[Senate Hearing 112-79]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 112-79
 
 THE RESULTS OF THE INVESTIGATION BY THE DEPARTMENT OF DEFENSE AND THE 
DEPARTMENT OF THE AIR FORCE INTO THE RELEASE OF PROPRIETARY DATA IN THE 
                            KC-X COMPETITION

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 27, 2011

                               __________

         Printed for the use of the Committee on Armed Services




        Available via the World Wide Web: http://www.fdsys.gov/

                               __________

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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
DANIEL K. AKAKA, Hawaii              JEFF SESSIONS, Alabama
E. BENJAMIN NELSON, Nebraska         SAXBY CHAMBLISS, Georgia
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri           SCOTT P. BROWN, Massachusetts
MARK UDALL, Colorado                 ROB PORTMAN, Ohio
KAY R. HAGAN, North Carolina         KELLY AYOTTE, New Hampshire
MARK BEGICH, Alaska                  SUSAN M. COLLINS, Maine
JOE MANCHIN III, West Virginia       LINDSEY GRAHAM, South Carolina
JEANNE SHAHEEN, New Hampshire        JOHN CORNYN, Texas
KIRSTEN E. GILLIBRAND, New York      DAVID VITTER, Louisiana
RICHARD BLUMENTHAL, Connecticut

                   Richard D. DeBobes, Staff Director

               David M. Morriss, Minority Staff Director

                                  (ii)

  
?



                            C O N T E N T S

                               __________

                    CHRONOLOGICAL LIST OF WITNESSES

 The Results of the Investigation by the Department of Defense and the 
Department of the Air Force into the Release of Proprietary Data in the 
                            KC-X Competition

                            january 27, 2011

                                                                   Page

Masiello, Maj. Gen. Wendy M., USAF, Program Executive Officer for 
  Combat and Mission Support, Office of the Assistant Secretary 
  of the Air Force for Acquisition...............................     7
Shirley, Steven D., Executive Director, Department of Defense 
  Cyber Crime Center.............................................    10

                                 (iii)


 THE RESULTS OF THE INVESTIGATION BY THE DEPARTMENT OF DEFENSE AND THE 
DEPARTMENT OF THE AIR FORCE INTO THE RELEASE OF PROPRIETARY DATA IN THE 
                            KC-X COMPETITION

                              ----------                              


                       THURSDAY, JANUARY 27, 2011

                                        U.S. Senate
                                Committee on Armed Services
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 9:33 a.m. in room 
SD-G50, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, McCaskill, 
McCain, Inhofe, Sessions, Graham, Wicker, and Brown.
    Committee staff members present: Richard D. DeBobes, staff 
director; and Leah C. Brewer, nominations and hearings clerk.
    Majority staff members present: Creighton Greene, 
professional staff member; Peter K. Levine, general counsel; 
and Jason W. Maroney, counsel.
    Minority staff members present: Pablo E. Carrillo, minority 
investigative counsel; David M. Morriss, minority counsel; and 
Christopher J. Paul, professional staff member.
    Staff assistants present: Kathleen A. Kulenkampff, Hannah 
I. Lloyd, and Brian F. Sebold.
    Committee members' assistants present: Tressa Guenov, 
assistant to Senator McCaskill; Joanne McLaughlin, assistant to 
Senator Manchin; Anthony J. Lazarski, assistant to Senator 
Inhofe; T. Finch Fulton, assistant to Senator Sessions; and 
Sarah Drake, assistant to Senator Wicker.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody.
    The committee meets today to address the inadvertent 
release of proprietary data in the process of the KC-X tanker 
procurement.
    We recognize that the Air Force is currently conducting a 
source selection in this procurement, and we need to avoid any 
action, comment, or answer that might compromise that source 
selection. This hearing will focus on, first, the nature of the 
information released by the Air Force; second, the steps that 
the Air Force took to determine what happened, and to determine 
if there was any damage to the fairness and integrity of the 
source selection process; and third, any remedial actions taken 
by the Air Force.
    I would ask both Senators and witnesses to avoid any lines 
of inquiry that could compromise the source selection process.
    The issue that needs to be addressed is whether the Air 
Force releasing proprietary or source-selection-sensitive data 
to the competitors during the ongoing third tanker procurement 
process has damaged that process.
    My understanding of the current situation is as follows: 
Boeing and the European Aeronautic Defense and Space Company 
(EADS) are competing for the contract to furnish the next 
generation strategic refueling contract, called the KC-X, for 
the Air Force.
    As part of this competition, the Air Force is evaluating 
the capability of the competitors' aircraft in a model referred 
to as the Integrated Fleet Aerial Refueling Assessment (IFARA). 
In this analysis, the Air Force is evaluating potential KC-X 
aircraft using several postulated real-world scenarios. In 
deriving an IFARA score, the Air Force uses the model to 
compare candidate aircraft with the current tanker, the KC-
135R.
    As part of the official discussions, within the current 
competition, the Air Force intended to share with each 
contractor the Air Force IFARA assessment on that contractor's 
aircraft, to ensure that there were no substantive 
disagreements on the calculations on the score.
    In November 2010, personnel working for the Air Force 
Program Office inadvertently sent the IFARA data files for the 
Boeing offer and the EADS offer to both contractors. After the 
error was identified, the Department of Defense (DOD) and the 
Air Force investigated the incident and determined that some 
IFARA data had been viewed by one of the two contractors. The 
Air Force then determined that comparable data should be 
released to the other contractor, in the effort to ensure that 
the competition could continue on a level playing field, and it 
was released.
    Now, joining us today are Major General Wendy Masiello, 
Program Executive Officer (PEO) for Combat and Mission Support, 
Office of the Assistant Secretary of the Air Force for 
Acquisition; and Steven Shirley, Executive Director for the DOD 
Cyber Crime Center. These witnesses have been selected because 
they have a detailed knowledge of issues regarding the specific 
subject matter of this hearing.
    I want to extend a welcome to our witnesses. Thank you both 
for appearing before this committee this morning. I know that 
it took some doing to get here, given the snow circumstances.
    Over the last month, the staff has met on two occasions 
with DOD officials familiar with the release of information and 
the Air Force investigation.
    Also, I made an offer to the chief executive officer (CEO) 
of each of the companies to submit written statements to the 
committee addressing these issues, should they choose to do so. 
We have received a submission from each of the companies, and 
without objection, we will make those two submissions part of 
the record at this time.
    [The prepared statements of Mr. Muilenburg and Mr. O'Keefe 
follow:]

               Prepared Statement by Dennis A. Muilenburg

    Mr. Chairman, thank you for this opportunity to provide a statement 
to the Senate Armed Services Committee regarding the release of 
contractor proprietary data in the KC-X competition. I am not in a 
position to comment on specific actions taken by another company. I 
can, however, provide the facts regarding how Boeing handled the data 
it received. In all respects, Boeing's conduct was consistent with the 
highest standards of ethically responsible behavior.

         On November 1 of last year, Boeing was notified by the 
        Air Force that a classified Integrated Fleet Aerial Refueling 
        Assessment (IFARA) package was available for Boeing to receive 
        from Wright Patterson Air Force Base (WPAFB). Boeing understood 
        the package contained Boeing's interim IFARA evaluation data 
        and score. Boeing retrieved the package and brought it to St. 
        Louis for review and analysis, following strict protocol for 
        the transport and handling of classified data.
         An analyst on the Boeing tanker program received the 
        IFARA data package from Boeing Security in St. Louis that 
        evening, and noted there were two disks and a cover letter. The 
        analyst took the materials to a classified lab for review with 
        another Boeing analyst. One of the analysts inserted the first 
        disk into a Boeing classified laptop. The analyst reviewed the 
        file structure and located the Excel file they believed would 
        contain the Air Force Fleet Effectiveness Value (FEV) for 
        Boeing. The analysts opened this file, confirmed it contained 
        the Boeing KC-767 FEV score, and printed this classified table. 
        An analyst then copied the contents of this first disk to the 
        classified laptop hard drive, and removed the first disk from 
        the computer.
         The analyst then inserted the second disk into the 
        laptop, and reviewed the file structure of that disk more 
        closely in an attempt to discern what the difference was 
        between the first and second disks. The analyst then noticed 
        that the parent folder name of the second started with the 
        prefix ``K-30B.'' At that point, the Boeing analysts became 
        concerned that the second disk could potentially contain 
        competitor data . The analysts immediately removed the second 
        disk from the laptop drive, and confirmed that the titles on 
        the first disk did indeed contain references to ``K-67B'' and 
        the titles on the second disk contained references to ``K-
        30B.'' At no point did the Boeing analysts open any files on 
        the second (``K-30B'') disk, nor did they make any copies or 
        print outs of the second disk data. Our analysts did not 
        forward the files or in any other way provide further access to 
        the data to any other person.
         The cover letter, both disks, as well as the 
        classified laptop used to open them, were all immediately 
        sealed by security and locked in classified safes, and the 
        analysts contacted the appropriate Boeing personnel to report 
        the incident. Boeing notified the Air Force by phone and email 
        that night, and received instructions the next day to repackage 
        the materials and return them to WPAFB in Dayton. Boeing 
        followed this direction, and couriered the materials back to 
        Dayton that same day (November 2).
         On November 8, the Air Force requested that Boeing 
        also deliver its classified laptop computer to the Defense 
        Computer Forensics Laboratory in Maryland on November 10. 
        Boeing complied with this direction.

    Boeing's behavior in this instance is emblematic of our conduct 
throughout this competition. We have competed fairly and aggressively. 
We have not sought extensions of time, we have complied with every 
deadline, and we have followed the strictures and procedures 
established by the Air Force acquisition authority to the letter. You 
can be sure that Boeing will do everything in its power to ensure the 
integrity of this competition because of its importance to our USAF 
customer and our military men and women that we are honored to serve.
    Mr. Chairman, Senator McCain, and members of the committee: 
American industry relies on the integrity of the Defense Department's 
acquisition processes. Your review of this matter is greatly 
appreciated.
                                 ______
                                 
                   Prepared Statement by Sean O'Keefe

    Chairman Levin, Senator McCain, and members of the committee, I am 
pleased to provide a statement to the committee concerning the U.S. Air 
Forces' inadvertent release of Integrated Fleet Aerial Refueling 
Assessment (IFARA) data in the KC-X tanker procurement. The facts 
surrounding this incident, and the responsible actions taken by EADS 
North America, are straight forward and deserve to be clearly 
understood with full transparency. We are pleased to contribute in any 
way to that full understanding.
    The constitutional role of Congress as exercised by this committee 
is critical, given that it examines issues that affect the capabilities 
of our men and women in uniform. I appreciate the thoughtful and 
careful manner in which the committee has engaged on the issue of data 
disclosure on the KC-X competition. It is my hope that this statement--
and the information we have provided to the committee--will add to your 
understanding of what transpired, as well as the care and precision 
with which EADS North America personnel dealt with a situation that 
they had no part in creating; and concurrently the professionalism of 
the U.S. Air Force response to make every effort to preserve the 
integrity of the procurement for aerial refueling tankers.
    Many members of this committee have considerable awareness of EADS 
North America. However, some of you may not. I would like to take a 
moment to briefly tell you who we are. EADS North America is the 
American Division of a global, publicly-traded defense and aerospace 
company whose products contribute daily to the security of the United 
States. In addition, as a global aerospace company, EADS is the largest 
international customer of U.S. manufactured aerospace components, 
purchasing in excess of $11 billion a year in U.S. manufactured 
components--many from your respective States--that are integrated into 
our final products and platforms for export around the globe.
    We are proud to be a major prime contractor to the Department of 
the Army today, providing the Lakota Light Utility Helicopter which is 
produced in Columbus, MS, and today is operational in the United 
States, Europe, and the Pacific. Additionally, we are the largest 
platform provider to the Department of Homeland Security, and we have a 
substantial and responsible history as a supplier to other departments 
and agencies of the U.S. Federal Government.
    As a company, EADS understands and embraces our obligations as a 
responsible provider of world class aerospace products to the U.S. 
military, as well as other government agencies and a myriad of 
commercial customers. We are a global corporation dedicated to bringing 
the best aerospace products to customers across the globe--just like 
our primary competitor, the Boeing Company. For the U.S. market, that 
means not just selling our exceptional products here for a good value, 
but building them here in the United States, and creating jobs across 
this country and participating constructively in the communities in 
which our employees live.
    The provision of capability and value to our customers is our 
foundation. As a corporate partner to the U.S. Government, our guiding 
tenet is the operation of our business enterprise in a manner that 
upholds the highest ethical standards. Those standards include 
protecting the integrity of the procurement process. When mistakes are 
made, we exercise rigorous care to safeguard competition sensitive or 
proprietary information--whether that information concerns us or our 
competitors. In the particular matter under discussion today related to 
the data disclosure on the U.S. Air Force aerial refueling tanker 
aircraft competition, EADS North America acted correctly, quickly, and 
responsibly in addressing an incident that was not of our making.
    Clearly, it would have been preferable that the data disclosure by 
the U.S. Air Force had not happened. However, after a full and thorough 
review of EADS North America's actions, I can tell you with high 
confidence that our actions following awareness of the disclosure were 
timely, responsible and appropriate.
    The facts surrounding this issue are clear. EADS North America 
received two data discs with security documentation from the U.S. Air 
Force. After proper in-processing, a cleared employee inserted and 
opened the first disc, reviewed and verified the EADS North America 
data, and closed it. He then inserted the second disc, and opened the 
first file on the disc. On seeing that the contents of the first page 
of that file contained competitor markings he closed the disc, removed 
it from the computer, and immediately secured it under appropriate 
security procedures. The total time that the file was open was less 
than 15 seconds.
    Once the data disclosure was discovered, our employee immediately 
followed established protocols to ensure that the disclosure was 
contained, that the media on which the data were contained was 
controlled, and that no communication of the content of the disclosed 
data occurred. All of this was done in line with all statutory and 
regulatory guidelines, and the highest standards of business conduct. 
Specifically, on the night of the disclosure incident, EADS North 
America secured the competitive data, under two-person control, using 
the Defense Department approved security facility at EADS North 
America. We immediately reported the disclosure to the U.S. Air Force 
Contracting Officer, and carefully followed the spirit and letter of 
subsequent government direction. This included the isolation of the 
data and recusal of the individual who discovered the disclosure, as 
well as the prompt return of the data and the processing equipment to 
the U.S. Air Force. The employee who opened the discs was immediately 
instructed that he must not disclose any information regarding the 
content of the file he saw on the second disc (one page), and was 
assigned to administrative duties separate from the KC-45 program, 
pending the outcome of an independent investigation, and the 
investigation and determination by the U.S. Air Force.
    Recognizing the importance of this unfortunate customer mistake in 
sending competitor data, I immediately initiated an independent 
investigation by outside counsel to review and document the events and 
actions taken by EADS North America to manage the situation. This 
investigation was thorough and comprehensive and its conclusions are 
the same as those reached by the U.S. Air Force's own assessment and 
the government's computer forensic analysis. We provided our complete 
and prompt cooperation with every aspect of the U.S. Air Force 
investigation, including providing the report of our internal 
investigation to the U.S. Air Force. The committee has received the 
same report of investigation of the events relating to the November 1, 
2010 incident. We have voluntarily made our findings and reports 
available to the committee, as requested. We did this without making 
public statements that might exacerbate matters or adversely affect the 
course of this important procurement.
    Unfortunately, it appears that some are attempting to exploit the 
U.S. Air Force's inadvertent error by speculating on events which are 
not in evidence. Most disconcerting is the false assertion that EADS 
North America held for a month the competitor data incorrectly sent to 
us. I can assure the committee that this allegation is simply untrue 
and is substantively contradicted by the government's investigation and 
detailed forensic analysis.
    EADS North America has a single goal in the KC-X competition--to 
ensure that the information necessary to support this competitive 
procurement is objectively provided to the U.S. Air Force such that a 
fair and timely decision can be made on this critical military system. 
Our actions over the more than 5 years of effort in this competition 
have fully demonstrated our commitment to that objective. There is no 
place in this competition for anything other than full transparency 
into the process leading to a fair outcome. The hearing by the 
committee today can advance that objective by affirming through an 
examination of known facts that the unfortunate misstep of sending 
competitive information to both contractors was managed in good faith 
and full compliance by EADS North America and the U.S. Air Force. I 
stand by the actions taken by this company and our employees as fully 
compliant and responsible in accordance with the information provided 
as requested by the committee.
    We are prepared to answer any question this committee may have 
regarding this data disclosure matter. We wish the committee well in 
your important work in support of our Nation's security and of our men 
and women in uniform.

