Boeing lobbying on tankers faces critical review on Hill
Hundreds of newly released Boeing documents shed light on the firm's hard-nosed lobbying effort to sell the Pentagon a commercial aircraft that congressional analysts say may not be urgently needed or even best suited for the job.
The e-mail exchanges and memos between Boeing executives and administration officials were released Friday by Senate Commerce Chairman John McCain, R-Ariz.,-an outspoken critic of Boeing's two-year endeavor to lease 100 commercial 767 jets to the Air Force for use as military refueling tankers-who intends to use the documents in a Wednesday committee hearing. The documents show how Boeing staff helped write the Air Force's basic military performance requirements for a future aerial refueling tanker with the 767 in mind and reveal the company's powerful sway over senior White House staff in garnering support for the $17 billion lease.
And even as Congress prepares to endorse the plan-three of four congressional panels have already approved it-the documents show how little is known about the program's true cost, or how much Boeing stands to profit from it.
McCain, also a senior Senate Armed Services Committee member, has called the deal a bailout for Boeing, whose commercial sales have suffered following the Sept. 11, 2001, terrorist attacks. McCain is now investigating Boeing's business practices, and several committees are slated to hold hearings this week to consider the proposal. In addition to the Commerce Committee hearing, the Armed Services Committee will take testimony Thursday from Pentagon and White House officials and representatives from GAO, CBO and the Institute for Defense Analyses.
Despite mounting pressure from McCain and others, Boeing executives insist the lease is a sound arrangement for the Air Force and taxpayers. But the documents, which are expected to be the focus of both the Armed Services and Commerce committee hearings, reveal significant barriers to the deal and measures that Boeing and the Air Force used to overcome them. In March 2002, after public outcry against the company's sole source bid called on the Air Force to open the tanker contract to competition, internal company e-mails show Boeing maintained an inside track with the Air Force against European competitor EADS, maker of the Airbus A330.
In an April 1, 2002, e-mail to Boeing staff, Andrew Ellis, Boeing's vice president for Washington operations, described a meeting in which Darleen Druyun, the Air Force's then-acquisition executive, reminded Boeing that the Airbus A330 proposal was "$5 [million]-$17 [million] cheaper" than the 767. Druyun has since left the Air Force to work for Boeing. In a previous e-mail, Ellis revealed how the Air Force coached Boeing through the proposal process. The March 29 e-mail outlined a conversation between Ellis and Bill Bodie, assistant to Air Force Secretary Jim Roche, in which Bodie urged Boeing to be "somewhat low-key, i.e., encouraged by results," Ellis wrote. "We agreed that we expect EADS to go negative."
Despite scathing attacks by McCain and criticism from congressional review panels and nonprofit organizations, Boeing has weathered the storm well. Earlier this year, Ellis reflected on the company's progress in a Jan. 23 memo to Jim Albaugh, who heads Boeing's Integrated Defense Systems unit. At that time executives were meeting regularly with senior Pentagon officials to push the lease, and were building support among National Guard groups, aerospace suppliers and labor unions to put additional pressure on the White House and Congress. Boeing executives ghost-authored several opinion pieces and enlisted key Capitol Hill allies-namely House Speaker Dennis Hastert, R-Ill.-to remind the President Bush and White House Chief of Staff Andrew Card of the "political downside of not moving forward with tankers," according to the document.