Boeing probe intensifies.

The grand jury probe of Boeing Co.'s illegal document gathering is growing larger and gaining steam. Since late 2002, the Los Angeles U.S. attorney's office has been investigating Boeing's alleged use of thousands of sensitive Lockheed Martin Corp. documents to help win a multi-billion-dollar competition for Air Force launch contracts during the late 1990s. That investigation is now before a federal grand jury. Most recently, the U.S. charged a third former mid-level Boeing manager with participating in an alleged scheme to use proprietary documents stolen from Lockheed to compete for National Aeronautics and Space Administration (NASA) contracts, a move that comes even as investigators increasingly pursue higher level executives of the company's rocket unit.

Last year, Air Force officials concluded that Boeing had illegally acquired thousands of pages of proprietary Lockheed documents from former Lockheed managers it hired in the 1990s, giving Boeing an unfair advantage by helping it calculate the amount bid by its rival in a major rocket competition. Boeing was stripped of $1 billion in military launches and suspended from bidding for new Air Force business as a result.

The NASA contracts involve different Lockheed documents, different Boeing managers, and a different former Lockheed employee than those involved in the Air Force matter. The widened investigation shows that the use of Lockheed data may have been broader than Boeing has acknowledged, according to The Wall Street Journal. That newspaper's reports said an affidavit from a former Boeing cost analyst, separate e-mails, and Air Force papers seemed to contradict Boeing's assertions that only a few "renegade" mid-level managers, who have since been fired or disciplined, were involved in wrongdoing. The new information also indicates that sensitive data acquired from competitors were more widely used by Boeing than the company has publicly disclosed.

The government affidavit says that Boeing official Larry Satchell repeatedly received proprietary and "competition-sensitive" documents that belonged to Lockheed and then provided precise cost and other data gleaned from those documents to Boeing's cost analyst, who then plugged them into computer programs comparing Boeing and Lockheed costs. Those cost comparisons were used and reviewed by Boeing executives all the way to the top of the unit's corporate hierarchy, according to the government. Once Boeing started looking into Satchell's activities in 1999, according to the affidavit, he obstructed justice by urging the analyst to destroy all copies and references to "tainted" Lockheed cost estimates. Satchell received a written reprimand from Boeing and then left the company. Under a grant of immunity, the analyst told prosecutors that Boeing used Lockheed's proprietary data to bid on both the NASA contracts and the earlier Air Force contracts, according to government officials.

A Boeing spokesperson declined to comment on the specific allegations but said the company is "continuing to cooperate with the U.S. attorney" in the investigation. Boeing also said it stands by its assertions that none of the improperly obtained information was used in preparing its bids and added that the company "stands by the thoroughness" of its initial internal investigations into the matter.

Responding to an Air Force demand that the aerospace giant hire an outside ethics watchdog to alert the government of any future transgressions by the company, Boeing has tentatively agreed to the measure as part of a broad administrative settlement still being negotiated with the Air Force. According to a Wall Street Journal report, Boeing agreed in principle to create an ombudsman, answerable to both the government and Boeing. The independent monitor would oversee Boeing's revamped ethics-compliance programs, file regular progress reports with the Pentagon, and flag any missteps or questionable activities by company officials.

The same report noted that Boeing also agreed to forgo asking the military to reimburse a portion of tens of millions of dollars in expenditures related to fixing its much-publicized ethics problems. In addition, Boeing agreed to pay the government about $2 million to cover the cost of the Air Force's investigative efforts so far. The anticipated settlement between Boeing and the Air Force may not be announced for months, and until then Boeing will remain suspended from competing for new government rocket business.