    Chairman Levin. We appreciate both companies' positive 
approach to this committee inquiry, and both of the companies' 
cooperation with us.
    Senator McCain.

                STATEMENT OF SENATOR JOHN McCAIN

    Senator McCain. Thank you, Mr. Chairman.
    I thank the witnesses for their attendance and being here 
this morning.
    One of the primary duties of this committee is to engage in 
oversight of DOD spending and programs. While I'm unfailing in 
my support for aggressive oversight by this committee over 
major Defense acquisition programs, and I acknowledge that it's 
the right and responsibility of the Chairman to schedule 
hearings as he deems fit and appropriate to ensure that the 
committee exercise its oversight responsibilities effectively, 
I approach today's hearing with a fair bit of concern, and even 
a greater amount of skepticism, that this hearing will be 
beneficial to our job of oversight.
    Unfortunately, this hearing appears to be designed to 
produce little new information about the pending award of the 
Air Force's KC-X tanker competition.
    As we all know, the competition for the Air Force's new 
aerial refueling tanker has been beset by problems in 
acquisition irregularities for years. After considerable effort 
to ensure the current competition process is as error-free and 
clean as possible, in November the Air Force inadvertently, and 
incredibly, sent data related to the competition to each of the 
respective bidders, that they should not have had.
    The natural outcome of this mistake is to ask, what 
difference, if any, did this mistake make to the competition? 
While I think the urge to dive into that question is 
understandable, this long, drawn-out process is nearing its 
end, and a final announcement of the Air Force's decision will 
be made soon.
    To the extent that November's mistake could be argued to 
have an impact on the outcome, that seems to me to be an issue 
more appropriately addressed after the competition has run its 
course and a winner has been announced, not just weeks before 
the process draws to a conclusion.
    While this committee should continue to exercise aggressive 
oversight into the tanker award processes, the witnesses here 
today have little ability to shed real light on the facts that 
eventually need to be examined on this matter. Indeed, the 
tanker program has been delayed for more than a decade and is 
expected to be worth approximately $30 billion. With that much 
at stake, hearings on this topic should be designed to allow 
the Air Force to speed the delivery of the tanker, that it so 
badly needs, in the most efficient, cost-effective manner 
possible.
    Everyone wants to ensure that this competition is fair and 
above board, and that no party gains an unwarranted advantage. 
We know corrective actions were taken, an effort was made to 
assess damage and set things right, opinions were formed about 
what the impact was and whether it could be overcome.
    With these fundamental questions in mind and an intent to 
exercise restraint as we involve ourselves in this issue, I 
look forward to the testimony of the witnesses.
    I also know that the Chairman intends to publicly release, 
today, documents that we received for this hearing. I think 
this is a bad idea. I think we could wait until just a few 
weeks from now, when the final decision is made, and then make 
all of these documents public, and I understand DOD ``doesn't 
object to the committee's release of these documents.'' Given 
all of the controversy, all of the legal challenges, and all of 
the delays of over a decade, why wouldn't we want to just wait 
a few weeks before we would release that information, which 
could cause further disruption to the competition?
    Mr. Chairman, it is your right, as chairman, to release 
those documents. I don't think that it does any good at this 
time, and it could be disruptive. I say that as a person who 
has been very much an advocate of total transparency and 
knowledge, not only shared by Members of Congress, but by the 
American people.
    So, I thank the witnesses for being here today.
    I hope that in February we can finally have a final 
resolution and selection of a tanker that's badly needed by the 
U.S. Air Force, after nearly a decade of stories of corruption, 
abuse, mismanagement, and now this latest fiasco of releasing 
relevant documents to the contractors, a rather incredible 
happenstance, in this long odyssey and saga of mismanagement 
and, in some cases, corruption surrounding the awarding of the 
contract for this tanker.
    I thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator McCain.
    General Masiello.

    STATEMENT OF MAJ. GEN. WENDY M. MASIELLO, USAF, PROGRAM 
EXECUTIVE OFFICER FOR COMBAT AND MISSION SUPPORT, OFFICE OF THE 
      ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION

    General Masiello. Mr. Chairman, Senator McCain, and members 
of the committee, thank you for opportunity to discuss the 
events surrounding an inadvertent disclosure of information 
related to the KC-X program.
    I should make it clear at the outset that neither I nor my 
fellow witness, Mr. Shirley, are affiliated with the KC-X 
source selection, and thus we cannot address nor speculate on 
matters beyond the scope of today's hearing.
    As a senior Air Force military officer with contracting 
experience, as well as experience in numerous source 
selections, I've been asked to review the redacted record of 
the incident, and the extent of the Air Force's response, so 
that I could appear today to address the process that was 
followed and how the Air Force's actions maintained the 
integrity of the source selection process.
    I know that committee members are aware that the Air Force 
is in the midst of the source selection and will appreciate 
that my testimony today will be limited to the specifics of 
this event and my analysis of the actions taken.
    The Air Force has been and remains committed to a fair, 
open, and transparent KC-X source selection. I understand the 
Air Force has provided all committee-requested documents 
properly redacted of proprietary and source selection sensitive 
information.
    These are the summary statements by the procuring 
contracting officer and the head of Air Force contracting 
activity regarding the Procurement Integrity Act; the Office of 
the Secretary of Defense (OSD) Independent Review Team's (IRT) 
report; statements from both companies, including signed CEO 
certification letters; and the summary statement of the 
classified Defense Computer Forensics Report.
    Before responding to your questions, let me provide this 
summary of where the Air Force believes the record stands 
today:
    First, the Air Force determined that the error was 
unintentional and that the actions of the individuals, both 
government and offerors, did not constitute a violation of the 
Procurement Integrity Act.
    Second, through the statements offered by the employees who 
handled or viewed the disks from both companies, certified in 
writing by both company CEOs, and other means which I'll 
address in a moment, the Air Force believes that the 
information exposed to one offeror's employee was limited to 
one screen of summary data related to the government's IFARA 
data. None of the information on that page was proprietary, and 
as has been previously stated publicly, there was no pricing 
data anywhere on the disks. The summary page, an Excel 
spreadsheet, was open on the screen for a matter of seconds 
before it was closed when the company employee realized the 
mistake. Both companies, upon realizing the error, immediately 
secured the disks in safes and contacted the Program Office. 
The Program Office immediately directed and received all of the 
disks the next day.
    The company employee who viewed the single screen shot was 
reassigned to an administrative position, and did not rejoin 
the company's proposal preparation team until after the 
leveling of the playing field, which I'll address momentarily.
    Third, at the direction of the source selection authority 
and procuring contracting officer, an independent review was 
conducted by personnel from the OSD IRT as to the facts and 
circumstances regarding the incident. The IRT also made 
recommendations to help prevent future occurrences.
    Fourth, as a further level of verification, the Air Force 
requested and both companies cooperated by providing the 
computers that their competitors' disks were inserted into. 
Using the Defense Computer Forensics Laboratory, the Air Force 
was able to verify that the record of the disks and files 
accessed was consistent with the statements provided by both 
companies and certified by their CEOs.
    Fifth, following the investigation, in order to ensure a 
level playing field, both offerors were presented with the same 
screen shots of each other's information. Further, since the 
Air Force was still at a stage where offerors could continue to 
update their proposals, the procuring contracting officer made 
it clear that such updates could continue. Consistent with the 
Air Force's efforts to maintain transparency, both offerors 
received the opportunity to review the forensic analysis of 
their respective computers.
    Sixth, I am informed by the Program Office that the IFARA 
summary scores shared with both offerors were interim scores 
and were not the final scores that will be used in the 
evaluation. Further, both offerors will have the opportunity to 
provide a final proposal revision, as is standard. No offeror 
was impaired from continuing to improve its proposal.
    Seventh, the two individuals directly responsible for the 
packaging and mailing of the information to the companies were 
not only removed from the program, but no longer perform any 
duties on programs associated with the Aeronautical Systems 
Center. Two other individuals, tangentially involved, were 
counseled.
    Eighth, all recommendations from the OSD IRT to prevent 
recurrence have been adopted. Transmittal of any classified 
material to a contract will be accompanied by a letter, not 
just the Air Force Form 310, signed by an appropriate official. 
Descriptions of the material being transferred must match both 
the transmittal letter and the Form 310. The transmittal letter 
and the Air Force Form 310 must both be reviewed by the 
signatory of the transmittal letter and an appropriate security 
official. Classified material to be transmitted must be 
delivered to the security office in a separate clearly marked 
package to identify the recipient of the material for each 
package, ensure individuals with knowledge of both the content 
of the material and the purpose of the transfer be involved 
with the preparation and packaging of the information, and 
personally execute the transfer. Additional measures were taken 
to include supervision oversight and two-person rules that 
involve senior program and contracting officer positions to 
personally verify and validate contents of packages against 
transmittal letters and inventory forms.
    Finally, while the Air Force regrets that the incident 
occurred, Air Force leadership is satisfied that both companies 
responded to the incident correctly and professionally.
    After reviewing the same documents presented to the 
committee, it is my opinion that the actions taken by the 
Program Office have ensured a level playing field.
    I'd like to thank the committee for your continued support 
of our men and women in uniform as we await the outcome of the 
source selection.
    [The prepared statement of General Masiello follows:]

          Prepared Statement by Maj. Gen. Wendy Masiello, USAF

    Mr. Chairman, Senator McCain, and members of the committee thank 
you for the opportunity to discuss the events surrounding an 
inadvertent disclosure of information related to the KC-X Program. I 
should make it clear at the outset that neither I nor my fellow 
witness, Mr. Shirley, are affiliated with the KC-X Source Selection and 
thus we cannot address, nor speculate, on matters beyond the scope of 
today's hearing. As the senior Air Force military officer with 
contracting experience, as well as experience in numerous source 
selections, I have been asked to review the redacted record of the 
incident, and the extent of the Air Force's response, so that I could 
appear today to address the process that was followed and how the Air 
Force's actions maintained the integrity of the Source Selection 
process. I know that committee members are aware that the Air Force is 
in the midst of the Source Selection and will appreciate that my 
testimony today will be limited to the specifics of this event and my 
analysis of the actions taken. The Air Force has been and remains 
committed to a fair, open and transparent KC-X source selection. I 
understand the Department has provided all committee requested 
documents, properly redacted of proprietary and source selection 
sensitive information. These are:

         The summary statements by the Procuring Contracting 
        Officer and the Head of Air Force Contracting Activity 
        regarding the Procurement Integrity Act;
         The Office of the Secretary of Defense (OSD) 
        Independent Review Team's report;
         Statements from both companies, including signed, 
        Chief Executive Officer (CEO) certification letters; and,
         The summary statement of the classified, Defense 
        Computer Forensics report.

