During testimony before the subcommittee last week, Air Force officials said the C-130J heavy lift aircraft had been acquired as a commercial item, leaving the government powerless to obtain critical cost and pricing information and assure itself a fair and reasonable price.
Consequently, the Air Force obtained an aircraft that failed to meet contract specifications, and was incapable of performing its intended mission at a dramatically higher cost than expected.
In a meeting Wednesday with McCain, acting Air Force Secretary Michael Dominguez and Air Force Chief of Staff Gen. John Jumper indicated that they shared the senator's concerns about the commercial item procurement strategy and said they would convert the C-130J contract to a traditional military-item procurement.
Sources said the offer is contingent on the administration's anticipated plan to amend its fiscal 2006 defense budget request and reverse its earlier proposal to cancel the C-130J.
If the change is implemented, the C-130J would for the first time be subject to laws and regulations typically used to protect contracts from fraud, waste and abuse.
A congressional aide said the Air Force officials indicated there would be no significant cost increase associated with the contract modification. Sources said McCain was gratified by the Air Force's receptiveness to his concerns regarding the C-130J.
However, they added that McCain is looking forward to seeing how the Air Force implements its stated commitment to ensuring that taxpayer interests are protected.