Letters: “McCain’s Oversight at Boeing,” Newsweek, July 21, 2008.
… In “McCain’s Boeing Battle Boomerangs” (PERISCOPE, June 30), disgruntled Air Force officials were allowed to hide behind the rough-and-tumble of the presidential election in order to rehash their smear of Sen. John McCain’s oversight efforts on the Boeing tanker lease. As an organization working to expose the corruption of the tanker deal at the time, we are well aware of how bad that deal was. Due to McCain’s willingness to put the enormous time and effort it took to expose the corruption, two people were sent to jail, the CEO was forced to resign and the deal was scuttled. The Air Force had drafted the solicitation so narrowly that without McCain’s intervention, there would not have been genuine competition, and only Boeing could have won it. To be sure, it is very disappointing that the McCain campaign didn’t prevent its people from later becoming lobbyists for Boeing’s competition. However, that shouldn’t tarnish his good work. If such stories dampen any willingness on the part of the Congress to conduct the often thankless work of oversight, the real loser here will be the taxpayer. Danielle Brian, Executive Director Project On Government Oversight Washington, D.C.

Tanker mess exposes problems in Pentagon, Seattle Times, by Sean Reilly, July 9, 2008.
Just four months ago, U.S. Air Force leaders were proudly touting their "fair and open" handling of the refueling-tanker contract that led to the selection of a team led by Northrop Grumman and European Aeronautic Defence & Space.

Now that Boeing has successfully challenged that decision, those officials face a humbling question: "How in the world could they have screwed it up?"

For Mobile, Ala., where the tanker would be assembled and outfitted, the stakes are high as the Air Force ponders its next move. But other analysts see the turmoil as evidence of a broader breakdown, with military bureaucrats and contractors increasingly failing to deliver new weapons on time at the agreed-upon price. … And the Air Force in April announced disciplinary action against five officers over a scheme to steer a $50 million deal to a Pennsylvania firm that included a recently retired four-star general.

"They suffer more from these GAO protests than any of the other services, which is an indication that their system is more flawed than the other services,' " said Nick Schwellenbach, national security investigator for the Project on Government Oversight, a watchdog group. …

The Pentagon's Procurement Problem, Washington Post, By Dana Hedgpeth and Robert O'Harrow Jr., June 20, 2008.
The giant award for a new refueling tanker was going to give the Air Force a chance to redeem itself. The service set out two years ago to create a demonstrably clear and straightforward process to avoid past missteps in replacing its aging aircraft fleet.

But something went wrong. Government auditors criticized the Air Force's process this week, essentially saying that the service should scrap the $40 billion deal that was awarded to Boeing competitor Northrop Grumman and its partner, European Aeronautic Defence and Space, the parent of Airbus.

The contract is an example of persistent overall problems with the way the Pentagon buys weapons, procurement specialists and government watchdogs say. As the government cedes more of its work to private companies and reduces the size of the workforce that oversees contracts, such problems are growing, according to a stream of government audits and reports.… "It appears that the Air Force was, at minimum, trying to overcompensate because of the perception they were too cozy with Boeing," said Nick Schwellenbach, national security investigator at the Project on Government Oversight, a nonpartisan group in the District that tracks federal procurement.

"Take what the Air Force has been saying publicly the last four or five months and contrast that with what the GAO found, and there's almost complete discord," Schwellenbach said.

Air Force not tied to Airbus yet, Marketplace, by Steve Henn June 19, 2008.
Scott Jagow: Airbus and Boeing are used to doing battle. And here's something else for them to fight about: Yesterday, the Government Accountability Office urged the Air Force to do a deal with Airbus to build the next generation of air-borne fuel tankers. This obviously doesn't sit well with the American company, Boeing. But somebody has to build these things. Steve Henn explains.

Steve Henn: The GAO found the Air Force didn't follow its own rules in awarding a massive tanker deal to Northrop Grumman and Airbus.

That's an opening for Boeing, says Loren Thompson of the Lexington Institute.