    Before responding to your questions, let me provide this summary of 
where the Air Force believes the record stands today.
    First, the Air Force determined that the error was unintentional 
and that the actions of the individuals, both government and offerors, 
did not constitute a violation of the Procurement Integrity Act.
    Second, through the statements offered by the employees who handled 
or viewed the disks from both companies, certified in writing by both 
company CEOs, and other means which I'll address in a moment, the Air 
Force believes that the information exposed to one offeror's employee 
was limited to one screen of summary data related to the government's 
Integrated Fleet Aerial Refueling Assessment (IFARA) data. None of the 
information on that page was Proprietary, and as has been previously 
stated, there was no pricing data anywhere on the disks. The summary 
page, an Excel spreadsheet, was open on the screen for a matter of 
seconds before it was closed when the company employee realized the 
mistake. Both companies, upon realizing the error, immediately secured 
the disks in safes and contacted the Program Office. The Program Office 
immediately directed and received all of the disks the next day. The 
company employee who viewed the single screen shot was reassigned to an 
administrative position, and did not rejoin the company's proposal 
preparation team until after the leveling of the playing field, which 
I'll address momentarily.
    Third, at the direction of the Source Selection Authority and 
Procuring Contracting Officer, an Independent Review was conducted by 
personnel from the OSD Independent Review Team as to the facts and 
circumstances regarding the incident. The Review Team also made 
recommendations to help prevent future occurrences.
    Fourth, as a further level of verification, the Air Force requested 
and both companies cooperated by providing the computers that their 
competitor's disks were inserted into. Utilizing the Defense Computer 
Forensics Laboratory the Air Force was able to verify that the record 
of the disks and files accessed was consistent with the statements 
provided by both companies and certified by their CEOs.
    Fifth, following the investigation, in order to ensure a level 
playing field, both offerors were presented with the same screen shots 
of each others' information. Further, since the Air Force was still at 
a stage where offerors could continue to update their proposals, the 
Procuring Contracting Officer made it clear that such updates could 
continue. Consistent with the Air Force's efforts to maintain 
transparency both offerors received the opportunity to review the 
forensic analysis of their respective computers.
    Sixth, I am informed by the Program Office that the IFARA summary 
scores shared with both offerors were interim scores, and were not the 
final scores that will be used in the evaluation. Further, both 
offerors will have the opportunity to provide a Final Proposal 
Revision, as is standard. No offeror was impaired from continuing to 
improve its proposal.
    Seventh, the two individuals directly responsible for the packaging 
and mailing of the information to the companies were not only removed 
from the program, but no longer perform any duties on programs 
associated with the Aeronautical Systems Center. Two other individuals, 
tangentially involved, were counseled.
    Eighth, all recommendations from the OSD Independent Review Team to 
prevent recurrence have been adopted.

         Transmittal of any classified material to a contract 
        will be accompanied by a letter, not just the Air Force 310 
        ``Document Receipt and Destruction Certificate'', signed by an 
        appropriate official.
         Descriptions of the material being transferred must 
        match both the Transmittal Letter and the Form 310.
         The Transmittal Letter and the AF Form 310 must both 
        be reviewed by the signatory of the Transmittal Letter and an 
        appropriate security official.
         Classified material to be transmitted must be 
        delivered to the security office in a separate clearly marked 
        package to identify the recipient of the material for each 
        package.
         Ensure individuals with knowledge of both the content 
        of the material and the purpose of the transfer be involved 
        with the preparation and packaging of the information and 
        personally execute the transfer.

    Additional measures were taken to include increased supervision 
oversight and two-person rules that involve senior Program and 
Contracting Officer personnel to personally verify and validate 
contents of packages against transmittal letters and inventory forms.
    Finally, while the Department regrets that the incident occurred, 
Department leadership is satisfied that both companies responded to the 
incident correctly and professionally.
    After reviewing the same documents presented to the committee, it 
is my opinion that the actions taken by the program office have ensured 
a level playing field. I'd like to thank the committee for your 
continued support of our men and women in uniform as we await the 
outcome of this source selection.

    Chairman Levin. General, thank you so much.
    Mr. Shirley.

STATEMENT OF STEVEN D. SHIRLEY, EXECUTIVE DIRECTOR, DEPARTMENT 
                 OF DEFENSE CYBER CRIME CENTER

    Mr. Shirley. Good morning, Senator.
    I have no opening statement, but I am present, as a 
technical representative, to answer questions about the 
forensic process, if required.
    Chairman Levin. Okay. Thank you.
    Thank you, both, very much for being here and for your 
service.
    Let's try an 8-minute first round.
    General, let me ask you this question first. Can you tell 
us, specifically, what data from each contractor has been 
shared with the other contractor as a result of the incident? 
You talked about a screen shot, for instance. Be much more 
precise as to what was seen and what then was shared.
    General Masiello. Senator, from my observation and my 
reading the documents that are presented here, it was a screen 
shot of IFARA data, which was about a spreadsheet. It appeared 
to have 10 lines of information. That screenshot was the IFARA 
data analysis, the Air Force's analysis of their individual 
data. That's all I know about what the content or the details 
are.
    Chairman Levin. It was one page, is that all?
    General Masiello. One page.
    Chairman Levin. What is a screenshot? Is that a page?
    General Masiello. Yes, sir. When it pops up onto your 
computer and it has a spreadsheet of the information, that 
instant page on the computer screen, and it's a picture of that 
taken.
    Chairman Levin. All right.
    General Masiello. So, there's nothing that drills down 
below that screenshot.
    Chairman Levin. All right. One image of the screen, you 
determined, for how long?
    General Masiello. However long it presented. But the fact 
is a copy of that, for each offer, was swapped with the 
offerors.
    Chairman Levin. That one page.
    General Masiello. Correct.
    Chairman Levin. That one page alone.
    General Masiello. Yes, sir.
    Chairman Levin. Now, have you determined how long that 
screen was opened?
    Mr. Shirley. Sir, based on the forensics of the media 
provided by the company, we think that it was viewed on the 
order of several minutes. That's based on statements from the 
company. But, the computer was powered for a longer period.
    Chairman Levin. Where was the 15-seconds figure? Where did 
that come from?
    General Masiello. Sir, that was the person's estimate of 
how much time they viewed it, that they then prepared and 
signed a statement certifying to that, which was subsequently 
certified by the CEO of the company.
    Chairman Levin. All right. You submitted those documents 
that you outlined to us and we have received assurance from the 
Air Force that there's no objection to the committee's decision 
to do so, if we determine that it's appropriate to do so.
    General Masiello. That's my understanding, sir.
    Chairman Levin. All right.
    Is there objection to those documents being made part of 
the record and being released?
    General Masiello. Not that I'm aware of, sir.
    Chairman Levin. Hearing none, that is the action the 
committee will take.
    [The information referred to follows:]
      
    
    
      
    
    
      
    
    
      
    
    
      
    Chairman Levin. You indicated that that information was 
nonproprietary information, is that correct?
    General Masiello. Yes, sir.
    Chairman Levin. Would the availability of that information 
to one of the competitors, but not the other, be advantageous? 
If so, is that the reason why you decided to attempt to level 
the playing field by swapping the information, so that both 
companies would have the assessment of the other company?
    General Masiello. Sir, I can't tell you whether it was that 
important or not, because I don't know. I'm not privy to the 
KC-X specifics. But, whether it was or wasn't, there was, at 
minimum, a perception, so the government chose to provide 
copies to both contractors.
    Chairman Levin. Both companies.
    General Masiello. Yes, sir.
    Chairman Levin. I presume it's the EADS employee that we're 
talking about; how long was it, after that mistake was noticed 
by that employee, did EADS close it up and get it back to the 
government?
    General Masiello. What I read is that they immediately 
stopped looking at it, and, because they were in a secure 
environment, needed to go find someone to partner with them to 
close it all down.
    Chairman Levin. Right.
    General Masiello. It was immediate. They wasted no time 
shutting it down and securing the documentation and the disks 
in a file that was signed by security reviewers, as well.
    Chairman Levin. All right. The other company, Boeing, also 
caught the mistake. How long did it take them to close up?
    General Masiello. It was as instantaneous as what I read 
about in the EADS testimony.
    Chairman Levin. All right. Those documents that you've 
referred to that contain that chronology and that 
certification--there were four of them that you made reference 
to in your opening statement--are now part of the record and 
people can look at that chronology and determine how many 
minutes and how many seconds it was, after the mistake was 
noticed, that each company locked up the disks, and then got 
them back to the government, is that correct?
    General Masiello. Yes, sir.
    Chairman Levin. That information is in those documents, now 
available publicly.
    General Masiello. Yes, it is.
    Chairman Levin. You're a forensic expert, Mr. Shirley, and 
you've told us how confident you are. Let me ask you this 
question, your conclusion, or the Department's conclusion, as 
to what data was viewed and for how long, is that a high level 
of confidence?
    Mr. Shirley. Yes, sir, Senator. If I might describe a 
little bit about the process to give you the context.
    DOD Cyber Crime Center has, as part of it, the Defense 
Computer Forensics Lab. It's manned with about 110 people, 
today. It operates as an accredited lab, certified by an 
external entity; in this case, the American Society for Crime 
Lab Directors and their lab accreditation board. What that 
process does is validate that we have a reliable, valid, 
repeatable process, that we have people who are certified and 
professionally qualified to perform the duties in question. 
They're subject to periodic review and testing in that regard 
as a condition of the lab retaining its accreditation.
    When we receive this data, we essentially treated it in the 
same manner as we would treat an inadvertent disclosure of 
classified information in a sensitive program. So, we assigned, 
as a forensic examiner, one of our most capable subject matter 
experts. He is the forensic expert that processed this data. 
He's been qualified in court about 13 times. So, we have a very 
high level of confidence that the forensic findings validated 
the representations by each company.
    Chairman Levin. Very specifically, the representations, in 
the case of Boeing, were that they saw the mistake and did not 
open the page or read the page. In the case of EADS, the 
representation was that the same page was inadvertently opened, 
the person who saw it, saw that one page. You indicated this 
morning, apparently, because of personal conversations with 
that person, that it may have been a matter of minutes, but 
according to the documents, which are now part of the record, 
that was for 15 seconds. In either event, you've concluded it 
was a matter of some minutes?
    Mr. Shirley. Yes, sir. A very short time.
    Chairman Levin. Okay. That person immediately closed that 
page and got that material back to the Air Force, is that 
correct?
    Mr. Shirley. That's correct, sir.
    Chairman Levin. You're confident that the facts are that 
was the only page which was opened up by that person?
    Mr. Shirley. Yes, sir.
    Chairman Levin. Based on your forensic capabilities.
    Mr. Shirley. That's correct, Senator.
    Chairman Levin. Okay.
    Thank you very much.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    I won't need my full 8 minutes; I had a chance to talk to 
both witnesses beforehand.
    In your position, are you able to say what percentage of 
the bid would this represent?
    General Masiello. Sir, I have no insight into what 
percentage that the IFARA data represents for the whole KC-X 
decision process.
    Senator Inhofe. The final bid, I think, is sometime just in 
the next few weeks. It's coming up. In your opinion, from what 
you do know, would this impact the final bid?
    General Masiello. Sir, I don't have a sense for how much it 
does or if it does affect the final bid. All I know is that the 
contractors have the opportunity to adjust their proposals any 
way they see fit over the next remaining period, whatever that 
might be, before their final proposal revisions are made.
    Senator Inhofe. But, however important or unimportant this 
information is, since I don't know and you're not in a position 
to know, has any thought been given to eliminate this IFARA 
element in the final bid process?
    General Masiello. Sir, I couldn't confirm whether or not 
that would be the case. It would probably be something that a 
procuring contracting officer (PCO) would consider when they 
made the decision how to address the inadvertent release.
    Senator Inhofe. As a member of this committee, I would like 
to know, if it's appropriate to know, whether or not this 
should be included. It bothers me when something is disclosed 
like this, and I don't know how significant it is to the whole 
bid, but I feel that we should know.
    General Masiello. Yes, sir.
    Senator Inhofe. All right.
    Thank you. I don't have anything else, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Inhofe.
    Senator McCaskill.
    Senator McCaskill. Let me just say for the record that this 
is a case study of incompetence at contract competition, this 
whole debacle from beginning to this very moment. Contract 
competition for something like this has to be a core 
competency.
    I want to know, in this instance, what punitive actions 
have been taken. We can call it an accident, but it's 
incompetence. So, what punitive actions have been taken against 
the person who made the mistake?
    General Masiello. Ma'am, from what I read in the documents, 
the two people who were involved in making the mistake are no 
longer employed at Aeronautical Systems Center.
    Senator McCaskill. So, they were fired?
    General Masiello. Yes, ma'am, from that particular program, 
and they have been moved to another program.
    Senator McCaskill. Where have they been moved?
    General Masiello. Ma'am, I don't know.
    Senator McCaskill. I would like to know that.
    General Masiello. Yes, ma'am.
    Senator McCaskill. I would like to know where they are. I 
would like to know if they're still making the same amount of 
money. I would like to know if they're going to resurface later 
in another position of responsibility.
    General Masiello. Yes, ma'am.
    [The information referred to follows:]

    The two individuals were removed from the KC-X program after an 
independent inquiry into the circumstances of the unauthorized 
disclosure. These individuals, both of whom were then support 
contractor employees, where immediately moved to their employer's 
administrative overhead. At the time of the disclosure, one of the 
individuals was a Senior Level Security Specialist and the other was a 
Contract Support Specialist. The security specialist subsequently was 
reassigned to a staff position, not supporting any Aeronautical Systems 
Center acquisition program of record, as a Journeyman Level Security 
Specialist with a substantial pay cut (believed to be roughly 30 
percent). The contract support specialist subsequently accepted a Civil 
Service position as a GS-12 Acquisition Program Manager at the Air 
Force Security Assistance Center at a substantial pay cut (believed to 
be roughly 30 percent).

