Investigation leads to indictments

  • Published
The Defense Department’s inspector general announced July 18 criminal indictments against two former Boeing Co. managers.

Joseph E. Schmitz said that a joint investigation by officials from the Defense Criminal Investigative Service and the Air Force Office of Special Investigations resulted in the indictments.

The managers were in the evolved expendable launch vehicle program. A federal grand jury in Los Angeles charged them with conspiracy to conceal and possess trade secrets.

Kenneth Branch, 64, and William Erskine, 43, are charged with misusing proprietary Lockheed Martin Co. documents during bidding for Air Force launch contracts. If convicted, each faces a maximum of 10 years confinement, a fine of $250,000 or both.

"The potential theft of proprietary data is a specter that can strike at the very foundation of any competitive system designed to ensure quality while containing costs," said Schmitz. "Competitions to design and build the most advanced military systems in the world for the Department of Defense have a potential value of billions of dollars per year. Part of the mission of the DCIS special agents is to investigate allegations to ensure that the integrity of commercial competitions (is) strictly maintained and that a fair playing field is maintained among defense contractors."

In 1997, the Air Force officials announced contracts for launch vehicles services to both Boeing and Lockheed Martin. Air Force officials agreed to provide each company with $500 million for development costs associated with their respective programs, with both companies agreeing to pay any additional developmental costs.

In 1998, of the 28 initial launches, Boeing won 19 of the launches while Lockheed won nine. The program uses the Lockheed Atlas or the Boeing Delta rocket systems to launch government satellites into space for national security interests and for the transportation of commercial satellites.

In 2002, upon learning about the loss of proprietary documents, Lockheed Martin officials alerted the Air Force, which, in turn, informed the DCIS. DCIS and OSI officials then launched an investigation into the theft and referred the case to the U.S. attorney for the central district of California.