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Home Front
Fresh Questions Raised About Lease of Boeing 767s by Air Force
2003-08-31
Dozens of e-mail exchanges among Boeing Co, the Air Force and the Pentagon released on Saturday raised fresh questions about a controversial $22.5 billion deal to lease, then buy 100 Boeing 767 tankers. The documents were among over 8,000 provided to the Senate Commerce Committee as it investigated a deal its chairman, Sen. John McCain describes as a "military-industrial rip-off" and a government bailout of Boeing, whose commercial aircraft sales slumped after the September 2001 hijack attacks.
If the lease is such a bad idea, John, why not sponsor a bill to buy them at a fair price?
The documents contain no "smoking guns," congressional sources say, but they show a close relationship between Boeing and Air Force officials, including Air Force Secretary James Roche, as well as details of a rival bid by Airbus SA. In other memos, Boeing officials say Air Force officials gave them details of the size and price of the Airbus 330 bid. Boeing has denied receiving any proprietary information from the Air Force. Air Force acquisitions chief Marvin Sambur said he did not believe the Air Force had improperly shared any proprietary data with Boeing but said it would take appropriate actions if that proved to be the case.
It's just not done, y'know... Officially.
McCain’s aides released the documents just days before the Senate commerce, budget and armed services committees are due to review the deal and before a possible vote on the deal by the Senate Armed Services Committee as early as Thursday.
Ah, politics.
That vote is the last hurdle facing the deal, under which the Air Force will lease 100 Boeing 767s from a nonprofit trust for six years, with the chance to buy them for an additional $4.4 billion at the end of the lease period. "This sets the stage for some very, very interesting hearings next week," said Keith Ashdown with Taxpayers for Common Sense. He said the documents raised serious questions about the Air Force’s role in negotiating the deal. "Instead of the Air Force acting as an independent reviewer of this nearly $30 billion deal, they’ve acted as a silent business partner of Boeing," said Ashdown.
Well, duh! Let’s see, we can buy Boeings, made in America, or Airbuses, made in Europe, in a contract worth billions. At the time we make this decision, we can remember which way Mr. Chirac would go.
The Air Force acknowledges it will pay more to lease the planes than buy them, but says the lease will allow quicker replacement of its 43-year-old fleet of KC-135 tankers. Boeing says it is guaranteeing the Air Force the lowest price ever for the tankers and even agreed to give back funds if its profits exceeded 15 percent over the life of the deal. The Congressional Budget Office says a lease will cost $5.7 billion more than a purchase over time, and said the deal violated four out of six requirements for federal leases.
On the other hand, it's much easier on the cash flow. And Congress has the habit of cutting funding or moving acquisition into the out years in the course of the budget process. The out years end up getting outer and outer...
Critics say the deal is being treated as an operating lease, rather than a lease-purchase, which means the full price will not be reflected in the federal budget. The Air Force says it wants to buy the 100 tankers, but it needs congressional approval before including it in its budget. The Pentagon’s Office of Inspector General, an in-house watchdog agency, will decide by next week if it should investigate whether Air Force officials improperly disclosed proprietary information to Boeing, defense officials said. Boeing denied on Friday it might have obtained proprietary information while it negotiated the lease deal. In an internal Boeing memorandum dated April 1, 2002, Darleen Druyun, hired by Boeing after leaving her job as a top Air Force acquisition official last year, is quoted as telling the Chicago-based company "several times" that Airbus’s price was $5 million to $17 million less than Boeing’s. In a memorandum dated March 29, 2002, Boeing lobbyist Andrew Ellis, said Bill Bodie, an assistant to Roche, told him the Air Force opted against the Airbus partly because the A330 was 81 percent larger than the KC-135 without commensurate additional fuel capacity.
Regardless of the lower price.
Both memos came after the Air Force decided on March 28, 2002 to reject the bid from Airbus, which is 80-percent owned by European Aeronautic Defense and Space Co. (EADS) consortium, and 20 percent by Britain’s BAE Systems Plc
Posted by:Steve White