    Senator McCaskill. I have complimented Secretary Gates 
because he has provided accountability at the top level in many 
instances where we have had problems. But, I just think this is 
beyond the pale.
    There are so many things about this that are unusual. Let 
me start with this. If you can state for the record--and if you 
can't, I would like this answer from someone else within the 
military--isn't it correct that it is very unusual for Boeing 
to file a protest after a competition?
    General Masiello. Ma'am, I couldn't answer that. I've had 
different experiences.
    Senator McCaskill. That's a question I would like for the 
record. I would like to know, from DOD's perspective, whether 
or not it is unusual for Boeing to file a complaint and whether 
or not it is unusual that all nine bases on which they filed 
the complaint were all sustained at the Government 
Accountability Office (GAO).
    [The information referred to follows:]

    Like most major defense contractors, Boeing does not have a history 
of being a frequent protester to the Government Accountability Office 
(GAO) or to the Court of Federal Claims. With regard to Boeing's 
protest of the 2008 KC-X source selection, while GAO did sustain the 
protest on eight separate grounds, there were other issues in 
contention on which GAO either found for the government or did not 
reach a final decision.

    Senator McCaskill. I'm confused about the screen. EADS 
said, originally, that they didn't look at the data. Is that 
correct?
    General Masiello. No, ma'am, they did not say that.
    Senator McCaskill. They said they looked at it for a very 
brief period of time.
    General Masiello. They looked at the screen shot of the 
spreadsheet. They admitted to that.
    Senator McCaskill. Okay.
    General Masiello. That's what made them nervous. They 
realized that they shouldn't be looking at that.
    Senator McCaskill. Okay. I'm confused, though. It appears 
to me, from looking at the information, that they originally 
said they looked at it a very short period of time. The 
forensics indicated that may not be true, that they might have 
looked at it longer than they originally said they looked at 
it. Is that correct, Mr. Shirley?
    Mr. Shirley. Senator, what we were able to determine is 
that the file was opened for a fairly short period of time. The 
computer was powered a bit longer. So, in essence, the 
statement by the employee, we thought, was consistent with what 
we saw in the digital media.
    Senator McCaskill. Why is it relevant that the computer was 
on longer? Why do you even mention the computer was powered 
longer?
    Mr. Shirley. When we perform an exam, we look at the media 
at a number of different levels. One of the things that's 
associated with the computer being in a powered state is 
there's a feature called clock time that tells you how long the 
computer's in operation and what files may be manipulated while 
it's in operation. So, it was part of the context of trying to 
validate the employee's statement against what we saw on the 
computer.
    Senator McCaskill. So, you are testifying today that you 
believe that the screen was only viewed for the same amount of 
time that EADS had represented that it had been viewed.
    Mr. Shirley. Roughly. Yes, ma'am.
    Senator McCaskill. My sense is that these are not the right 
witnesses to answer this question. To follow up on what Senator 
Inhofe said, given this controversy, should IFARA be used and 
retained in the final evaluation process now?
    General Masiello. Ma'am, it's not for me to judge. The PCO 
on the head of contracting activity determined that it was 
still appropriate to leave in the competition.
    Senator McCaskill. We will compose another question for the 
record to get to those individuals, to get other rationale for 
that.
    [The information referred to follows:]

    Yes. The Integrated Fleet Aerial Refueling Assessment (IFARA) 
uniquely measures the integrated capability of a fleet of tankers in 
wartime scenarios. Elimination of IFARA could result in significant 
operational capability being eliminated by all offerors. The Air Force 
believes the actions taken level the playing field. Further, all 
offerors equally had several opportunities to update any part of their 
proposal after the playing field was leveled.

    Senator McCaskill. Finally, I know that these are probably 
not the right witnesses, but it's my understanding that DOD has 
taken the position that the World Trade Organization (WTO) 
rulings are not relevant to their decision. I would like to 
know where in the Federal Acquisition Regulation (FAR) that is 
prohibited. If it's not a level playing field, due to subsidies 
by other countries, common sense tells me, from the Midwest, 
that if somebody has their finger on the scale, in terms of 
subsidies they get from their government, that it's not a level 
playing field. I am trying to get my arms around the notion 
that that's not relevant. If either of you can speak to that, 
that would be terrific; if not, we'll try to track down the 
right person to get the answer from. Because I don't believe 
there's anything in the FAR that prohibits that from being 
considered.
    General Masiello. I'll defer to DOD on that, ma'am.
    [The information referred to follows:]

    The Department of Defense has taken the necessary steps to protect 
the interests of the taxpayer and the warfighter. The World Trade 
Organization (WTO) matters in the large civil aircraft disputes are 
issues between the United States and the European Union. It would be 
inappropriate for DOD to take any action that could impair the U.S. 
Trade Representative's ability to appropriately represent the interest 
of the United States before the WTO. The Government Accountability 
Office (GAO) has consistently held that there is no requirement that an 
agency consider foreign government subsidies in evaluation of 
proposals. According to these GAO decisions, the Buy American Act is 
the proper method for taking these sorts of concerns into consideration 
in a source selection. The KC-X evaluation will consider, as 
appropriate, the Buy American Act.

    Senator McCaskill. Okay.
    I understand the limitations we have, Mr. Chairman, in 
terms of what we can ask, since this is an ongoing process. 
But, some of these are writ large policy discussions that I 
really think the Senate has to come to grips with.
    I mean, we have a farm field in Alabama and a company 
that's receiving tens upon billions of dollars of subsidies 
from foreign governments. Obviously, this process began with 
bad acting on the part of the company that I think, from where 
I sit, is better equipped to handle this.
    But, having said that the notion that we are not going to 
take into account, in light of everything that's going on in 
this country, that we have foreign nations that are subsidizing 
companies and that's not relevant to our competition, just 
doesn't make sense to me. I would like us to get to that policy 
question in these hearings, if at all possible.
    I thank you, Mr. Chairman.
    Chairman Levin. Senator McCaskill, I think the purpose of 
this hearing is set forth, which is to see what happened here, 
specifically, and what was done to attempt to remedy it. The 
broader questions which you raise are appropriate in a 
different forum for that to be argued or for a different time. 
But, these witnesses, in all fairness to them, are not called 
for that purpose.
    Senator McCaskill. I certainly understand. I don't mean to 
be in any way critical of these witnesses, because they're not 
prepared to handle these questions. But, they're on my mind and 
I needed to express them.
    Chairman Levin. Which is your right.
    Senator McCaskill. Thank you.
    Chairman Levin. Thank you very much.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    I would just like to say, first, that the Air Force did 
start off with this process in a very, very unfortunate way. 
People from both the Boeing Company and the Air Force went to 
jail. Senator McCain smelled a rat early on. This committee was 
the one committee that wasn't really consulted in how that 
original sole-source contract was awarded. Senator McCain, 
supported by Senator Levin and Senator John Warner, challenged 
the situation.
    What we decided to do was to have a competition. It was the 
right decision to do, and it saved $7 billion. I remember 
declaring Senator McCain to be the $7 billion man; he saved the 
taxpayers $7 billion as a result of having a competition in 
this process.
    A fair, objective competition is what we need and what we 
have committed to as a committee, and as a Congress. Now, on 
the eve of this final decision, we have people with political 
interest and local interest trying to destabilize the process. 
I just am not happy about that. I wish it had not happened.
    I understand how important it is, because it would mean a 
lot for my State, just like it would mean a lot for other 
States if it would go another way. But, we have to be sure that 
we're not doing anything that says that we expect the Air Force 
to do anything other than what we have directed them to do. The 
question of subsidies and all of those matters have been 
discussed for a decade as we've gone forward with this. We've 
decided how we need to proceed with the competition, and we 
need to proceed in that way.
    I suppose it's appropriate to ask about whether or not this 
possible information error infected the process. I'm not 
comfortable that it is. I asked General Schwartz, the Chief of 
Staff for the Air Force, earlier about it. He assured us all 
that there had been no unfair advantage gained through this 
process.
    Mr. Chairman, thank you for your leadership. I know you 
have members on your side and others that want you to do this, 
that, and the other, all in all, it's a thankless task you 
have, and I think you've conducted it in a fair way.
    I just would like to say, I think producing these documents 
is a bad idea. Just because they've been redacted to exclude 
source selection sensitive and proprietary information doesn't 
mean that releasing them might not cause disruption to the 
competition, which is taking place right now and coming to its 
conclusion. So, in my view, our disrupting in any way, 
politically, the competition would reflect poorly on our 
committee.
    I understand DOD doesn't object to the committee's release 
of the documents. While that fact is relevant, it still doesn't 
mean that, in the exercise of its discretion, the committee 
should release them before the contract is awarded. So, I do 
object to that.
    Chairman Levin. They've already been made part of the 
record, Senator Sessions.
    Senator Sessions. Mr. Chairman, General Masiello, I asked 
General Schwartz in this room last fall about the documents, 
and he responded that ``both offerors reacted in a responsible 
manner and returned the disks that were mistakenly forwarded to 
them, to the Air Force. We have confirmed that by forensic 
evidence.'' I'd just like to ask you today whether or not you 
have any information that would indicate that either competitor 
has acted inappropriately when they received the data that 
should not have been sent to them.
    General?
    General Masiello. Senator, by reading the statements that 
came from both companies, I was really quite impressed by the 
responses, on both companies' part, when they realized they had 
data that they shouldn't have had. My assessment is they all 
acted very appropriately and have certified to that effect.
    Senator Sessions. Mr. Shirley, you've examined forensically 
the disk and the information. Have you been able to conclude 
that both offerors responded appropriately?
    Mr. Shirley. Yes, sir. What we found on their computers was 
consistent with what they said that they did, in each case.
    Senator Sessions. General Masiello, what action did you 
take once you realized this error had occurred?
    General Masiello. Sir, what I read the PCO did when she 
heard was, she told them to package things up immediately and 
get the disks right back to the Air Force. Then they instituted 
an IRT. They went over to look and see what happened and what 
went on in the Air Force distribution process so they could 
correct that immediately. They pulled in the Defense service to 
examine the computers and got the CEOs to certify to the 
details that came from each incident on the companies' side. It 
was very thorough.
    Senator Sessions. Do you think that the process as a result 
of this disclosure was injured in anyway? Was fairness in the 
process damaged in any way?
    General Masiello. From what I read here and from the 
decision that the PCO has validated by the head of contracting 
activity, and the fairness in sharing the same snapshot with 
the companies, I would come to the conclusion that it would not 
affect the source selection process.
    Senator Sessions. If either one of the companies--and they 
were told about this--felt they had been unfairly affected by 
it, what action, if any, could they have taken?
    General Masiello. Sir, a company can protest at any point, 
either pre-award or post-award. The companies still have the 
opportunity to protest if they think that anything is being 
inappropriately managed at this point.
    Senator Sessions. How long did the offerors have to lodge a 
formal complaint as a result of this event?
    General Masiello. It could still be a part of a post-award 
protest, should they choose to do that.
    Senator Sessions. Have either one protested?
    General Masiello. Not at this time, sir.
    Senator Sessions. Throughout this whole process there have 
been opportunities to protest and neither company has.
    General Masiello. That's correct.
    Senator Sessions. No formal complaint has been lodged.
    General Masiello. That's correct, as far as I'm aware.
    Senator Sessions. I suppose, then, that we have to conclude 
that both companies feel that this inadvertent disclosure did 
not affect them adversely to the degree that they should ask 
for it. Would you agree with that?
    General Masiello. At this point, sir, I would.
    Senator Sessions. On November 30, a New York Times article 
indicated that an Air Force forensic specialist inspected both 
companies' computers and found that one of the firms had 
mistakenly opened a computer file containing information about 
its rival's airplane, while the other had not. The redacted 
forensic report presented to the committee yesterday asserts 
that both companies inspected their own and their competitors' 
disk and opened them. General and Mr. Shirley, tell me which 
statement is correct, the New York Times report of the matter 
or the statement by the Air Force spokesman forensic report by 
the Defense Cyber Crime Center.
    General Masiello. Sir, both companies put the other 
companies' disk in the computer. One of the companies realized 
what they saw on the disk right away was probably something 
they shouldn't look at. The second company opened one of the 
files on the disk, and that's the 10-line spreadsheet snapshot 
that was then swapped between the companies. So, both companies 
did put the disks in their computer, based on what I read. One 
opened a single file, and that's the snapshot of the IFARA data 
that's in question.
    Senator Sessions. Mr. Shirley, do you agree with that?
    Mr. Shirley. Yes, Senator, I do.
    Senator Sessions. We've heard the fact that nothing 
significant was disclosed, not unfair, it did not affect the 
competition, and that neither company has protested.
    Mr. Chairman, there's a lot more we could talk about, I 
know it's important to every area of the country that has an 
interest in the outcome of the contract, but it's really 
important for us, on this committee, not to politicize this 
process. Every one of these issues, the trade issues and all, 
we've discussed for almost a decade and we've made the decision 
to go forward. We shouldn't on the eve of this competition take 
any action that would suggest we want the Air Force to do 
anything other than try to select the best aircraft at the best 
price for the men and women who defend our country.
    Thank both of you for the effort you've taken to get to the 
bottom of the error and establishing, I think conclusively, 
that there was no unfairness arising from it.
    Thank you.
    Chairman Levin. Thank you, Senator Sessions.
    Senator Graham.
    Senator Graham. Thank you.
    I have a completely different take than Senator Sessions on 
this. I think this is something we should be looking at; this 
is something we should be talking about. Quite frankly, as 
Senator McCaskill said, this is not the finest moment for the 
Air Force. I happen to be a member of it.
    The sheet of information we're talking about, was it the 
price proposal that the companies were making?
    General Masiello. No, sir. The disk and the information 
that was presented and viewed was not proprietary and it 
included no pricing data.
    Senator Graham. Well, then why do we even care about this? 
[Laughter.]
    General Masiello. Sir, it's an element of the decision 
process, as I understand it.
    Senator Graham. Was it an important event in the whole 
process? Did the information that was disclosed and viewed by 
one company, not the other, matter at all?
    General Masiello. Sir, it matters from a fairness 
perspective. Whether it's important or not, the important thing 
is that we're fair to these companies.
    Senator Graham. Do you know if it's important?
    General Masiello. I don't know.
    Senator Graham. Okay.
    So, what's this whole hearing about? You can't tell us 
whether it was important or not. At the end of the day, the 
whole process has a conclusion to it. We're about to spend $35 
billion of taxpayers' money here and quite frankly, I think it 
is important. It's not your job to answer this question as to 
whether or not we want to award a contract to a company that 
receives subsidies from a foreign government.
    We're setting precedent here, and I think the committee 
should be looking at this. It's hard enough for American 
companies to compete already. The Chinese Yuan is 40 percent 
undervalued. If we're going to start awarding public contracts, 
where one side gets government aid and the other doesn't from a 
foreign government, that's something we need to think about. 
That's not the purpose of this hearing, but we need to have 
some discussion about that.
    Mr. Shirley, the person at EADS said that they looked at it 
for 15 seconds. Is that correct?
    Mr. Shirley. Yes, sir.
    Senator Graham. How long was the computer on?
    Mr. Shirley. Roughly 20 minutes, sir.
    Senator Graham. Now, how can you say that a 15-second 
statement in a 20-minute gap in the computer is roughly 
consistent?
    Mr. Shirley. Well, sir----
    Senator Graham. What I'll do is, I'll ask us to sit in 
recess for 20 minutes versus 15 seconds, and you'll see, very 
clearly, there's a long gap in time between 15 seconds and 20 
minutes.
    Mr. Shirley. What we're judging, sir, based on the 
statement presented by the employee----
    Senator Graham. But, the computer was on for 20 minutes; do 
you know what was on the screen for 20 minutes?
    Mr. Shirley. Yes, sir, I believe we do. You're right, sir, 
we can't assert what that employee did or didn't do. All we 
know is what the company represented in their statement.
    Senator Graham. I'm no forensic expert, but the difference 
between 15 seconds and 20 minutes is a lot.
    Mr. Shirley. We can tell how long a file is open, sir.
    Senator Graham. Thank you. I have no further questions.
    Senator Sessions. Mr. Chairman, if the witness could finish 
his answer.
    Senator Graham. Do you know what they looked at for 20 
minutes?
    Chairman Levin. Who are you asking?
    Senator Graham. I'm asking anybody that can answer the 
question.
    Mr. Shirley. Sir, can I finish this?
    Senator Graham. Sure.
    Mr. Shirley. Let me say it this way, sir. Our lab found no 
evidence in conflict with either offeror's written statement. 
The only files opened were the files identified in the written 
statement.
    Senator Graham. I know your findings. I'm just asking a 
factual question. The computer was on for 20 minutes, the 
person said they looked at it for 15 seconds. I guess the point 
I'm trying to conclude here is: this whole idea that it doesn't 
matter, we can't really get to because you all don't know.
    I'm not complaining about the fact that you don't know. 
That's not your problem, that's my problem.
    Mr. Shirley. Sir, if I can clarify here. Our examiner 
concluded that the files were open only for the time suggested 
by either offeror.
    Senator Graham. I understand. I just wonder how you got to 
that conclusion.
    Mr. Shirley. He can judge from examination of the media 
whether a file was open and when it was closed.
    Senator Graham. All right. So, are you saying it was only 
opened for 15 seconds, forensically?
    Mr. Shirley. Yes, sir. It was open a brief time.
    Senator Graham. But, can you say that this file was open 
for 15 seconds?
    Mr. Shirley. Sir, I'd take that one for the record and we 
will send you the precise times on that if we may.
    Senator Graham. Okay.
    [The information referred to follows:]