Loren Thompson: Boeing has not now won the tanker competition. What it has earned is the opportunity to come back and be evaluated fairly.

The GAO's report is non-binding, but Nick Schwellenbach at the nonprofit Project on Government Oversight says Boeing has deep ties to the Democratic Congress and the upper hand on Capitol Hill.

Nick Schwellenbach: Congress is going to put a lot of pressure on the Defense Department. …

Analysis: USAF's great tanker debacle, United Press International, By Shaun Waterman, June 19, 2008.
The finding by U.S. government auditors that the Air Force used a flawed process in awarding a controversial $35 billion contract for aerial refueling tankers to a European-led consortium, rather than to American aerospace giant Boeing, is a victory for the vociferous "buy American" lobby in Congress.

And the news is also another body blow for the Air Force, following the abrupt sacking earlier this month of its civilian and military chiefs.

The bid process, begun after a lengthy corruption probe ended the service's previous effort to replace its half-century-old fleet of aerial refueling tankers, was perhaps the most closely watched procurement the Air Force has ever undertaken. Officials have said repeatedly the new tanker was their No. 1 purchase priority and that it was up to a decade overdue.

So, despite the troubled history of large Air Force procurements, the auditors' finding that the process was riddled with "significant errors" left many observers open-mouthed.

"This was their No. 1 acquisition priority," Nick Schwellenbach of the Project on Government Oversight told United Press International. "It's astounding that they didn't get it right, given that they knew they would be under the microscope."

But he added that the Government Accountability Office, which reviewed the award, has "repeatedly sustained protests against Air Force contract awards." … Although the Air Force, and Northrop Grumman, have the right to appeal the ruling, and Pentagon officials could even ignore the GAO's non-binding findings altogether, that does not seem likely.

"It is highly unlikely that the Air Force would override the ruling, given the huge political firestorm that would provoke," said Schwellenbach.…

CHRONOLOGY-U.S. Air Force tanker saga rumbles on, Reuters News, by Andrea Shalal-Esa and Bill Rigby, June 18, 2008.
U.S. government auditors ruled on Wednesday that the Air Force made "significant errors" in running the competition for $35 billion worth of new aerial refueling tanker aircraft, the latest twist in a nearly eight-year long procurement saga with strong political overtones.

The Government Accountability Office recommended that the Air Force reopen the competition, a boost for losing bidder Boeing Co , which had protested the award and lobbied for it to be overturned.

It is a blow for Northrop Grumman Corp and its European partner EADS , which were awarded the contract in February.

The following is a chronology of events in the Air Force's effort to replace its aging fleet of KC-135 refueling tankers, which is no nearer to completion than it was in 2001:

• Sept. 25, 2001 - Darleen Druyun, then the Air Force's No. 2 acquisition official, meets with Boeing officials to lay out a strategy to lease 100 Boeing 767s. …
  
• Jan. 3, 2003 - Boeing announces Druyun hire. Watchdog group Project on Government Oversight describes it as "one of the most egregious examples in recent memory of the revolving door between the federal government and defense contractors."…
  

Analyst's switch stirs tanker talk, Press-Register, By Sean Reilly, June 09, 2008.
In late February, the U.S. Air Force dropped a bombshell by announcing its choice for an aerial refueling tanker contract. Not long after, an outside analyst named Loren Thompson delivered another.

Referencing an internal Air Force document, Thompson reported that the winner, a team led by Northrop Grumman Corp. and EADS North America, had been deemed superior in four out of five categories over the surprise loser, Boeing Co. … The episode also turned a floodlight on Thompson, long a go-to guy for reporters in search of comment on specific military programs. Among Washington pundits, the affable former academic has carved out a niche as a reputed back-channel for power-brokers who want to pass along their own views and positions.

"I would say he's a conduit for very high-level people," said Nick Schwellenbach, national security investigator for the Project on Government Oversight, a Washington, D.C. watchdog group.

