Bad Blood Between Pentagon, Congress Burns Boeing

Reuters ^ | 10-24-03

[Brian S]

Fri October 24, 2003 06:48 PM ET By Jim Wolf

WASHINGTON (Reuters) - Bad blood between the U.S. Congress and the Pentagon has taken a toll on Boeing Co.'s multibillion-dollar drive to lease jetliners to the Air Force as refueling planes, congressional officials and private analysts said on Friday.

The Boeing issue laid bare growing strains between Defense Secretary Donald Rumsfeld and his top lieutenants, on the one hand, and the two most powerful Republicans on the Senate Armed Services Committee, on the other.

Among other things, the chill reflects pique at what officials on both sides of the aisle deem Rumsfeld's sometimes-dismissive approach to Congress, for instance on the situation in post-war Iraq.

But it also reflects perceived slights to Armed Services Committee Chairman John Warner of Virginia, Congress's top overseer of the Defense Department, and the panel's second-ranking Republican, John McCain of Arizona.

The tanker lease has become "a focal point of a dysfunctional relationship between the Pentagon and Congress," said Richard Aboulafia of the Fairfax, Virginia-based Teal Group, an aerospace consultancy. "It's no longer about the tanker requirement or the virtues of leasing. It's about politics and egos."

Deputy Secretary of Defense Paul Wolfowitz, for instance, spurned on Wednesday a McCain request for Boeing lease-related records of Air Force Secretary James Roche and Michael Wynne, the Pentagon's acting top weapons buyer.

Lawmakers, Wolfowitz wrote, had already received a "balanced picture" of the lease decision -- the first to rent rather than buy a major weapons system -- through testimony and responses to previous congressional queries.

McCain, in a telephone interview, said he was examining all options to obtain the records. Among the possibilities, he said, was persuading a majority of the Commerce Committee he heads to issue a subpoena .

Another, he said, was "to hold up nominations" -- by implication, the Armed Service Committee's long-delayed action on Roche's nomination by President Bush to be the next Army secretary and Wynne's nomination to be the next assistant secretary of defense for acquisition.

Warner hit back at the Pentagon, in effect, on Thursday when he unveiled a hybrid proposal calling for the lease of no more than 20 modified Boeing 767s, one-fifth the number sought by the Air Force and the Pentagon. Another 80 could be acquired through standard purchase practices, he said.

"While on occasion we have our differences, Secretary Rumsfeld and I continue to work closely to support the president and the men and women of the armed forces," Warner said in a statement Friday.

The Senate Armed Services Committee was the only one of four congressional oversight panels that has declined to approve the lease of 100 -- a deal potentially worth more than $21 billion, including purchases at the end of the leases.

"We conducted extensive oversight of this tanker-lease program," Warner said on the Senate floor, supported by the panel's ranking Democrat, Carl Levin of Michigan, and McCain.

Significantly, Warner pointed out, he had initially suggested leasing up to 25 aircraft and buying 75 -- numbers he had modified to 20 and 80, to the detriment of Boeing, the Pentagon's No. 2 supplier.

Rather than seek any middle ground, Wolfowitz had stuck to the idea of leasing 100 767s. The greater the number of leased aircraft, the more the deal would cost taxpayers, nonpartisan Congressional auditors found.

"It's come back to haunt them," a Senate aide said of the Pentagon's disregard for the initial, lease 25-buy 75 compromise put forward by Warner and Levin

In addition, Warner's new plan would rule out any upfront payments to Boeing for the 767s until they are delivered, just as would have been the case under the lease-100 proposal.

As a result, no money would change hands until fiscal 2006 when the company would get $48 million for the lease of four, followed by $465 million in 2007 for 16 more.

The Air Force would then start buying 20 planes a year from 2008 through 2011 at about $3.7 billion a year -- provided the Air Force and Congress can come up with at least $5 billion in previously unearmarked funds to pay for them by then.

Chicago-based Boeing has lobbied hard for more than a year for the lease program, which would help offset a sharp drop in demand for its commercial aircraft since Sept. 11, 2001.

[Southack]

The DNC talking points this week include claiming "a split has developed inside the Republican Administration."

I've seen several articles in the media that pedal this nonsense already...

[goodnesswins]

BS....it was a BAD Plan......too costly....lease? airplanes? They could have bought and maintained them for a lot less if what I've heard is correct.

[Brilliant]

The Congress is run by idiots, and always has been. There are about 15 Republican Senators who earn their pay, and the rest of the Senate ought to be given pink slips.

[mathluv]

Isn't Linda Daschle the #1 lobbyist for Boeing?

[inPhase]

"The greater the number of leased aircraft, the more the deal would cost taxpayers, nonpartisan Congressional auditors found."

Curious on whether Roche will go down now.

[chiller]

Daschle is Boeing's lobbyist. The deal is very costly. I also understand most of the planes could be purchased for the cost of the lease.

[mathluv]

I thought the lease was much more expensive than the actual purchase.

[JoeFromSidney]

I thought the lease was much more expensive than the actual purchase.

The lease is more expensive than purchase. The idea was that with a lease, the full number of aircraft could be obtained almost immediately, while payment was put off into future years. With purchase, procurement of aircraft would be dragged out, in order to keep within a fixed budget.

The problem is that the existing tankers are just about falling apart. The AF needs new tankers now.

I thought leasing was a bad idea when I first heard it. The aircraft should be purchased. Unfortunately, we're paying the price for the Clinton neglect of the military.

[meenie]

There are several schools of thought on this. Leasing would evade any budget controls if it became a habit. Then there is the thought that there are no budget controls now. Lease now and pay later would allow us to start more wars, but would drive up the costs of defense with no oversight until after the fact.

This could impact our foreign policy if the Secretary of State was unaware of the latest lease contracts. Imagine the chagrine of finding that we just signed a twenty year lease to attack Timbuktu. Bad, bad policy and too expensive when Alan just has to whip out his debit card and pay for them.

[baltodog]

I say we stick with our 35-year-old KC-135's and the small handful of KC-10's.
Or maybe wait until Airbus comes up something better.
Our tankers need to be replaced somehow.
Stop the pork and spend wisely.

[kerosene]

USAF says that it doesn't meet its needs, but Airbus has a tanker version of the A330.

[donmeaker]

The airbus doesn't meet the nuclear flash requirement.

boeing hardens their electronics, and has for years. There is a reason the KC-135 is still around, remember, the KC-135 is a hardened version of the 707, which latter was used as the chassis for the JSTARS.

It has to be Boeing, or I'm not going~