    I answered to the committee during testimony that the EADS computer 
was in a powered mode for approximately 20 minutes after a competitor 
file was opened (i.e. a Boeing spreadsheet) and that file was opened 
for approximately 3 minutes. Those responses were predicated on DC3's 
forensics findings as of the date of the hearing. In the forensic 
process, DC3's analyst made technical observations of computer data and 
correlated those against affidavits provided by EADS.
    The following is the deeper detail behind the response, some of 
which was not technically determined as of the hearing date:
    DC3's forensics examination determined that the EADS computer 
indicated the Boeing spreadsheet was opened at 9:21.14 (Eastern 
Standard time as displayed in the computer on 1 Nov 2010). It was the 
analyst's opinion there was no relevant, discernible file activity for 
approximately 20 minutes at which time the computer was shut down. This 
was the basis for my comment that the EADS computer was in a powered 
mode for approximately 20 minutes. My testimony that the spreadsheet 
was open for roughly 3 minutes was framed on three available data 
points: one employee's estimate that he opened the file for 15 seconds, 
the arrival of a second employee within an estimated 3 minutes, and no 
contradictory forensic evidence; hence the analyst's worst case 
conclusion of 3 minutes of access.
    However, in making this determination the analyst did note what he 
considered to be two superfluous file artifacts, an icon cache file and 
a .pip file. Subsequent to the testimony the .pip file was more 
accurately identified as Excel12.pip, a file Microsoft Excel uses to 
store menu preferences. The .pip file becomes more probative in further 
ascertaining the specific length of time the spreadsheet file was open. 
This is because the .pip file is only modified when the Excel program 
itself is closed. DC3's analyst was only able to draw this specific 
conclusion based on post-testimony technical consultation with 
Microsoft Corporation experts who developed the software. As previously 
indicated, the analyst confirmed the spreadsheet file was opened at 
9:21.14. He was able to confirm the .pip file was simultaneously 
created, modified, and accessed at 9:21.40. According to the Microsoft 
consultation, the .pip file is only updated when the Excel program is 
closed and the time of 9:21.40 becomes definitive for file closure. As 
a result, the analyst was able to further narrow the 3-minute window, 
described in testimony, to 26 seconds. This finding is clearly 
consistent with the statement by the EADS employee who estimated he 
opened the spreadsheet for approximately 15 seconds. However, this 
specific data was not available by the date of the hearing, hence the 
reference to the 3-minute window.

    Senator Graham. Thank you.
    General Masiello. Senator, if I could add something to 
this. While the individual looked at the data, that individual 
was moved off of the program team into an administrative 
holding tank and was not allowed to participate in the program 
until the PCO allowed them to.
    Senator Graham. You don't know anything about this, but 
there's a bunch of problems of how this contract has been 
changed. Some people went to jail; they should have gone to 
jail.
    Before we award this contract, I want to make sure that 
what we're doing here, Mr. Chairman, doesn't set a precedent 
for the future. Because if this is going to be the way we do 
contracting, where one company gets subsidies from a foreign 
government and the other doesn't, with public money, we need to 
think about that. The process here of what information was 
shared and what outcome it had is precedent for the future. So, 
I am glad you had this hearing, and I hope we'll think more 
about what we're about to do, not less.
    So, thank you, Mr. Chairman.
    Chairman Levin. Let me just clarify the one point, because 
we've had three different statements, it seems to me, Mr. 
Shirley, from you.
    One, we know from the record that the person who opened up 
that file said that they looked at it for about 15 seconds. 
When I talked to you earlier today, you said you determined, 
forensically, that it was opened for a few minutes. Now you're 
saying that the computer was opened, not necessarily the file, 
but the computer was opened for about 20 minutes.
    Mr. Shirley. Yes, sir.
    Chairman Levin. Do I have it straight? If not, straighten 
it out right now.
    Mr. Shirley. Yes, sir. The computer was in a powered state 
for about 20 minutes.
    Chairman Levin. How long was the file open? How long was 
that page visible?
    Mr. Shirley. My recollection, from the briefing from my 
examiner, was roughly 3 minutes, sir.
    Chairman Levin. Okay.
    Senator McCaskill. Three minutes.
    Chairman Levin. I think it's important that we get our 
terms straight, okay?
    General Masiello. Mr. Chairman, could I add to this, as 
well?
    Chairman Levin. Of course.
    General Masiello. From what I read in the documentation, 
the person who was responsible for opening the file and seeing 
it realized that they shouldn't be looking at it. Their 
procedures are that when they see something they shouldn't, 
from what I'm seeing here, a two-person rule comes into play. 
They saw it, and they were in a sensitive compartmented 
information facility (SCIF), they couldn't use their phone to 
get the other person there to come help them close it and 
follow the procedures. So, they went outside of their 
classified area to use the phone to get hold of this person to 
let them know that they had discovered something that they were 
all going to get in trouble for, and they didn't want to get in 
trouble for.
    So, the screen might have been open, but he was the only 
person in the room. He left the room to get the other person to 
come help them follow their procedures to close the data.
    Chairman Levin. That's the statement of the person who 
opened the file. But, in terms of how long the file was open, 
to get it straight, forensically, 3 minutes. Is that correct?
    Mr. Shirley. Yes.
    Senator Graham. Mr. Chairman, the Air Force obviously is 
trying to make sure this is not a big deal.
    Chairman Levin. I'm not trying, Senator Graham, to say 
whether it's big or small because, obviously, it raises some 
significant questions or we wouldn't be here.
    Senator Graham. Yes, it does.
    Chairman Levin. I'm not trying to defend or attack, I'm 
just trying to straighten out facts because we've had a 
statement here that it seems to me we have to be very clear on 
from Mr. Shirley.
    The computer was powered for perhaps 20 minutes; the file 
was opened for 3 minutes; the person who opened the file said 
they looked at it for 15 seconds. That's the statement which 
the person gives. Those are the times that we're talking about.
    Whether or not it is significant that EADS had that 
information for some period of time, whatever that information 
was that was seen by that person existed for some period of 
time before the two files were exchanged, right? The 
significance, or lack thereof, is, it seems to me, an important 
issue which we'll get to a little bit later. But for the time 
being that's the time, okay?
    Thank you, Senator Graham.
    Forgive me, Senator Wicker, I've intervened before I called 
on you; I wanted to straighten that out. Thank you.
    Senator Wicker.
    Senator Wicker. I thank you for straightening that out. I 
think that was very helpful. I appreciate the Chair actually 
giving Mr. Shirley an opportunity to answer the question. This 
is not a jury trial, where we're trying to play ``got you.'' 
We're able to leave the record open and get a full explanation.
    I think I see what's going on here, Mr. Chairman.
    There are some people in this town who believe that the 
company that they favor may be about to lose a bid again, as 
they did in 2008. A foundation is being laid for howls of 
protest. I don't have any idea who's going to win the award. I 
do know who won it in 2008. I regret that DOD didn't go forward 
with that contract then. We would be very, very close to having 
a tanker that we could rely on.
    But, I see what is happening with this hearing. It's no 
wonder that General Masiello and Mr. Shirley can't answer these 
questions, because they're not involved in the actual award.
    I thought this was going to be a hearing about how the 
information was inadvertently released and how that has been 
corrected.
    Let me see if I can get to this procedure, with regard to 
the computer being on for 20 minutes, the file being open for 
about 3 minutes, and the statement of the individual, that he 
viewed it for some 15 seconds.
    Do I understand, General, that the EADS procedure is that, 
once an individual realizes he has opened a file, then he must 
go and get a second person to come in and verify that before it 
can be closed? Was that your statement?
    General Masiello. Sir, I'm not sure what the procedures 
are. What I read was, they instituted a two-person rule that, 
together, they closed the data, they sealed the data, and they 
took the disk and put it in a safe, separate from any working 
documents, isolating it completely from the rest of their 
specific bid information.
    Senator Wicker. Mr. Shirley, is that consistent with the 
file being open for approximately 3 minutes?
    Mr. Shirley. We were given to understand at the lab that 
when the employee opened the file, they were very nervous about 
what had occurred, they realized that they shouldn't be looking 
at that particular piece of data. They went through some sort 
of internal process to see, ``Geez, how should we walk back 
from this,'' and essentially find another witness or a second 
party to sort of instruct them, ``Okay, what do we do next? 
We're into something that's awkward.'' So, that was why the 
computer, we were given to understand, was left on while they 
figured out that internal process. As they did, then they shut 
the computer down and went through the process that General 
Masiello just described, Senator.
    Senator Wicker. Okay.
    Then, General, the Air Force, after looking at this and 
after understanding what had happened, decided to level the 
playing field. Now, once again, tell the committee what 
information has been shared to each of these competitors to 
level the playing field.
    General Masiello. As I understand it, it was the snapshot 
screen of the spreadsheet that the contractor saw. They took a 
picture of the screen from the computer that had that 
information, and took that same picture of the screen from the 
other competitor, and swapped that information. It's just a 
single piece of paper that had the spreadsheet from each 
offeror. It's the IFARA data.
    Senator Wicker. Okay, so it really wouldn't matter if the 
person from EADS had looked at that file for 20 minutes, would 
it? Because, now both competitors can look at each other's 
snapshot of that spreadsheet for an infinitely long time, is 
that not correct?
    General Masiello. That's correct, Senator.
    Senator Wicker. I really don't think there's anything more 
to ask about. Did either competitor change their proposal 
significantly after this information was shared?
    General Masiello. Sir, I have no way of knowing that. But, 
right now they still have the opportunity to change it, should 
they choose to.
    Senator Wicker. Okay.
    My friend from Missouri mentioned a protest.
    With regard to this release of information, is it a fact 
that neither Boeing nor EADS has protested this?
    General Masiello. That is correct.
    Senator Wicker. As a matter of fact, I would observe, Mr. 
Chairman, that the statements from both of the companies that 
are before us, are both relatively straightforward and 
relatively relaxed about this, and that neither, having had an 
opportunity to file a protest, has done so.
    Can either of you answer this question--and I suspect you 
can't, because you're not involved in the contract--the 
testimony is that this is not proprietary information, but in 
previous competitions, hasn't this exact data been provided in 
2008? Isn't it already part of the public record?
    General Masiello. Sir, I'm sorry, I can't answer that.
    Senator Wicker. Okay. I expected that was the answer.
    Mr. Chairman, you had no choice but to call the hearing. 
Until I see a protest from either company, I'm going to 
conclude that the Air Force saw an example of human error, and 
that they responded correctly, professionally, and properly, 
and have now leveled the playing field, and we should go 
forward and, hopefully, not see further delay in this very 
important program.
    Thank you.
    Chairman Levin. Thank you, Senator Wicker.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    All I can say is, thank goodness it wasn't highly 
classified information like we've had in other circumstances. 
Being in the military, I understand the followup, the checks 
and balances where you try to identify the problems, where they 
were, and you move forward to make sure it doesn't happen 
again. I appreciate that.
    Are you able to guarantee to the committee that the 
unauthorized release of this information did not give one 
contractor an unfair advantage?
    General Masiello. Sir, I can't guarantee anything like 
that. I don't know enough about it, whether to judge or not.
    Senator Brown. Right.
    General Masiello. But, what we have done has provided the 
same type of information to both contractors now. From what I 
can see, and based on the Air Force having taken that action, 
it appears that they have leveled the playing field.
    Senator Brown. You're right, you can't answer that. I'm not 
quite sure why we're actually here. I understand there may be 
other things happening behind the scenes that are forcing us to 
be here.
    Your statement could have been given to me offline as to 
what you've done. I understand sometimes we need to politicize 
things a little bit more.
    The one thing that I'm surprised at is, it takes 10 years 
for the Federal Government to issue a contract. Only in the 
Federal Government does it take 10 years to issue a contract. 
It's amazing to me.
    I'm not as new as I once was, but I'm just amazed when I 
learn about these breakdowns. Not only is it not cost 
effective, we're wasting taxpayers' money, we're losing the 
confidence of the people that we deal with, not only the 
average citizen, but the individual businesses that we deal 
with to the point where they think, ``Why bother? It's going to 
take 10 years. We're going to have to file a bunch of protests. 
It's going to go on and on and on and on.'' It just makes no 
sense to me.
    I want to thank you for braving the elements and taking the 
time to come in. We thank you for the preparation.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Brown.
    I think the question was raised as to what was available 
during the last protest. Was one contractor's IFARA data made 
available to the other contractor as a result of the protest 
process during the previous competition?
    General Masiello. Sir, I can't answer that question. I 
don't know.
    Chairman Levin. We'll ask that for the record. That is a 
question which is factual and it's not in any way, it seems to 
me, inappropriate to know, because that gets to the question as 
to whether this data is relevant.
    General Masiello. Right.
    Chairman Levin. It could be relevant that, assuming that 
this data was known to the person or understood by the person 
or remembered by the person who saw it for somewhere between 15 
seconds minimum and a few minutes maximum, according to the 
experts here, whether that data gave an advantage because it 
was available to the one contractor for the month, or whatever 
it took, before the switch took place. I'll ask you the 
question, whether or not that would give any advantage to have 
that data, assuming it was remembered, to have that in one's 
possession for that period of time between November 1 and the 
time that the data was exchanged. Do you know the date of that 
exchange?
    General Masiello. November 22.
    Chairman Levin. Okay, so whether or not that gives an 
advantage or not to have the data, assuming it was remembered 
for that 21-day period or not, is not, as I understand it, for 
you to say. Is that correct?
    General Masiello. That's correct. But, if I were just 
looking at a snapshot of the information, and all I did was 
have a snapshot of the information, I wouldn't have known what 
was going on behind the data to get to that point. The person 
who did have that information, who had seen that screenshot, 
was removed from the program, so they were not allowed to talk 
to anybody associated with the program. They have not, 
according to their certification--that was also certified by 
the CEO--talked or told anyone in the company what they saw on 
that data.
    But, now that it's been exchanged it's level.
    Chairman Levin. When you say, ``it's level,'' I think you, 
frankly, should be a little more cautious. I think it's an 
attempt to level the playing field.
    General Masiello. Fair enough.
    Chairman Levin. It may be a successful attempt.
    General Masiello. Fair enough.
    Chairman Levin. Unless there's some advantage to having 
that data for 21 days, in the possession of somebody who has 
said they didn't share that data with anybody else, then that 
is an attempt to level the playing field, which may have 
succeeded. Okay?
    General Masiello. Correct.
    Chairman Levin. Okay.
    General Masiello. Fair.
    Chairman Levin. General, I just have a couple more 
questions. The remedy here or the attempt to level the playing 
field, which, again, may or may not succeeded--people may want 
to argue that--but, what other options were considered by the 
Air Force to remedy this mistake?
    General Masiello. Again, Senator, I don't know.
    Chairman Levin. If you don't know, that's fine.
    General Masiello. I don't know.
    Chairman Levin. You've been called here for a specific 
purpose, and you have given us the information to the best of 
your ability.
    Same thing with you, Mr. Shirley.
    I think we have to be fair to you as to why you were 
called.
    It's important that we get this information on the record, 
although it may be of limited value. It is part of an overall 
picture on this contract, which took 10 years by the way, 
because there was fraud and corruption involved in one point 
during this process where someone landed in jail. There are a 
number of reasons why it's extended. The last thing I want to 
do is inappropriately extend the period. This hearing is not 
doing that.
    We're simply getting information. Whatever the value of 
that information is, in advance or afterwards, you can debate 
that too. I happen to think it's useful to get this out in 
advance for a number of reasons. I think the clearer the air is 
going into that decision, the better off we are. This is 
intended to get factual information whichever way one wants to 
argue it, on the record, prior to a decision. I shouldn't say 
it clears the air; we don't know if it clears the air. Some may 
argue that it gives weight to one side or the other. I'm not 
arguing that.
    It is important, it seems to me, that all of the 
appropriate facts that can be made public are made public 
before the decision. There may be a lot of arguments after the 
decision, but at least before the decision, it seems to me we 
ought to get as much out there on the record as we can.
    So, you don't know what other options were considered by 
the Air Force. I will ask for the record the question about 
whether, in the previous protest, this information was made 
available to the competitors. Will you take that for the 
record?
    General Masiello. Yes, sir.
    [The information referred to follows:]

