The U.S. Air Force's highest-ranking officer and his predecessor are the subjects of an FBI investigation into the handling of a $49.9 million dollar contract for the Thunderbirds, an air demonstration squadron, ABC News reported on Thursday.

Gen. John P. Jumper (left) passes the Chief of Staff Guidon to Gen. T. Michael Moseley during a ceremony at Andrews Air Force Base, Maryland in a 2005 photo. ABC News quoted law enforcement officials as saying the Federal Bureau of Investigation was investigating allegations that Gen. Michael Moseley and Gen. John Jumper helped to steer a Thunderbird contract to a friend, retired Air Force Gen. Hal Hornburg. (U.S. Air Force/Master Sgt. Jim Varhegyi/Handout/Reuters)

The network quoted law enforcement officials as saying the Federal Bureau of Investigation was investigating allegations that Gen. Michael Moseley and Gen. John Jumper helped to steer a Thunderbird contract to a friend, retired Air Force Gen. Hal Hornburg.

The Air Force, responding to the report, said Air Force Secretary Michael Wynne had referred a protest involving the contract to the Defense Department's chief internal inspector.

"Unfortunately, because of the ongoing litigation and investigation it is inappropriate to address specifics concerning the issue," an Air Force statement said.

Spokesmen for Moseley did not return phone calls seeking comment and ABC said the three generals concerned denied any wrongdoing. As a matter of policy, the Defense Department would not confirm or deny whether such an investigation was under way, said Army Lt. Col. Brian Maka, a Pentagon spokesman.

The Air Force's reputation has been tarnished by a scandal that sent Darleen Druyun, its former second-ranking weapons buyer, to federal prison for nine months for breaching conflict-of-interest rules.

Air Force Secretary James Roche and acquisition chief Marvin Sambur resigned in fallout from the scandal, which led lawmakers to kill a $23.5 billion plan to acquire Boeing Co. tankers in 2004.

ABC said Hornburg, whose command included the Thunderbirds, became a partner in the company that won the contract six months after he retired from the military.

The FBI investigation began after complaints from Air Force insiders and a rival company whose bid was for half the amount, the network said.

The contract was canceled earlier this year when the Air Force General Counsel questioned the "integrity of the process" and the involvement of four-star generals, ABC said.

The case was referred to the Inspector General for the Department of Defense, and the FBI later joined the investigation, it said.

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