What is often not revealed in news reports, Schwellenbach added, is that almost all funding for Thompson's employer, the non-profit Lexington Institute, comes from the same defense contractors who frequently have a stake in the programs that he writes about. Overall, Schwellenbach said, "he represents a very pro-industry viewpoint. I don't think you'll ever see him calling for less spending or cutting programs." …

When Public Advocates Line Up for Corporations, Washington Post, By Robert O'Harrow Jr. and Dana Hedgpeth, April 3, 2008.
It was billed as a coalition of public interest groups focused on the recent $40 billion contract award for a new Air Force refueling tanker.

Officials at Citizens Against Government Waste, a quarter-century-old group founded as a good-government advocate, wanted other groups to join in speaking out in favor of the "open, fair and transparent" process that gave the award to Northrop Grumman and its partner, European Aeronautic Defence and Space.

But as often happens in this town, the story was not so clear cut. It turns out Citizens Against Government Waste, or CAGW, was playing a more complicated advocacy role on the same side as the Northrop team, in an immense struggle over the deal with surprise loser Boeing.

Welcome to that special place where business and Washington intersect, where things often are not what they seem and keeping track of the players and their motives is as hard as following the aces in hands of a cardsharp. … There's typically no way to determine who is giving money to nonprofit groups, unless the groups decide to say. Danielle Brian, executive director of the Project on Government Oversight, said nonprofit organizations that advocate good government are taking sides on this contract in a way she has not seen before.

"I can't remember a case where public interest groups have become such vocal, aggressive advocates on behalf of corporations," said Brian, adding that CAGW asked her group to join the effort, an offer she declined. "There's so much money flying around on this issue. I suspect it is playing a significant role in some cases."

POGO Alert - POGO's Position Regarding Current Air Force Tanker Contract Award, April 1, 2008.

Air Force keeps tanker freeze, Press-Register, By Sean Reily, March 18, 2008.
The U.S. Air Force said Monday it won't fight a temporary freeze on a recently awarded aerial refueling tanker contract, a move that could delay construction of a $600 million aircraft assembly plant in Mobile.

The Air Force's decision not to seek a waiver raises questions about whether Northrop Grumman Corp. will slow an ambitious timetable for building its share of the 1,500-worker facility at Brookley Field Industrial Complex. … Awarded Feb. 29, the contract calls for Los Angeles-based Northrop and its partner, EADS North America, to build 179 tanker airplanes over 15 years. The planes will be assembled in Mobile in a deal valued at up to $40 billion. … Via e-mail Monday. Lt. Col. Jennifer Cassidy, an Air Force spokeswoman, said the military "has no plans at this time" to restart contract activity before then.

In general, she added, "because the entire GAO bid protest resolution process takes, at most, only 100 days, the (Air Force) does not override stays, absent some particular urgency to initiating or continuing performance."

And if the Air Force did so in this case, it would be seen as "pro-Northrop," said Nick Schwellenbach, defense investigator at the Project on Government Oversight, a Washington, D.C., watchdog group.

"It's very unusual to intervene in that protest process and say, 'We still have to go ahead,'" Schwellenbach said. While Northrop could proceed at its own risk, he added, "things can get weird, because you're starting to talk about serious cash."

On Capitol Hill, the Air Force has already come under fire from Boeing allies who accuse the service of leaking information favorable to Northrop to defense analyst Loren Thompson.

At a Senate hearing last Wednesday, Air Force Secretary Michael Wynne deplored the leak but said he had "no idea" where Thompson got his information from.

McCain defends his tanker deal inquiries, Associated Press, By Jim Kuhnhenn, March 11, 2008.
Sen. John McCain said Tuesday his inquiries into a $35 billion Air Force tanker contract were designed to assure evenhanded bidding and denied they were motivated by lobbyists who are close advisers to his presidential campaign.

"I had nothing to do with the contract, except to insist in writing, on several occasions, as this process went forward, that it be fair and open and transparent," he said at a meeting with voters in St. Louis. "That was my involvement in it."

