Federal Procurement Policy. "The environment became one that encourages and rewards carelessness. The lines became too easy to cross, and no one was paying attention. I don't even think most people know where the lines are anymore."

Under such circumstances, it's not hard to see how an innovator like Druyun could wind up making decisions that put her career at risk. Investigators are now probing Druyun's oversight of a controversial $21 billion deal to lease a fleet of 100 tanker aircraft from Boeing. The deal has been widely criticized by lawmakers, notably Sen. John McCain, R-Ariz., who say the plan amounts to a federal bailout of the ailing airplane manufacturer. Critics point to an e-mail Druyun sent top Boeing officials in 2002 saying the tanker proposal of a European rival of the company was cheaper as evidence she was sharing insider information. Her backers, however, say Druyun was doing what she had always done-playing contractors against one another to get the best deal for the Air Force. The Pentagon now has put the tanker deal on hold pending an investigation by the Defense inspector general.

Meanwhile, the U.S. attorney's office in Northern Virginia is investigating Druyun and former Boeing chief financial officer Michael Sears, who also was fired last fall. Investigators have focused on whether Druyun negotiated with Sears to land a job with Boeing before recusing herself from decisions related to the firm. In December 2003, The Wall Street Journal reported that Druyun may have used her daughter, Heather, who works in Boeing's human resources department, as a go-between. Investigators also are looking into Druyun's sale of her northern Virginia home last fall to a Boeing corporate attorney who was involved with the tanker lease deal.

In January, the Journal reported that the Defense Department had opened a broad-ranging investigation of the conditions under which other high-level Pentagon officials have been hired by defense contractors in recent years.

The ongoing investigations of Druyun will determine whether she engaged in unethical or illegal actions in the closing days of her federal career. She has declined all press interviews since her firing, but interviews with more than a dozen of her former colleagues and an examination of the deals she made at the Air Force show that she had long demonstrated a willingness to push federal rules and regulations to their limits. But at the same time, even those who clashed with Druyun describe her as committed to fairness and as a dogged defender of Air Force interests.

THE GODMOTHER

Druyun's penchant for pushing the envelope in procurement showed in her management of the Air Force's C-17 cargo aircraft. She liked to call herself the "godmother" of the transport plane for turning around the program after it was billions of dollars over budget and a year behind schedule in the mid-1990s. President Clinton hailed the turnaround in 1996, calling the C-17 "the best moving van in the world." But while Druyun was widely praised for saving the aircraft, she almost lost her job because of it.

In the early 1990s, the plane's builder, McDonnell Douglas, was running out of money to build a prototype. Without a cash infusion, there were doubts the plane would ever be built. After meeting with McDonnell Douglas executives, Druyun and four other Air Force officials came up with a plan to advance the company millions of dollars in payments. A 1992 Defense inspector general report found the officials allowed the company to backdate some records and reclassify costs to speed up payments. The report recommended that all five officials be disciplined, but did not recommend that the program be halted or call for criminal prosecution.

Ultimately, of the five Air Force officials involved, one general was fired, two others were barred from acquisition work, and a senior civilian was transferred. Druyun was not punished. Retired Air Force Gen. Merrill McPeak, then the service's chief of staff, says Druyun was supposed to be fired, but he lobbied then-Defense Secretary Les Aspin to spare her job. "I am a bit of a maverick myself and tried to protect [other mavericks]," the outspoken former general says. He adds that he would be "very surprised" if Druyun were found guilty of any ethics violations related to her Boeing job.

The C-17 rescue came at a time when Druyun was making a name for herself by testing the limits of Defense procurement practices. In 1995, she initiated a series of reforms, known as "lightning bolts," that would become the hallmark of her Pentagon career. Over the next seven years, Druyun would back 19 such reforms, which were designed to save money and time by bringing more businesslike practices to Air Force acquisition. One initiative called for streamlining requests for proposals from contractors by eliminating military-specific requirements. Another sought to keep the Air Force and contractors out of court by creating an alternative dispute resolution process.

The creation of an all-weather precision bomb known as the Joint Direct Attack Munition (JDAM) is widely seen as a product of those reforms. In building the bomb, the Air Force waived more than 80 Defense buying rules and relied heavily on commercial technology. As a result, the bombs were fielded in large quantities in less than a decade for $20,000 apiece. During recent military operations in Iraq and Afghanistan, JDAM was hailed as one of the greatest battlefield advances since the machine gun, because of its pinpoint accuracy.

But other efforts, such as the Air Force's Evolved Expendable Launch Vehicle (EELV), have not been as successful. Druyun championed the EELV in the mid-1990s as a way to save money by developing launch vehicles, launch sites and infrastructure that could be used by the military, other federal agencies and commercial satellite companies. But the program has consistently been over budget as the commercial space launch market has dried up. Last year, Boeing lost its EELV work after the Pentagon determined it had obtained proprietary information from rival Lockheed Martin. As a result, Lockheed Martin got the contract by default-but at an additional cost of about $1 billion. In 1999, Druyun called working on the EELV project "the worst experience of her life," according to notes from a meeting with contractors that were widely circulated among the Defense trade press.