    As part of the post award debriefing at the end of the February 
2008 Source Selection, each offeror was provided the other offeror's 
IFARA Fleet Effectiveness Value (FEV). The FEV is the bottom line 
information that was part of the information inadvertently disclosed 
and subsequently provided to each offeror to level the playing field in 
the current KC-X Source Selection.

    Chairman Levin. Okay. Senator Sessions.
    Senator Sessions. Let me just say, in defense of the Air 
Force, thousands of decisions and interactions and 
communications, I'm sure, have been undertaken in this effort. 
After the last incident in which fraud was discovered and 
Boeing officials went to jail, the effort redoubled to do this 
in the most fair way possible, to the extent to which the 
greater capabilities of the airplane to be built in Alabama 
were really not considered in the bid. It's basically a low-bid 
contract to make sure that whoever comes in with the lowest 
price gets the contract, no matter if one plane is more capable 
in every single area of evaluation; they get very little credit 
for that.
    I know the Air Force has bent over backwards to be fair 
about this. Human errors occur, and I just don't think it 
should besmirch the reputation of the Air Force. I do believe 
that you took appropriate action.
    General Masiello, didn't the Secretary of Defense send an 
IRT to come and evaluate the accident independently of the 
people who were supervising the contract?
    General Masiello. Yes, sir.
    Senator Sessions. I just think the Air Force tried to do 
what they could. They notified everybody, they did everything 
they could do. Fortunately, it appears that nothing serious 
happened that jeopardized the fairness of this contract. I 
think that's pretty plain.
    Mr. Shirley, the examination report from the Defense Cyber 
Crime Center, Defense Computer Forensics Laboratory, that's a 
unit that takes pride in its independence and integrity, does 
it not?
    Mr. Shirley. Yes, sir, it does.
    Senator Sessions. You were brought in to independently 
evaluate what happened.
    Mr. Shirley. That's correct, sir.
    Senator Sessions. You concluded that ``no signs of network 
connections were disclosed, and no signs of attached storage 
devices were found.'' That was one of the findings.
    Mr. Shirley. That's correct, Senator.
    Senator Sessions. No sign of any documents being printed 
were found, is that correct?
    Mr. Shirley. That is correct, sir.
    Senator Sessions. No trace of K-76B data, other than file 
names, was found on the server's hard drive.
    Mr. Shirley. That's correct, Senator.
    Senator Sessions. That would indicate that nobody 
downloaded, copied, or stored this information, would it not?
    Mr. Shirley. We saw no evidence of that, sir.
    Senator Sessions. That's pretty conclusive, actually, your 
ability to determine that. I think that's important.
    I think, General Masiello, Senator Wicker asked you an 
important question. The document that was revealed when he was 
opening that file, did that include dramatic, important 
evidence? Or, fortunately, was it something that did not impact 
the fairness of the competition?
    General Masiello. I don't know the relative importance, but 
whether it did affect or establish or create, at minimum, an 
appearance of unfairness by swapping the same snapshot between 
the companies, the same type of information between the 
companies, that reestablished from the Air Force perspective 
fairness in the competition.
    Senator Sessions. With regard to the parties who are 
aggressively competing for this, and, I hope, submitting the 
lowest possible bids, for the benefit of America and the 
taxpayers, they can possibly submit, because that's what it's 
going to take to win this contract--I understand there was a 
10-day formal complaint period. Maybe I'm wrong about that. 
But, at any rate, neither competitor has filed any kind of 
formal complaint about this matter.
    General Masiello. That's correct.
    Senator Sessions. The individual, as you noted, that saw 
that was removed from the process.
    Mr. Chairman, I think it's fine that we had the hearing. We 
were briefed on it by the Air Force immediately. General 
Schwartz testified to it in December of last year. I believe 
they responded well. I think both parties understand what 
happened and are prepared to accept the Air Force's decision, 
or else they would have protested. This critically important 
contract is on the road to final decision. I just hope and pray 
and expect that the Air Force will do so fairly and 
objectively, and award the contract to the competitor that 
deserves to win.
    I would repeat one more time, when we directed, explicitly, 
as part of the National Defense Authorization Act, that this 
award of the tanker contract would be competed, we knew there 
were only two competitors in the whole world that could provide 
this. At that time, people raised some of these issues. Now, 
there are arguments on both sides, but we made that decision. 
We're moving forward to the final decision, going forward with 
the two competitors in the world aggressively submitting bids 
to produce an aircraft, hopefully, that will meet the standards 
of the Air Force at the lowest possible price.
    Our committee certainly has not been shy about it, Mr. 
Chairman. We've done, I think, our duty without politicizing 
the process, to date. I hope that we can continue at that rate.
    Chairman Levin. Thank you very much, Senator Sessions.
    Senator McCaskill.
    Senator McCaskill. Mr. Chairman, I want to take a moment 
after my friend from Mississippi said that he could see what's 
going on here. I want to explain, very clearly on the record, 
what's going on here, from my perspective as a Senator.
    Am I unhappy about the notion that a subsidized company 
from another country is going to compete on a level playing 
field with a company that's not subsidized? Yes, I'm very 
unhappy about that. I've heard a lot of lectures over the last 
year about socialization and the notion that government should 
not be subsidizing private companies. The idea that all of a 
sudden we can completely ignore that and decide, ``Well, 
socialization's okay if it's being done in another nation,'' 
and then a company that's being subsidized by the government of 
another nation is going to compete on a level playing field 
with a company that's a free-market company, I think, is 
absolutely wrong, especially in DOD.
    What if this company was owned by China? Would we take that 
into consideration? Okay, so they're our allies, and they're 
only subsidized to the tune of $10 or $20 billion. We don't 
take that into consideration? I don't want to hear any more 
lectures about the government's socialization or subsidization 
of American companies, because if this is not relevant, then we 
shouldn't be complaining about it.
    That's what's going on. These jobs aren't going to 
Missouri. This tanker wouldn't be built in Missouri. This 
tanker's going to be built in another State. What happened here 
is there was fraud. There were criminals. Then the process was 
not fair, with all due respect, Senator Sessions. It wasn't.
    They didn't bend over backwards to make the process fair 
after the fraud was found, because, in a very unusual move, one 
of our major defense contractors filed a protest. An 
independent auditing agency said, ``You know what? It was very 
unfair.'' That's what happened in 2008. They stacked the deck.
    I'll tell you, from my standpoint, what I think happened 
is, they were embarrassed. The Air Force was embarrassed that 
they had allowed fraud to go on in this kind of competition, 
and they overcompensated and said, ``Okay, Boeing, we're going 
to make sure you don't get it.'' They put out a proposal that 
GAO said every single basis was unfair.
    That's how we got here. It wasn't that the Air Force bent 
over backwards to make it fair after the fraud. We have an 
independent evaluation of that.
    I just want to make sure the record's clear about that, 
because I don't care where the jobs were going. I don't think 
DOD should treat companies equally if one is subsidized by a 
foreign government. I think it's a bad precedent. I don't think 
we should be doing it. I think most Americans don't think we 
should be doing it.
    I know there are jobs that are going to be had here in 
various States. We all do this around here. We're competing for 
jobs, just like American companies are competing for jobs. I 
think, at the end of the day, we should be doing everything we 
can to at least take that into consideration, because the 
lowest and best price is relevant to whether or not they're 
subsidized. It's relevant.
    I wanted to explain what's going on here from my 
perspective, because these aren't Missouri jobs. These are not 
Missouri jobs. I think this is a process that has been terribly 
flawed.
    A lot of what you've testified today, I think, is fair. 
This really isn't a trial, because, frankly, if this were a 
trial, I could ask a series of leading questions that would 
highlight what I think is the case. A lot of what you've 
testified is that you couldn't prove that EADS didn't do what 
they said they did.
    In other words, the computer was on; you can't prove 
whether they looked at it. There's no proof, other than the 
man's testimony, whether he looked at it for 15 seconds or 3 
minutes, correct? You just can't disprove what they said, 
correct?
    Mr. Shirley. Ma'am, I think it would be wise for us to send 
you the specific technical findings, in a question for the 
record, to clarify that.
    [The information referred to follows:]