Two of the lobbyists working on the EADS account gave up their lobbying work when they joined McCain's campaign last year. A third, former Texas Rep. Tom Loeffler, lobbies for EADS and serves as McCain's national finance chairman.

McCain, the Republican presidential nominee in waiting, has been instrumental in the Pentagon's long attempt to complete a deal on the tanker. McCain helped block an earlier, scandal-marred tanker contract with Boeing in 2004 and prodded the Pentagon in 2006 to change proposed bidding procedures opposed by Airbus. …

Danielle Brian, executive director of the Project On Government Oversight, a watchdog group that has cooperated with McCain in the past on the tanker issue, said she had seen no evidence that lobbyists influenced McCain's stands on the bidding process. But she said he is judged differently because of his reputation as a self-described "straight-talking" reformer.

"McCain ends up having to live by a higher standard than everyone else because he's the one that's been pointing out how corrupt the whole Washington system is," she said. "And when he doesn't, he does hand his critics ammunition."

McCain on Tuesday said his work on the tanker was designed to keep the bidding competitive.

"I think my record is very clear on this issue, including a paper trail of letters that we wrote to the Department of Defense during this process and saying clearly and unequivocally we just want a fair process, and we don't want a repeat of the previous process," he told reporters in St. Louis. "I think my record on this issue is very clear and authenticated by both written and verbal statements on the issue." …

In recent years, ties between Air Force, Boeing strained, Seattle Post-Intelligencer, By Eric Rosenburg, February 29, 2008.
The awarding of the multibillion-dollar Air Force contract to a team of Northrop Grumman and Airbus parent EADS to produce a new fleet of tanker jets caps a tumultuous seven-year period for the military service and The Boeing Co.

Air Force officials have indicated that they hoped their selection of the Northrop-EADS team to build the new refueling airplanes would signal that the service has moved beyond the tanker scandal that inflicted grievous wounds on the reputations of the Air Force and Boeing.

The scandal mushroomed after the Air Force in 2001 came up with a plan to replace its aging tanker fleet by leasing 20 Boeing tankers and later buying 80 more in a deal worth more than $20 billion. … At the epicenter of the tanker scandal was Darleen Druyun, then the second-highest acquisition executive in the Air Force, who admitted steering huge, multibillion-dollar contracts to Boeing in return for post-government employment for herself, her daughter and her son-in-law. One of those contracts was the tanker deal. … After the Air Force responded to McCain's complaint and announced it would solicit competing bids, Druyun admitted sharing with Boeing proprietary pricing information that had been furnished to the Pentagon by rival Airbus.

"It was jaw-dropping," said Danielle Brian, executive director of the Project on Government Oversight, a nonpartisan watchdog group. "She was admitting to what in the worst of all worlds we thought might be happening."

Later investigations concluded that part of the problem rested in the fact that Druyun had functioned during the previous tanker competition in a bureaucratic vacuum, with little oversight from superiors or little transparency to outsiders. …

Northrop zeros in on tanker contract: Test of key component called flawless, OrlandoSentinel.com, by Richard Burnett, August 21, 2007.
With $40 billion at stake, Northrop Grumman Corp. has stepped up its effort to land a historic refueling-aircraft contract the company said could bring 2,000 jobs to Florida, including up to 500 at its Melbourne operations. The Los Angeles-based defense giant touted a major technical milestone Monday as well as hundreds of millions of dollars in potential economic impact in Florida if Northrop wins the lucrative Air Force advanced tanker. Still, some significant work -- such as the air-frame fabrication -- would be done in Europe, a fact that has drawn criticism from some congressional leaders. Northrop has its work cut out for it in trying to overcome that opposition and the considerable political clout of Boeing, defense-industry experts said. Chicago-based Boeing has already projected it would add 44,000 jobs in the United States, including many at its massive aircraft-plant operations in Seattle. "Clearly, Northrop is trying to counter the perception that Boeing has the edge in that area," said Nick Schwellenbach, an investigator for the Project for Government Oversight, a defense watchdog group based in Washington, D.C. "But Boeing is very effective at exploiting that perception."

