* Longest-serving Air Force secretary
* DiBattiste seen as contender for job
By Andrea Shalal-Esa
WASHINGTON, April 26 (Reuters) - U.S. Air Force Secretary Michael Donley said on Friday he was stepping down after nearly five years leading the service, during a time it faced scrutiny for mishandling nuclear weapons, a spate of sexual assaults and recurrent acquisition challenges.
Defense Secretary Chuck Hagel called Donley an outstanding leader and said he had been an “invaluable adviser” during his first months in office.
“His leadership came during a challenging time for the Air Force, and he helped instill a culture of responsibility, initiative, and professionalism to the service,” Hagel said in a statement.
Donley, 60, who plans to retire on June 21, was named acting Air Force secretary in June 2008 when then-Defense Secretary Robert Gates fired his predecessor and chief of staff over an incident that raised questions about Air Force oversight of nuclear weapons. Donley was confirmed in October 2008.
Former military officials said Donley rebuilt confidence in the Air Force on the nuclear weapon issue, but the service still grappled with acquisition issues and a controversy over sexual assaults that occurred on his watch.
Earlier this month, Hagel asked Congress to eliminate the power of top commanders to alter verdicts for major crimes like murder or sexual assault. The move came after a senior commander in Europe set aside the sexual assault conviction of an Air Force officer, Lieutenant Colonel James Wilkerson, stirring an uproar in Congress.
Carol DiBattiste, a lawyer and former undersecretary of the Air Force under President Bill Clinton, has emerged as one of the leading candidates for the top civilian job at the Air Force, according to a source familiar with the process.
DiBattiste held senior jobs with the Justice Department, the Navy and the Transportation Security Administration before moving to the private sector in 2005.
Donley leaves office as the Air Force girds for significant budget cuts required under the automatic across-the-board reductions known as “sequestration,” although the full extent of the cuts is not yet clear.
Donley announced plans last week to halt operations of eight fighter and bomber units because of the cuts that took effect on March 1. He said the reductions would also halt training for the rest of the year in many Air Force units.
Donley was the longest-serving Air Force secretary, having held the job for seven months in 1993 as well, according to a Pentagon spokesman. He also served as the service’s top financial officer from 1989 to 1993.
He was the Air Force’s top acquisition official through most of his tenure since the White House-nominated position for that job remained unfilled.
During his time as Air Force secretary, procedural mistakes forced the service to redo a multi-billion dollar refueling plane competition that pitted Boeing Co against Airbus parent EADS. Boeing eventually won the contract.
The service was also forced to redo a multi-million dollar contract won by Sierra Nevada Corp and Brazilian planemaker Embraer to build new light attack planes for Afghanistan in the wake of a protest filed by Beechcraft Corp.
While preparing for the protest, the Air Force discovered mistakes made in the paperwork needed to document the decision. The Air Force gave Sierra Nevada a fresh contract for the work in February, but that contract has also been protested.
Donley played a key role in several restructurings of the $396 billion F-35 Joint Strike Fighter program run by Lockheed Martin Corp in recent years. Last autumn, he told reporters the program had to shape up, or face cuts in orders.