Boeing -- the face of US Corporate Welfare

[Timber Loftis]

Bless Mr. McCain for making this public. I think this sort of collusion between the military and its contractors to jerryrig the "open bidding" system should be considered fraud akin to Enron -- especially since it's done with monies in the public trust. Oh, and I'd bet taken as a whole it's quite illegal under FARS, the Federal Acquisition System. I mean, it's insider trading, isn't it?

NY TIMES:

Documents Show Extent of Lobbying by Boeing
By LESLIE WAYNE

WASHINGTON, Sept. 2 — In a last-ditch effort to block a controversial $20 billion proposal by the Air Force to lease a fleet of Boeing 767 aerial tankers, Senator John McCain's office has released documents showing a high-level lobbying campaign by the Air Force and Boeing to fend off critics as well as potential competitors.

The documents, made public over the holiday weekend and first reported in The Washington Post and elsewhere, come as two Senate committees are planning to hold hearings this week on the $20 billion leasing plan, which Senator McCain, an Arizona Republican, has long criticized as corporate welfare.

In releasing the documents, which include Boeing and Air Force e-mail messages and internal memos culled from some 8,000 documents, he is trying to show that the Air Force and Boeing assisted each other in structuring the program, promoting it in Washington and setting requirements so that no other competitors could qualify.

Much of this new information will be examined on Wednesday at a Senate Commerce committee hearing to be led by Senator McCain. On Thursday, the Senate Armed Services Committee, whose members generally have a more positive view of the proposed lease, will also hold hearings on the plan, which is intended to replace aging aerial refueling tankers with a fleet of 100 specially outfitted 767's.

The documents, Congressional staff members said, raise questions about whether the Air Force overreached in assisting Boeing. They show that one top Air Force official, who now works for Boeing, gave the company important financial data about a competing bid from Airbus. In addition, the documents show how the Air Force relied on Boeing to provide it with arguments that could play well with influential members of Congress as well as in the White House and with the news media.

Boeing's relationship with the Pentagon is coming under increasing fire. In July, Boeing was sanctioned by the Air Force for having obtained 25,000 proprietary Lockheed Martin documents and using them to win Pentagon satellite contracts. Boeing was denied government business estimated to be worth $1 billion.

One of the more revealing memos among the newly released documents showed that Darleen Druyun, then the principal deputy assistant secretary of the Air Force for acquisition and management, told Boeing to "keep in mind" that an Airbus bid was $5 million to $17 million cheaper per airplane than a basic Boeing 767. The information was disclosed in an April 1 meeting of Air Force and Boeing officials after Boeing had been selected over Airbus.

Ms. Druyun is now deputy general manager of Boeing's missile defense systems. If the information given by Ms. Druyun was proprietary, she could possibly be in violation of the Trade Secrets Act as well as other federal regulations.

In a statement today, Boeing defended Ms. Druyun as a "truly tough negotiator." The company declined to comment specifically on the memo, but said Ms. Druyun was using the April 1 meeting as "an opportunity to send us a clear message that we needed to sharpen our pencil."

A member of the Commerce Committee staff, who spoke on condition he not be identified, said Senator McCain, its chairman, and some other committee members saw it otherwise. "Generally, the documents tell a story of the extent to which the Air Force overreached to assist Boeing," the staff member said. "The program was signed off by the Air Force when the outcome was determined from the start with help from Boeing."

One of the internal Boeing e-mail messages described a meeting between Boeing lobbyists and members of the staff of the Air Force secretary, James Roche. It shows the head of Air Force acquisitions, Marvin Sambur, turning to Boeing for help: "He indicated that the USAF is desperately looking for the rationale for why the USAF should pursue the 767 tanker NOW . . . It was clear he was looking to find a path forward."

Other memos provided a bird's-eye view of a powerful lobbying effort by the Air Force and Boeing. A Boeing lobbyist, after meeting with top Air Force officials, said the Air Force "urged us to have our friends on Hill, think tanks, etc. get more visible/vocal" with pro-tanker arguments. It contended that Mr. Roche was particularly keen on anything Boeing could do "especially if it helps drown out McCain."

Another memo delineated other elements of this lobbying campaign, including enlisting the House speaker, J. Dennis Hastert, a Republican from Illinois and a strong supporter of the plan, to talk to President Bush and other White House officials. It also described an effort to line up unions in a plan that Boeing said was "aimed at executive branch as well as Congress."

"We are in touch with Andy Card and White House political operation," a Boeing lobbyist wrote in a memo to James Albaugh, president of a Boeing division; Mr. Card is the White House chief of staff. "They see increased pressure and realize a political downside to not moving forward with tankers," the memo continued.

After an April 1 meeting between Mr. Albaugh and Mr. Roche, a Boeing lobbyist wrote about the increasing help from Paul D. Wolfowitz, deputy defense secretary, and Donald H. Rumsfeld, the defense secretary. Mr. Roche told Boeing that more involvement from Mr. Rumsfeld provided "necessary `top cover' for Air Force," adding that it "works better in White House and will help on Capitol Hill."

[antryg]

The obvious moral from this report is that foreign airplane manufacturer's need to bribe hire retiring Air Force personel. We all know how hard it is on these people to live on 60% retirment wages with only fulltime jobs paying 2-3 times what a "nonhelpful/connected" civilian would make for doing the same job.

[Azred]

This isn't surprising, simply "business as usual". Of course, don't forget the necessary upgrades, upkeep, technical fixes, etc. that will keep Boeing occupied for decades.

[img]graemlins/1ponder.gif[/img] Didn't I hear recently about Boeing having another round of layoffs?

[wellard]

Yes you did Azred, the 757 line is dead on its feet. The 767 line is not much better and overall airbus is hammering away Boeing in all departments.

I smell gross incompetence or back to the good old hidden subsidies war.

[Arvon]

Does it make any difference to you that one of the senior lobbiest for Boeing is Tom Dashal's(SP?) wife?

[wellard]

20 Billion US$ for just 100 767?

I will do some research into the leasing deal (why lease? the air force should not be bothered about tax benifits) But from my sums you are talking a couple of billion over the odds. mind you the variables are enourmous. Which engines rolls royce, P&W or GE? spares? warranty and such. And no doubt some details will be kept secret to stop the EU crying foul over Airbus.

The 767 *kc 767* is at least an ideal choice IMO for the next genaration of tankers though, a well proven (since 85) airframe with no reliability problems or design faults other than Boeings usual corrosion issues. So It's not as though the military is being forced to buy crap to satisfy political means.