    I answered to the committee during testimony that the EADS computer 
was in a powered mode for approximately 20 minutes after a competitor 
file was opened (i.e. a Boeing spreadsheet) and that file was opened 
for approximately 3 minutes. Those responses were predicated on DC3's 
forensics findings as of the date of the hearing. In the forensic 
process, DC3's analyst made technical observations of computer data and 
correlated those against affidavits provided by EADS.
    The following is the deeper detail behind the response, some of 
which was not technically determined as of the hearing date:
    DC3's forensics examination determined that the EADS computer 
indicated the Boeing spreadsheet was opened at 9:21.14 (Eastern 
Standard time as displayed in the computer on 1 Nov 2010). It was the 
analyst's opinion there was no relevant, discernible file activity for 
approximately 20 minutes at which time the computer was shut down. This 
was the basis for my comment that the EADS computer was in a powered 
mode for approximately 20 minutes. My testimony that the spreadsheet 
was open for roughly 3 minutes was framed on three available data 
points: one employee's estimate that he opened the file for 15 seconds, 
the arrival of a second employee within an estimated 3 minutes, and no 
contradictory forensic evidence; hence the analyst's worst case 
conclusion of 3 minutes of access.
    However, in making this determination the analyst did note what he 
considered to be two superfluous file artifacts, an icon cache file and 
a .pip file. Subsequent to the testimony the .pip file was more 
accurately identified as Excel12.pip, a file Microsoft Excel uses to 
store menu preferences. The .pip file becomes more probative in further 
ascertaining the specific length of time the spreadsheet file was open. 
This is because the .pip file is only modified when the Excel program 
itself is closed. DC3's analyst was only able to draw this specific 
conclusion based on post-testimony technical consultation with 
Microsoft Corporation experts who developed the software. As previously 
indicated, the analyst confirmed the spreadsheet file was opened at 
9:21.14. He was able to confirm the .pip file was simultaneously 
created, modified, and accessed at 9:21.40. According to the Microsoft 
consultation, the .pip file is only updated when the Excel program is 
closed and the time of 9:21.40 becomes definitive for file closure. As 
a result, the analyst was able to further narrow the 3-minute window, 
described in testimony, to 26 seconds. This finding is clearly 
consistent with the statement by the EADS employee who estimated he 
opened the spreadsheet for approximately 15 seconds. However, this 
specific data was not available by the date of the hearing, hence the 
reference to the 3-minute window.

    Mr. Shirley. I did not read that employee's statement. I 
did not see that material. The aspect that he looked at it 
fairly briefly, 15 seconds, is something that I understand from 
the conversations relating to preparing for this.
    We had each company's computer that was forwarded to us, 
based on the agreement of the companies and the Program Office, 
and delivered to our lab. Then we subjected each of those 
company's computers to a detailed forensic examination that's 
outlined in a very exhaustive technical report.
    I did not review the specific details of the entirety of 
that report out of a concern that it had source selection or 
other proprietary material. I wanted to understand that, in 
directing the assets of our lab and our process, that we 
received those computers in the right fashion, that we looked 
at those with the right subject matter experts, that could 
deliver a technical report consistent with our processes and 
procedures; and then, under the specific direction of our lab 
director, that process was conducted and we rendered the 
technical report as a result of that process.
    I believe I mentioned earlier that, from that technical 
report, the only files opened were the files that were 
identified in each of the respective written statements, and 
that the files were only opened for the time suggested by each 
of the respective companies.
    Senator McCaskill. Wait just a minute there. I understand 
that they were opened for that period of time. But the only 
knowledge we have about how long the screen was looked at is 
what the individual said.
    Mr. Shirley. Yes.
    Senator McCaskill. We have no way of knowing whether they 
looked at that screen for 15 seconds or whether they looked at 
it for 3 minutes.
    Mr. Shirley. Senator, you're precisely correct.
    Senator McCaskill. Right. Okay. That's what I wanted to 
establish.
    Mr. Shirley. Yes, ma'am.
    Senator McCaskill. Could EADS have adjusted their final and 
best offer? This is my question; it's a yes-or-no question. 
Could EADS have adjusted their final and best offer based on 
the IFARA data, General?
    General Masiello. Ma'am, now that they have an exchange of 
the information, both offerors have the opportunity to adjust 
their proposals.
    Senator McCaskill. I understand now.
    But let's assume that after someone looked at the screen, 
could they have adjusted their data? Or could they have 
adjusted their final and best offer?
    General Masiello. I don't know, because I don't know how 
much information was revealed in the quick amount of time that 
they looked at the information.
    Senator McCaskill. Do you believe, based on the IFARA data 
that was on the page, that 3 minutes would be enough time to 
memorize that data?
    General Masiello. I can't speak for the individual.
    Senator McCaskill. I don't want to ascribe nefarious 
motives to this company.
    I am just frustrated, because I'm embarrassed at how this 
process has happened from the beginning to this moment. I am 
very exercised about the notion that we are not going to have a 
policy in this country that doesn't take into account, when we 
are having a competition, that one company is subsidized to a 
very large extent. If we were subsidizing Boeing to this 
extent, there'd be press conferences going on around here about 
how this is a subsidization bailout and the government 
shouldn't be in private companies' businesses. But somehow it's 
okay now. I just don't get that inconsistency. That's why I'm 
as exercised as I am.
    Thank you very much, Mr. Chairman.
    Thank you all. I understand you're here and my passion 
about this has very little to do with the fine work you've done 
preparing for this hearing and the efforts you've made after 
this unfortunate incident. But, nonetheless, I think it's very 
important that I explain what's going on with this Senator.
    Thank you very much, Senator Levin.
    Chairman Levin. Thank you, Senator McCaskill.
    Senator Sessions. Mr. Chairman, could I offer for the 
record the GAO report on the protest previously? It found 8 
violations out of 111 complaints. They were very close 
questions, in my view, whether that protest should have been 
upheld. I don't think the Air Force deserves as much criticism 
as my colleague suggests.
    Also, when I was referring, Senator McCaskill, to bending 
over backwards, I really thought I meant post-protest.
    Senator McCaskill. I would agree with you on that.
    Chairman Levin. That will be made part of the record.
    [The information referred to follows:]
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    Chairman Levin. Senator Wicker.
    Senator Wicker. I appreciate Senator Sessions making that a 
part of the record, and for the committee accepting it without 
objection.
    Someone should correct me if I'm mistaken, but the 
information provided to me by my staff is that in September WTO 
ruled that, in fact, Boeing received illegal aid from the U.S. 
Government, and that, as a matter of fact, WTO has made 
findings against both of these competitors with regard to 
improper aid from their governments. I stand to be corrected, 
but that's the information I have.
    The information that I also have is that the Secretary of 
Defense has determined that these WTO rulings against both 
competitors will not be a factor in the competition.
    A determination was made in 2008, by the independent 
analysts at the Acquisition Office, that, in fact, EADS and 
their partner at the time had a bid for the best aircraft. I 
thought the criteria should be what's best for the U.S. Air 
Force, what's best for the fighting men and women who are going 
to depend on this, and what's best for national security. In my 
judgment, that decision was made independently and correctly.
    By kicking the can down the road now to 2011 there is a 
real risk, Mr. Chairman, that the acquisition for major 
projects such as this, will always be called into question. I 
fear that we've done great damage to the future of acquisition 
in DOD.
    Let me make a final point about the 3 minutes versus the 20 
minutes versus the 15 seconds. That information has now been 
shared with both companies. Is that correct, General?
    General Masiello. Yes, Senator. That's correct.
    Senator Wicker. So, it wouldn't matter if the EADS employee 
had looked at the data for 3 hours or for 3 days. Each company 
now has that one little bit of information from the other 
company. They've had it, and they could analyze it until the 
wee hours of the morning. Is that correct?
    General Masiello. That's correct, sir.
    Senator Wicker. I appreciate what the Air Force has done. 
Clearly, human error is, unfortunately, going to happen. 
Anytime an organization is shot through with people, you're 
going to have human error occur.
    I appreciate what the Air Force has done. They're my branch 
too. I love them all, but as Senator Graham said, I'm an Air 
Force veteran and an Air Force Reserve veteran, and I think 
that the Air Force acted very professionally and has corrected 
this inadvertent mistake.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Wicker.
    For the record, let me just put in a chronology here, 
because this committee has been following the tanker 
modernization program closely for a number of years, obviously.
    In 2002 and 2003, we directed a series of reviews. We held 
hearings that identified serious problems with the sole-source 
lease originally proposed by the Air Force. This ultimately 
led, or helped to lead, to the cancellation of the contract. 
That was the time when the corruption was discovered. That was 
described earlier today, that this committee played an 
important role in uncovering that; and Senator McCain, 
particularly, took the lead on that, but a number of us very 
much supported that effort.
    In 2007 and 2008, we closely followed the Air Force's 
unsuccessful second attempt to award a tanker contract. It was 
unsuccessful because GAO upheld the protest to that award.
    Now we're trying to do what we can to get on the record for 
consideration the facts that surrounded this release of 
information that obviously never should have taken place. There 
was some significant incompetence that led to this release of 
information. Everybody acknowledges it shouldn't have been.
    Whether or not the effort of the Air Force to level the 
playing field, in fact, succeeded or not is not a matter for 
deliberation. We're not looking at that aspect of it. That may 
or may not be debated by one or more of the parties later on. 
But, that would be the issue, it seems to me, as to whether or 
not that playing field, in fact, has been leveled. There 
clearly is an attempt to level it. I commend the Air Force for 
trying to do that. But, whether or not, in fact, it has been 
leveled, or whether there was some either advantage during that 
21-day period that existed is another issue.
    This analogy probably doesn't work at all, but you can give 
somebody who is wealthy a dollar, and you can give somebody who 
is broke a dollar; the fact that you gave them both a dollar 
clearly advantages the person who's broke more than the person 
who's wealthy. But, you gave them both a dollar.
    In this case, I have no opinion on this question, but it 
seems to me it could be an issue as to whether or not the 
exchange of the same information advantages one party more than 
the other, for whatever reasons could exist.
    The intent to level the playing field is clear. That's 
clear. The attempt to do that is the right thing to do. But, 
whether it succeeds or not is a different issue, one that I'm 
not able to expound upon, because I'd have to know exactly what 
those arguments are. I think we have to at least leave open 
that possibility.
    My colleagues, I thank you all.
    I want to thank our witnesses for their presence here 
today, for coming during this weather challenge. I know, 
particularly for one of you, you came a long distance, and 
maybe had no sleep. I won't identify which of the two of you it 
is, because both of you deserve credit for your testimony. I 
very much appreciate it.
    We will stand adjourned.
    [Questions for the record with answers supplied follow:]

             Questions Submitted by Senator James M. Inhofe
               integrated fleet air refueling assessment

    1. Senator Inhofe. Major General Masiello, are all proposed tankers 
considered using the Integrated Fleet Air Refueling Assessment (IFARA) 
model held to the same criteria running the wartime scenarios? If not, 
what are the differences?
    General Masiello. The ground rules for the IFARA assessment are 
published in the Request for Proposal (RFP). The ground rules are 
applied consistently to all offerors. It is only the offerors' unique 
proposed aircraft that drive different IFARA Fleet Effectiveness 
scores.

    2. Senator Inhofe. Major General Masiello, during the competition 
for the KC-X, has the IFARA model and guidelines ever been modified? If 
so, what was modified and why?
    General Masiello. There were three RFP amendments that affected the 
IFARA assessment. In Amendment 2, the Air Force corrected transposed 
base information on two bases. Amendment 3 more clearly defined the 
configuration, with regards to Large Aircraft Infrared Countermeasures 
defensive systems, to use in the IFARA analysis. Finally, Amendment 4 
corrected a spreadsheet that had a note, which referenced four priority 
bases, when in fact, the RFP scenario contained five bases; only the 
note was in error.

    3. Senator Inhofe. Major General Masiello, does IFARA determine how 
many tankers it takes to accomplish the mission?
    General Masiello. Yes. IFARA computes how many tankers are required 
to accomplish a classified scenario made up of four theaters. The 
scenarios and ground rules were established as part of DOD's 2005 
Mission Capability Study and remain valid today. The IFARA process 
generates a Fleet Effectiveness Value by dividing the number of KC-135R 
tankers to accomplish the four scenarios by the number of offeror-
proposed tankers to accomplish all four scenarios.