POGO Alert - Defense Inspector General Originally Hid Boeing Role in Scandal Report; White House and Congress' Roles in Tanker Lease Deal Still Unclear, May 25, 2006. read this alert »

Less Secretive Release “Management Accountability Review of the Boeing KC-767A Tanker Program,” Department of Defense Inspector General.  Parts 1 thru 5 Released to the public on May 2, 2006.

RAND study for DoD states that new tankers are not needed, GovExec.com, January 27, 2006.
A new analysis of the Air Force's tanker modernization plans has found that the military can safely delay expensive plans to replace its fleet of aerial-refueling planes, contradicting longstanding Air Force claims that the aircraft were aging and in disrepair, according to sources familiar with the study.

Original Public Release “Management Accountability Review of the Boeing KC-767A Tanker Program,” Department of Defense Inspector General, May 13, 2005.

POGO Alert - McCain: Pentagon Stonewalls Tanker Investigation, January 31, 2005.

Senator John McCain's floor statement and transcriptions of documents on the Boeing-Air Force tanker scandal. November 19, 2004.

"Pentagon Delays Decision on Boeing Tanker Deal," Morning Edition, National Public Radio story, May 26, 2004.
Defense Secretary Donald Rumsfeld decides to delay, for at least six months, a decision on whether to keep a controversial deal to purchase 100 refueling tankers from Boeing. Critics say the $23.5 billion contract is too costly and argue the Air Force doesn't need the tankers immediately.

A report by the Defense Science Board rejects claims by the Air Force that it needed to rush to lease and purchase 100 new Boeing 767 tanker aircraft. May 13, 2004.

POGO Alert - Defense Science Board Concludes There is No Tanker Emergency. May 13, 2004.

POGO's response to Boeing's full page ad in the Washington Post. May 4, 2004.


"Pentagon Says Changes Are Needed in Boeing Jet Deal," New York Times, April 10, 2004.
In a report severely criticizing how the Air Force negotiated with Boeing to obtain up to 100 large jets for use as in-flight refueling tankers, the Pentagon's inspector general said on Friday that the military should not go forward with the $20 billion deal unless major changes were made to procurement practices.

POGO Alert - Pentagon Inspector General report further supports a decision to halt a sweetheart deal for Air Force to lease Boeing 767 tankers. April 9, 2004.

"'West Wing' Takes on Tanker-Plane Scandal," Washington Post, February 23, 2004.
Has the scandal about the Boeing Co. tanker-deal gone Hollywood?

"Commerce Watchdog Growls At Industry's 'Revolving Door,'" Congressional Quarterly, January 24, 2004.
Sen. John McCain, whose relentless investigation of an Air Force plan to lease tanker aircraft from Boeing Co. prompted fellow lawmakers to reconfigure the deal more to the taxpayers' advantage, is on the warpath once again.

"Stormy Weather: Exit a CEO; enter a new case of cozy ties between Boeing and the Air Force." U.S. News and World Report, December 15, 2003.
Boeing's growing dependence on the government is a big reason Condit lost his job as CEO last week.

"Senate Oks revised deal to acquire tankers." Chicago Tribune, November 13, 2003. Ending a two-year battle between the Pentagon and Congress. The Senate on Wednesday approved a compromise deal allowing the Defense Department to acquire 100 air-refueling tankers from Chicago-based Boeing Co. for substantially less than originally proposed.

POGO Alert - A pair of GAO studies confirmed that the taxpayers would reap huge savings from a compromise proposal of Senators John Warner and Carl Levin to lease 25 and purchase 75 tankers, rather than lease 100. October 16, 2003.

POGO Alert - Pentagon Admits Tanker Lease Costs $5.5 Billion More, But Defends the Boeing Handout Anyway. Defense Deputy Secretary Paul Wolfowitz September 22, 2003 letter to Senators John Warner and Carl Levin. September 23, 2003.