Druyun was equally outspoken during the early 1990s, when she spent three years as NASA's procurement chief and a key architect of the agency's "better, faster, cheaper" approach. In 1992, Druyun told Florida Trend magazine that many of NASA's programs were a "mess" and called for greater contractor accountability. "The good contractors are happy," she said. "They wonder why the hell we give contracts to someone who has a losing record. The ones who bitch and complain are the ones with lousy records. Now there will be motivation to improve."

FIERCE DEFENDER

Although Druyun earned a reputation as a reformer, she was equally well-known as a strong defender of Air Force acquisition efforts. She awarded, protected and managed some of the largest contracts ever issued by the Air Force.

In 2001, Druyun oversaw the award of a $200 billion contract to Lockheed Martin to build the Joint Strike Fighter. The deal was the largest ever awarded by the Pentagon and over the next four decades will result in the purchase of 3,000 planes for the Air Force, Navy, Marine Corps and British military. Druyun is credited with shepherding a difficult competition between Lockheed Martin and Boeing.

At one point, Druyun famously delivered a tough-love message to Lockheed Martin executives after Pentagon officials became fed up with the company's management. "If I detect bullshit, you go to the bottom of the chart," she warned them at one meeting, according to published reports. At the same meeting, though, Druyun offered praise for the manager of the company's F-16 fighter program. In short order, that manager was overseeing what would turn out to be the company's winning Joint Strike Fighter bid.

Druyun also was known as a staunch defender of Lockheed Martin's F/A-22 Raptor fighter aircraft, which faced billions of dollars in cost overruns as it was developed in the 1990s. Philip Coyle, who was the Pentagon's top tester for much of Druyun's tenure-and frequently clashed with her over the F/A-22's schedule delays and cost overruns-says she could be toughest when her programs faced criticism. "I didn't see her as a maverick or a reformer. She was a tough defender of Air Force acquisition programs," says Coyle.

Micky Blackwell, a former senior Lockheed Martin executive, says Druyun was like a "mother hen" in protecting the F/A-22. He says she continually "laid into" the contractor to become more efficient or risk having the program scrapped as the Defense budget shrank. Blackwell credits Druyun's persistence not only for saving the F/A-22, but pushing Lockheed Martin to develop lean manufacturing methods to cut costs. The effort paid off-the Air Force began fielding the F/A-22 in 2003.

Whitten Peters, who served as Air Force secretary in the latter half of the Clinton administration, praises Druyun's handling of the "politically charged and complicated" competitions for repair and maintenance work at Air Force depots after the service shut down depots in California and Texas in the late 1990s. "Those deals were hard and she did them well," he says. They also remain the largest partnerships the Pentagon has forged between federal workers and Defense contractors.

In the largest of three deals, Druyun orchestrated a $10.1 billion contract for engine repair work between the Air Force's Oklahoma City depot and former federal workers at a depot in San Antonio, which had been privatized and taken over by Lockheed Martin. Peters says Druyun had a unique ability to get various parties to team up on contracts. An audit by the General Accounting Office later concluded that the deal would save the Air Force $1.8 billion over 15 years.

TOUGH BUT FAIR

Terry Little, a veteran Defense weapons manager who oversaw the JDAM program, still remembers how angry he was at his first meeting with Druyun in the mid-1980s. Little was managing a classified weapons program at Eglin Air Force Base, Fla., when Druyun, a few levels above him in the Air Force's Pentagon hierarchy, came down for a review and promptly told him how to run the program. Little says his first inclination was to tell her to do it herself, but his boss told him to listen to Druyun.

"After getting over the grumpiness of being told by this cold, icy woman what to do, I was pleased, because I got satisfactory results," says Little, who would adopt Druyun as a mentor and earn a reputation for getting weapons built quickly at low cost. Little says Druyun worked harder than anyone else and that it showed at meetings, where she typically knew more than anyone else in the room about a weapons program. "Generals would defer to her not just on strategy but technical issues too, which was unusual, because she was a contract person," he says.

Arthur Money, who was Druyun's boss while an Air Force undersecretary in 1996 and 1997, said she was a "superb" executive on acquisition issues who had the courage of her convictions. "I never want 'yes people' to work for me," he says. Retired Gen. Larry Skantz, a mentor to Druyun early in her career when he was running the Air Force Systems Command, fiercely defended his protégé in a recent column in Defense News, calling her "tough, focused, sometimes difficult to deal with, but a superb professional who devoted an inordinate number of hours to her work."

While Druyun was hard on contractors, Blackwell says she also frequently asked them what she could do to help cut through the Pentagon bureaucracy. And always, he said, Druyun would give a losing contractor a candid briefing on why they lost. "She was tough on everybody," he says, "but very fair."


By George Cahlink

February 1, 2004

http://www.govexec.com/magazine/2004/02/fallen-star/15929/