#10  I've read that a lot of the reason this deal has to go through is that the Clinton administration signed away our ability to complain about the massive subsidies Airbus recieves from the European Union. So our choices are: impose tarriffs and have our head handed to us by the WTO; not impose tarriffs and do nothing else and see Boeing go out of business, thus winding up with the French as the supplier of tanker aircraft, shutdown the WTO, or subsidize Boeing. McCain's right in that this is a bad decision, but where the heck was he when Clinton was busy making this the least bad decision available to us?
Posted by: Phil Fraering   2003-8-31 4:06:04 PM  

#9  Ah, Stevey, you're so-o-o-o misinformed it's comical. Really, we don't laugh with you, we laugh at you!

Sen. Daschle's lovely wife has angled for the lease-buyout because it puts more money in the pockets of Boeing, for whom she's a registered lobbyist. Not her fault, it's her job and she's good at it (evidently!) but it's not the best deal for the Air Force.

[ the Air Force -- among those who defend your sorry ass even though you don't deserve it ]

Bush won't veto because this is the best deal they can get now, and those aircraft have to be replaced. Far better for Sen. McCain to sponsor a resolution to buy the planes outright. I'm waiting.

SuperHose: yep, P-3 ought to be on the list.
Posted by: Steve White   2003-8-31 3:53:31 PM  

#8  If one of the current tankers goes down, opposition will disappear. I hope the pilots get out safely. To save money it would be more worthwhile to try to buy a common replacement airframe for the P-3.
Posted by: Super Hose   2003-8-31 3:00:32 PM  

#7  republican congress, republican senate, republican pentagon,republican president but somehow senator tom daschles wife is to blame. where r bush's veto powers, McCain would have vetoed the deal so should bush or doesnt he have the ball. Pretty soon you rightwingers r gonna blame this on Hillary Clinton and Babra Streisand and the dixie chicks. Yes the dixie chicks are to blame for this corporate welfare deal
Posted by: steveerossa   2003-8-31 2:32:27 PM  

#6  Hmm...we got a 43-year old fleet that desperately needs to be replaced, a domestic company that could use the business, and we're gonna hold it up for $5-17 million out of a $4.4 billion dollar deal?
I think Senator McCain has forgotten that he represents Arizona and not France.
Posted by: Baba Yaga   2003-8-31 1:23:40 PM  

#5  And let's remember that until the last election cycle ending January 2003, Tom Daschle was running the Senate.
Posted by: Don   2003-8-31 9:20:00 AM  

#4  Boeing and its engineering and production staff are national assets that are not readily replacable. If Boeing were to go bust and ten years down the road we need a large airframe manufacturer who are we going to go to? Lockheed who seems to have gotten out of that business? Northrup you was never really in it? If there was shinnagens going on in the contract prosecute the individuals responsible not the company as a whole. Starting up a new aircraft manufacturer from scratch ain't like opening up a freaking law office, not that most of the people in Congress or the Senate would understand that
Posted by: Someone who did NOT vote for William Proxmire   2003-8-31 9:11:10 AM  

#3  Pretty amazing stuff. We get attacked in the US on 911, and instead of the INS making a concerted effort to deal with those who are trying to kill us, the federeal government goes after and wrecks the domestic aviation industry.

Now we find out that the US government all of a sudden has no problem with the domestic aviation industry as long as they can ensure it gets buried later with surplus aircaft, as these planes will surely be.

Something way wrong in D.C.
Posted by: badanov   2003-8-31 7:20:35 AM  

#2  A little honesty here folks... Tom Daschle(D-SD)'s wife is the lobbiest for Boeing trying to shoehorn the lease deal over an inexpensive straight purchase...
Posted by: DANEgerus   2003-8-31 3:22:54 AM  

#1  We better not give the deal to Airbus. The last thing I want is to pay a EU Agency for our planes. Especially if they were made in France.
Posted by: Charles   2003-8-31 1:05:38 AM  

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