NASA: Google execs received improper discount on jet fuel

Google's top executives received improper subsidies worth millions of dollars on fuel purchased from the federal government for their private jets, according to a report released by the NASA Inspector General on Wednesday.

Blaming the situation on an internal government "misunderstanding" rather than intentional misconduct, the 10-page report (PDF) found that Google's founders were allowed to buy jet fuel for private flights at a rate meant for US government business. The report estimated the discounts, which ended in September, saved Google co-founders Sergey Brin and Larry Page and Google Executive Chairman Eric Schmidt between $3.3 million and $5.3 million.

The situation arose as a result of a rental agreement NASA had with H211, the private company that manages the trio's fleet of seven jets and two helicopters. The company paid NASA $1.4 million a year to rent 70,000 square feet of hanger space at Moffett Federal Airfield, about four miles from the company's headquarters. As part of an agreement with H211, NASA was able to collect climate data during more than 200 flights conducted by H211 at no cost to the space agency.

Noting that H211 was entitled to a discounted rate on fuel for the scientific missions, the report found that the Defense Logistics Agency-Energy (DLA-Energy) -- the sole provider of aviation fuel at Moffett -- misunderstood that H211 was drawing fuel for both private flights and NASA-related missions. While the arrangement, which lasted from 2007 to this past August, didn't cost NASA any money, the report noted that it resulted in "considerable savings for H211 and engendered a sense of unfairness and a perception of favoritism toward H211 and its owners."

"Even though we concluded that the fuel arrangement did not result in an economic loss to NASA or DLA-Energy," the OIG's statement said, "H211 nevertheless received a monetary benefit to which it was not entitled. Accordingly, we recommend that NASA explore with the company possible options to remedy this situation."

Google referred requests for comment to H211 Vice President Ken Ambrose, who told CNET that the private company received the report Wednesday morning and was currently reviewing it.

The matter came to light in September when The Wall Street Journal reported that the deal had ended after the Pentagon discovered Google might have been using the fuel for non-government flights, potentially violating its contract with NASA.