Investigation zeroes in on bid status a former space agency
official shared with executive
By Andy Pasztor, Andrew Tangel and Aruna Viswanatha
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 15, 2020).
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
(END) Dow Jones Newswires
August 15, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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