    4. Senator Inhofe. Major General Masiello, does the number of 
tankers required impact the total evaluated price which the source 
selection is based on?
    General Masiello. Yes. Per Section M of the RFP, the offeror with 
the lower number of tankers will receive a credit equal to the 
difference in tankers required multiplied by the average price of each 
tanker proposed.

                        FEDERAL ACQUISITION RULE

    5. Senator Inhofe. Major General Masiello, I believe Federal 
Acquisition Rule (FAR) 3.104-4 covers disclosure, protection, and 
marking of contractor bid or proposal information and source selection 
information. It states, ``Except as specifically provided for in this 
subsection, no person or other entity may disclose contractor bid or 
proposal information or source selection information to any person 
other than a person authorized, in accordance with applicable agency 
regulations or procedures, by agency head or the contracting officer to 
receive such information.'' Was the FAR violated by the unintentional 
disclosure of the IFARA? If so, what is the consequence of violating 
this FAR?
    General Masiello. The inadvertent disclosure did not comply with 
the FAR. Therefore, the Air Force took numerous actions, including 
asking for an outside Office of Secretary of Defense (OSD)-led 
investigation, obtaining written statements and certifications from the 
offerors, and obtaining computer forensic analysis by the Defense 
Computer Forensics Laboratory. In the end, the Air Force Contracting 
Officer determined, and the Head of Air Force Contracting concurred, 
there was no intentional Procurement Integrity Act violation and that 
the procurement could continue, because there was no impact to the 
integrity of the source selection. However, to eliminate even the 
appearance of an unlevel playing field, the Air Force provided each 
offeror the same IFARA information about the other offeror. Each 
offeror was also afforded the opportunity to update any aspect of its 
proposal.

                         RELEASE OF IFARA DATA

    6. Senator Inhofe. Major General Masiello, I remain concerned about 
the release of the IFARA data and any impact it could have on the 
overall award of the KC-X contract. It could directly impact a bidder's 
strategy for establishing its final price which is due this month. 
Given the unfortunate circumstances surrounding the release of the 
IFARA information, would it not be best to eliminate the IFARA from the 
evaluation process?
    General Masiello. No. IFARA uniquely measures the integrated 
capability of a fleet of tankers in wartime scenarios. Elimination of 
IFARA could result in significant operational capability being 
eliminated by all offerors. The Air Force believes the actions taken 
level the playing field. Further, all offerors equally had several 
opportunities to update any part of their proposal after the playing 
field was leveled.

    7. Senator Inhofe. Major General Masiello, can someone guarantee 
that the inappropriate and unauthorized release of the proprietary data 
did not give one contractor an unfair advantage in preparing its bid 
for the tanker contract or insight into the other competitor's bid 
strategy?
    General Masiello. Because no price, technical, military 
construction, or fuel efficiency information was disclosed, because the 
IFARA information is similar to what was disclosed in the previous 
source selection, and because all offerors were allowed to update any 
aspect of their proposal, the Air Force does not believe there is a 
competitive advantage to any offeror.

    8. Senator Inhofe. Major General Masiello, after the incident, 
according to your written testimony, the Air Force purposefully 
released each competitor's proprietary IFARA data to the other 
competitor to level the playing field--the summary page which was an 
Excel spreadsheet. Given the sensitivity of the data, did you inform 
the contractors ahead of time that you were going to do this and give 
them an opportunity to respond?
    General Masiello. No. The offerors were not given advance notice 
nor provided an opportunity to respond. The Government's decision as to 
how to proceed to level the playing field was determined to be 
appropriate and advance notice and opportunity to respond were not 
required by any law or regulation and could have resulted in an offeror 
essentially vetoing the way ahead, thereby precluding the Government 
from proceeding as necessary.

                             INVESTIGATION

    9. Senator Inhofe. Major General Masiello, I understand an 
investigation was conducted after the inadvertent release of the IFARA 
data. Who conducted the investigation?
    General Masiello. OSD/Defense Procurement and Acquisition Policy 
led an independent assessment in response to a request by the Air 
Force. The KC-X Contracting Officer and Air Force Head of Contracting 
reviewed the results of this assessment and its recommendations. No 
intentional Procurement Integrity Act violations were found and all OSD 
recommendations were adopted.

    10. Senator Inhofe. Major General Masiello, when was the 
investigation started and completed?
    General Masiello. The OSD independent review of potential 
Procurement Integrity Act violations was requested on 9 November 2010. 
This investigation concluded 18 November 2010.

    11. Senator Inhofe. Major General Masiello, who has been provided a 
full copy of the investigation report on the inadvertent disclosure, 
including company statements, statements from individual employees, 
forensic analysis of computers, and analyses and conclusions?
    General Masiello. The OSD investigative report, including all 
attachments and statements, were reviewed by the Contracting Officer, 
the Air Force Head of Contracting, Air Force and OSD Legal Counsel, and 
the KC-X Source Selection Authority. Subsequent to the 27 January 2011 
hearing, this document was reviewed by the OSD Office of the Inspector 
General. Officials from both offerors were afforded the opportunity to 
review Defense Criminal Analysis Reports on their computers. Redacted 
versions (to remove source selection sensitive and classified 
information) of the OSD report were also provided to the Senate Armed 
Services Committee.

                          DATA FILES ACCESSED

    12. Senator Inhofe. Mr. Shirley, during your testimony you stated 
that one file was accessed for 15 seconds and then you clarified that 
statement and said 3 minutes. What was the length of time the file was 
accessed?
    Mr. Shirley. I answered to the committee during testimony that the 
European Aeronautic Defence and Space (EADS) company computer was in a 
powered mode for approximately 20 minutes after a competitor file was 
opened (i.e. a Boeing spreadsheet) and that file was opened for 
approximately 3 minutes. Those responses were predicated on DC3's 
forensics findings as of the date of the hearing. In the forensic 
process, DC3's analyst made technical observations of computer data and 
correlated those against affidavits provided by EADS.
    The following is the deeper detail behind the response, some of 
which was not technically determined as of the hearing date:
    DC3's forensics examination determined that the EADS computer 
indicated the Boeing spreadsheet was opened at 9:21.14 (Eastern 
Standard time as displayed in the computer on 1 Nov 2010). It was the 
analyst's opinion there was no relevant, discernible file activity for 
approximately 20 minutes at which time the computer was shut down. This 
was the basis for my comment that the EADS computer was in a powered 
mode for approximately 20 minutes. My testimony that the spreadsheet 
was open for roughly 3 minutes was framed on three available data 
points: one employee's estimate that he opened the file for 15 seconds, 
the arrival of a second employee within an estimated 3 minutes, and no 
contradictory forensic evidence; hence the analyst's worst case 
conclusion of 3 minutes of access.
    However, in making this determination the analyst did note what he 
considered to be two superfluous file artifacts, an icon cache file and 
a .pip file. Subsequent to the testimony the .pip file was more 
accurately identified as Excel12.pip, a file Microsoft Excel uses to 
store menu preferences. The .pip file becomes more probative in further 
ascertaining the specific length of time the spreadsheet file was open. 
This is because the .pip file is only modified when the Excel program 
itself is closed. DC3's analyst was only able to draw this specific 
conclusion based on post-testimony technical consultation with 
Microsoft Corporation experts who developed the software. As previously 
indicated, the analyst confirmed the spreadsheet file was opened at 
9:21.14. He was able to confirm the .pip file was simultaneously 
created, modified, and accessed at 9:21.40. According to the Microsoft 
consultation, the .pip file is only updated when the Excel program is 
closed and the time of 9:21.40 becomes definitive for file closure. As 
a result, the analyst was able to further narrow the 3-minute window, 
described in testimony, to 26 seconds. This finding is clearly 
consistent with the statement by the EADS employee who estimated he 
opened the spreadsheet for approximately 15 seconds. However, this 
specific data was not available by the date of the hearing, hence the 
reference to the 3-minute window.

    13. Senator Inhofe. Mr. Shirley, what was the name of the file and 
extension?
    Mr. Shirley. K-76B Tanker Fleet Effectiveness Table 101101.xls

    14. Senator Inhofe. Mr. Shirley, was that file located in a folder/
subfolder or was it readily accessible once the disk was open?
    Mr. Shirley. When the disk was opened, one folder was visible 
titled K-76B IFARA Results Release 101101. The Tanker Fleet 
Effectiveness Table 10/101.xls.

    15. Senator Inhofe. Mr. Shirley, how many folders and files were on 
the disks provided to Boeing and EADS?
    Mr. Shirley. EADS and Boeing copies of the K76 disk contained 378 
files in 6 folders. Their copies of the K-30 disk contained 355 files 
in 6 folders. However, there is no forensic evidence that Boeing 
accessed any of the files or folders other than they got to a point 
they could see the K-30B IFARA Results Release 101101 folder being 
listed. In addition, there is no forensic evidence that EADS accessed 
any files or folders other than the K-76B Tanker Fleet Effectiveness 
Table 101101.xls spreadsheet that was located within the K-76B IFARA 
Results Release 101101 folder.

    16. Senator Inhofe. Mr. Shirley, what did the overall directory of 
the disk look like?
    Mr. Shirley. When opened by a user using Windows Explorer, the disk 
provided to EADS had one folder titled: ``K-76B IFARA Results Release 
101101.'' Within that folder, there were two folders--``Depot'' and 
``CMARPS analysis. There were also two files--``K-76B IFARA Results 
Read Me 101101.doc'' and ``K76 Tanker Fleet Effectiveness Table 
101101.xls'' The latter is a Boeing spreadsheet. There is one file 
within the Depot folder and 3 folders and 375 files within the CMARPS 
analysis folder. Forensic analysis showed that only the folder ``K-76B 
IFARA Results Release 101101'' and the file ``K76 Tanker Fleet 
Effectiveness Table 101101.xls'' were accessed.
                                 ______
                                 
              Questions Submitted by Senator Jeff Sessions

    17. Senator Sessions. Mr. Shirley, how long was each company's 
computer that was analyzed by the lab powered up and operating?
    Mr. Shirley. The EADS computer was in a power mode for 
approximately 20 minutes after a competitor file was opened. Prior to 
that file being opened, however, the computer was powered on for 
approximately 27 minutes on the night in question during which time it 
was used to view EADS tanker procurement material. It was also powered 
up the next day for approximately 5 hours and 9 minutes but there is no 
forensic evidence that Boeing material was accessed.
    The Boeing computer was powered on for 26 minutes and was not used 
again before it was sent to DC3/DCFL.

    18. Senator Sessions. Mr. Shirley, since both companies acknowledge 
inserting their competitor's disk into their respective computers, how 
long was each disk inserted into their respective computer before being 
removed?
    Mr. Shirley. There is no way to tell forensically when a disk is 
inserted or removed. All we were able to see is the activity with the 
files themselves. If a disk was inserted but there was not activity 
with the files, there would be no record of the disk ever being 
inserted.

    19. Senator Sessions. Mr. Shirley, do you have forensics-based 
information which would appear to be inconsistent with the EADS North 
America statement that the Boeing IFARA data file was opened and then 
closed within 15 seconds?
    Mr. Shirley. No, Senator, there is no inconsistent forensic 
evidence to the EADS statement. I answered to the committee during 
testimony that the EADS computer was in a powered mode for 
approximately 20 minutes after a competitor file was opened (i.e. a 
Boeing spreadsheet) and that file was opened for approximately 3 
minutes. Those responses were predicated on DC3's forensics findings as 
of the date of the hearing. In the forensic process, DC3's analyst made 
technical observations of computer data and correlated those against 
affidavits provided by EADS.
    The following is the deeper detail behind the response, some of 
which was not technically determined as of the hearing date:
    DC3's forensics examination determined that the EADS computer 
indicated the Boeing spreadsheet was opened at 9:21.14 (Eastern 
Standard time as displayed in the computer on 1 Nov 2010). It was the 
analyst's opinion there was no relevant, discernible file activity for 
approximately 20 minutes at which time the computer was shut down. This 
was the basis for my comment that the EADS computer was in a powered 
mode for approximately 20 minutes. My testimony that the spreadsheet 
was open for roughly 3 minutes was framed on three available data 
points: one employee's estimate that he opened the file for 15 seconds, 
the arrival of a second employee within an estimated 3 minutes, and no 
contradictory forensic evidence; hence the analyst's worst case 
conclusion of 3 minutes of access.
    However, in making this determination the analyst did note what he 
considered to be two superfluous file artifacts, an icon cache file and 
a .pip file. Subsequent to the testimony the .pip file was more 
accurately identified as Excel12.pip, a file Microsoft Excel uses to 
store menu preferences. The .pip file becomes more probative in further 
ascertaining the specific length of time the spreadsheet file was open. 
This is because the .pip file is only modified when the Excel program 
itself is closed. DC3's analyst was only able to draw this specific 
conclusion based on post-testimony technical consultation with 
Microsoft Corporation experts who developed the software. As previously 
indicated, the analyst confirmed the spreadsheet file was opened at 
9:21.14. He was able to confirm the .pip file was simultaneously 
created, modified, and accessed at 9:21.40. According to the Microsoft 
consultation, the .pip file is only updated when the Excel program is 
closed and the time of 9:21.40 becomes definitive for file closure. As 
a result, the analyst was able to further narrow the 3-minute window, 
described in testimony, to 26 seconds. This finding is clearly 
consistent with the statement by the EADS employee who estimated he 
opened the spreadsheet for approximately 15 seconds. However, this 
specific data was not available by the date of the hearing, hence the 
reference to the 3-minute window.

    [Whereupon, at 11:11 a.m., the committee adjourned.]

                                 
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