Boeing CEO ouster raises Hill eyebrows

The latest turmoil at Boeing, which on Monday forced out its chief executive, Harry Stonecipher, is unlikely to reduce the volume of congressional criticism aimed at the aerospace giant.

Stonecipher’s ouster over a personal relationship with a female employee will likely confirm the view that Boeing still needs to clean house.

But the incident may not make matters worse, sources say, because it involves personal impropriety rather than contractual misconduct.

One congressional source with knowledge of defense matters said, “Clearly, Boeing’s problems are far from over…It is clear that … it will take a long time to right this ship.”

A defense industry consultant said, however, “Boeing is in enough trouble as it is…In the Hill context, I don’t think this adds all that much.”

Whether Stonecipher’s resignation will spark more scrutiny on Capitol Hill for the company is unclear.

Stonecipher, who was married and had been on the job since December 2003, had crusaded on the Hill and within the Pentagon on Boeing’s behalf, stressing that all employees — from top executives to mechanics — are held to strict ethical codes.

He was called out of retirement to help right the company, which has been embroiled in a scandal over a $23 billion deal to lease aerial refueling tankers to the Air Force. That deal ultimately led to the resignation of Stonecipher’s predecessor, Phil Condit, and the criminal convictions of Boeing executives Michael Sears and Darleen Druyun.

For more than a year, he served as the ethical face of a company in turmoil — a key factor in the board of directors’ decision to ask for his resignation, according to a Boeing e-mail to company employees.

“The board therefore decided that it had no choice but to request Harry’s resignation, especially since we — and much of the rest of the world — have considered him as an icon of Boeing’s integrity,” the e-mail said. “We want to reiterate that we are committed to strong ethical leadership.”

Stonecipher’s resignation comes just days after he won one of the biggest victories of his brief tenure.

Last week, the Air Force lifted its 20-month ban on contracting with three of the company’s business units. The Air Force enacted the ban in July 2003 after it discovered Boeing held proprietary information belonging to competitor Lockheed Martin, giving Boeing the edge to win a 1998 contract for the Evolved Expendable Launch Vehicle (EELV).

Defense-industry analysts said Stonecipher’s resignation would have reverberating effects within the company — particularly among its top ranks as executives position themselves to take over the chief executive position.

“The main impact is going to be internal to Boeing itself — deciding who to replace Stonecipher” with, said Philip Finnegan, a defense industry analyst at the Teal Group in Fairfax, Va.

Possible replacements include Jim Albaugh, head of the Boeing Integrated Defense Systems, and Alan Mulally, president of the company’s commercial-plane business. James Bell, the company’s chief financial officer, will take over as Boeing’s acting chief executive.

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