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Project on Government Oversight

Letter to Senate Armed Services Committee urging the committee to reject an Air Force proposal to lease 100 Boeing 767 aircraft

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August 29, 2003

The Honorable John Warner
Chairman, Senate Armed Services Committee
225 Russell Senate Office Building
Washington, D.C. 20510

The Honorable Carl Levin
Ranking Member, Senate Armed Services Committee
269 Russell Senate Office Building
Washington, D.C. 20510

Dear Senators Warner and Levin:

On September 4, 2003, your committee is scheduled to hear testimony on a multi-billion dollar U.S. Air Force proposal to lease 100 Boeing 767 wide-body aircraft and convert them into tankers. The Project On Government Oversight strongly urges you to reject the proposal for what it is - an outrageous waste of taxpayers dollars.

This costly lease proposal has little to do with helping the nation's fighting men and women, and everything to do with padding the bottom line of an already prosperous defense contractor. Those who are pushing to gain quick approval of the lease have in recent months attempted to steer debate away from the plan's original announced intent: A bailout for Boeing after it complained in published media accounts of a post 9/11 drop in commercial aircraft orders.

In a report issued earlier this week the Congressional Budget Office concluded that "the proposed transaction would essentially be a purchase of the tankers by the federal government, but at a cost greater than would be incurred under the normal appropriation and procurement process." The CBO also said the proposed lease does not meet the condition for an operating lease as required by Office of Management and Budget rules.

The Air Force, attempting to capitalize on Congressional support for new procurement funding, has only muddied the waters with distorted facts and contradictory financial projections. As you consider the proposal, we hope you will cast aside political considerations and make your decision on the facts.

Clearly, tanker aircraft play a vital role in the mission of the U.S. military, but the Air Force has failed to provide evidence that the KC-135 fleet is in urgent need of replacement. To the contrary, a May 2002 General Accounting Office preliminary study showed just the opposite, that the current fleet can be re-engined and updated to serve the military's mission until 2040. This also was the opinion of Air Force officials until the lease proposal was dangled in their faces by some members of Congress eager only to please their constituents and a powerful defense contractor.

Simply put, Air Force leaders never said they even needed the tankers until they woke up one morning and saw a pile of money on the table. All of a sudden, they say the KC-135 tanker fleet is plagued with corrosion problems, and have even suggested that the current fleet of tankers is unsafe - even though the KC-135 mishap rate is lower than many other Air Force aircraft.

As you question witnesses and deliberate, we hope you will consider the following:

  • The Tanker Lease is Overpriced. The CBO analysis claims that over the period of the lease the taxpayers will spend $5.7 billion more to lease the aircraft over the cost of an outright purchase. In all, the CBO estimates the tankers will cost $161 million each if the Air Force exercises an option to purchase the aircraft at the end of the six-year lease period. An independent analysis by the highly-regarded Institute for Defense Analysis concluded that the aircraft should at most cost $120.7 million each.

  • Need not Established. Until recently, the Department of Defense has projected that the tanker fleet could be flown for decades. In fact, General Richard Myers, Chairman of the Joint Chiefs of Staff, has said that the KC-135 tanker fleet is "relatively healthy" with "lots of flying hours left on them." The Air Force has not publicly disclosed any studies that contradict Myers statements, and the recent GAO study supported his observations with data supplied by the Air Force.

  • The Corrosion Issue is a Straw Horse. First, the Air Force said the planes were too old, but most recently said the fleet is unsafe because of corrosion but offers no specific assessment of the extent of the problem. No wonder. A July 2003 GAO study concluded that there is no way to assess the extent of the corrosion problem because neither the DOD or military services have reliable data.

  • Boeing has a history of Misconduct. The federal government should not reward contractors who do not have a record of "integrity and business ethics." Three Boeing space subsidiaries recently were suspended after an Air Force investigation revealed that Boeing was in possession of thousands of pages of Lockheed Martin's proprietary documents. A POGO study documented 50 instances of misconduct or alleged misconduct by Boeing since 1990.

The Air Force and some Members of Congress are rushing the lease proposal at the expense of the taxpayers. The Air Force says the lease will allow the delivery of aircraft beginning in 2006, rather than 2009, if they are purchased. However, Neal Curtin of the GAO testified at a House Armed Services Committee hearing last month that as recently as 18 months ago the Air Force told his office that tankers were "lower priority, replacements that could wait." That is one of the reasons the Air Force's plea for urgent replacement of the tanker fleet lacks credibility, particularly after it has been able to meet the heavy tanker demands posed by recent wars in Afghanistan and Iraq.

We hope that your committee will see through the Air Force's hollow plea for new tankers and rebuff a sustained corporate welfare campaign. The taxpayers deserve nothing less.

Sincerely,

Danielle Brian
Executive Director
 

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