Press Release

Pentagon Panel Studying "Initiative" to Lease, Not Buy, Future Weapons of War

The Pentagon is working behind-the-scenes to develop a broad proposal to lease, rather than buy, many weapons systems.

"This plan would be a new low in offering sweetheart deals for defense contractors at the expense of taxpayers," said POGO Executive Director Danielle Brian. "The Pentagon isn't even trying to pretend it's getting a good deal for the taxpayers anymore."

The proposal was first revealed publicly in a January 26 story in the National Journal, written by George Wilson. The plan is outlined in a November 1, 2001 memo written to the secretaries and commanders in chief of all branches of the service by Pentagon Acquisitions Chief Edward "Pete" Aldridge and Defense Department Comptroller Dov Zakheim.

It calls for essentially eliminating several existing legal restrictions placed on multi-year leases for weapons systems, aircraft, and ships, intended to make sure leases aren't more expensive than outright purchases. The Aldridge-Zakheim memo refers to such protections as "statutory and regulatory impediments."

The new proposal could make routine controversial deals like one recently approved by Congress that permits the U.S. Air Force to lease 100 Boeing 767s for conversion into military tanker aircraft.

The tanker lease plan, made public by POGO in December 2001, was estimated to cost $26 billion. It was opposed by Mitchell Daniels, Jr., Director, Office of Management and Budget, because he had concerns that it would circumvent federal rules designed to block leasing abuses.

The B-767 deal was also criticized by Senators John McCain, R-Arizona, and Phil Gramm, R-Texas. McCain called it the "envy of the corporate lobbyists," and said it would mean the government would pay as much or more to use the aircraft for 10 years, when they could have a life span of 30 or 40 years if they were purchased outright. Gramm, a strong supporter of the U.S. military, called the Boeing deal the worst case of Congressional pork he'd seen in his 22 years in Congress.

The Aldridge-Zakheim memo said the Pentagon is establishing a Leasing Review Panel which could recommend changes ranging from the repeal of legal limits upon the length of leases to changing budget score-keeping rules for leases.