POGO Alert - POGO Blasts President Bush's support of Tanker Lease Proposal as an Insult to the Taxpayers. September 17, 2003.

Letter from Senators John Warner and Carl Levin to Secretary of Defense Donald Rumsfeld requesting that the Department of Defense study an alternative Senate Armed Services Committee proposal to scale down a tanker lease from 100 aircraft to 25. September 4, 2003.

POGO Alert - POGO Hails New Boeing Tanker Proposal a Victory for the Taxpayers. September 4, 2003.

POGO Testimony - Eric Miller, Senior Defense Investigator on Proposed KC-767A Tanker Lease. September 3, 2003.

POGO Alert - Boeing Leasing Deal Originally Conceived to Save Boeing's Faltering Operations post 9/11. September 2, 2003.

POGO Alert - Senate Armed Services Committee Should Reject Air Force Tanker Lease. August 29, 2003.

Letter from POGO's Danielle Brian to Senate Armed Services Committee urging the committee to reject an Air Force proposal to lease 100 Boeing 767 aircraft. August 29, 2003.

"The Air Force KC-767 Lease Proposal: Key Issues For Congress," updated report by the Congressional Research Service on a controversial proposal to lease 100 tanker aircraft from Boeing. August 29, 2003.

Letter from Secretary of the Air Force to Rep. John P. Murtha ranking minority member, Subcommittee on Defense, concerning leasing 100 Boeing 767 aircraft. July 10, 2003.

POGO Alert - Morgan Stanley Analyst Report. Prominent stock analyst says Boeing tanker lease would mean big profits for the defense contractor, little risk, and political "payback." June 17, 2003.

Letter signed by POGO and six other good government groups to key Senate leaders expressing concern over Air Force overpriced plan to lease 100 Boeing-767 aircraft and convert them to refueling tankers. June 10, 2003.

POGO Alert - POGO Applauds Decision on Boeing 767 Leasing Deal: Senator McCain Prevails in Battle Against $26 Billion Pork Provision, May 10, 2002.

POGO Report - "Fill 'Er Up: Back-Door Deal For Boeing Will Leave The Taxpayer on Empty." May 7, 2002.

POGO Alert - LEAKED DOCUMENTS: Pentagon Panel studying "Initiative" to Lease, Not Buy, Future Weapons of War, January 29, 2002.

Letter to Congress is oppose being pressured to approve a costly proposal that is a hidden taxpayer bailout of Boeing Company. The proposal call for the lease of 100 Boeing 767 tankers at a cost that is nearly $7 billion more than if the aircraft were purchased outright.

Organizations call on Senate to vote against the Air Force leasing Boeing 767s at a price dramatically higher than the cost of direct purchase, December 19, 2001.

Letter to Senator John McCain from Mitchell Daniels Jr., Director, Office of Management and Budget, supplying requested cost data on a plan to lease Boeing 767 commercial aircraft to the Air Force, December 18, 2001.

Letter from Senator John McCain to Mitchell Daniels Jr., Director, Office of Management and Budget, requesting recommendation for a Presidential Veto of and cost data regarding a plan to lease Boeing 767 commercial aircraft to the Air Force, December 11, 2001.

Letter from Senator John McCain to Senators Robert Byrd and Ted Stevens opposing authorization and funding the leasing of Boeing 767 commercial aircraft to the Air Force, December 11, 2001.

POGO Alert "The Pentagon Attempts to Quietly Push Two Sweetheart Deals for Boeing Through Congress". Alert includes links to documents and letters from Under Secretary of Defense E.C. Aldridge, OMB Director Mitchell E. Daniels, Jr. and a draft memo of an agreement between the USAF C-17 System Program Office and the Boeing Company. November 26, 2001.

November 2, 2001 letter and supporting financial data sent to Representative Kent Conrad from Office of Management and Budget Director Mitchell Daniels expressing opposition to a plan by the Air Force to lease 100 Boeing 767s to be used as refueling tankers.