McCain to probe Air Force contracting for cargo planes

One of the Senate's most aggressive watchdogs against wasteful defense spending announced Wednesday he will investigate what he considers the Air Force's deliberately delayed response to congressional demands for increased oversight of its procurement of C-130J cargo planes.

Sen. John McCain, R-Ariz., publicly criticized Air Force leaders and Lockheed Martin Corp., maker of the aircraft, for failing to abide by a provision in the fiscal 2006 defense authorization bill requiring the Air Force to convert an existing $2.3 billion commercial contract for the airplanes into a traditional agreement that requires reports to Congress on costs and prices.

"I intend to pursue this issue until it is completely resolved and Lockheed Martin is held accountable in whatever part they placed in this disgraceful performance," said McCain, drawing parallels to his three-year investigation into the Air Force's now-defunct deal to lease aerial refueling tankers from Boeing. That deal collapsed in a scandal that put a former senior Air Force procurement official, Darleen Druyun, in federal prison.

McCain spoke out at a Senate Armed Services Committee hearing on the nomination of Michael Dominguez, who served as acting Air Force secretary last year after James Roche resigned in the aftermath of the tanker scandal.

Dominguez, now the Air Force's personnel chief but nominated to be the Defense undersecretary for personnel, said he intended to make the C-130J costs visible to Congress. McCain threatened to hold up his nomination until the matter is resolved.

Senate Armed Services Chairman John Warner, R-Va., supported McCain's calls for an investigation. "This committee was the last stop for the tanker," Warner said at the hearing. "We decided the buck was going to stop on this desk, and it did."

After the hearing, Warner said he shares McCain's "measure of resolve" and wants the Air Force to clarify the facts.

Supporters of the C-130J procurement program say the current agreement with Lockheed Martin will be converted to a traditional government contract by the end of the year. The Air Force announced a draft agreement with the firm Monday.

"It takes a lot of time. We have over 500 suppliers on the program," a Lockheed Martin spokesman said. "We're working very closely with the Air Force to ensure smart decisions are made."

After the Pentagon inspector general concluded in June 2004 that the commercial contract was inappropriate for the C-130J, the Air Force announced it would change the contract.

But last November, the service sent a 539-page draft to Capitol Hill that appeared to add traditional acquisition clauses to the original agreement but failed to require certified cost or pricing data or new negotiated prices for the $66 million planes.

That sparked letters and meetings between McCain and the Air Force, which insisted the new draft contract would give Congress the necessary authority to oversee the program.

Air Force officials assumed "we had to work within the existing commercial item procurement contract ... and amend each relevant clause with language providing the government nearly the same visibility into the vendor's production costs," Dominguez wrote the committee in a letter dated Monday.

"That was an unfortunate assumption on my part," Dominguez added.

Aside from the C-130J provision in the defense bill, authorizers also required the Pentagon to notify Congress of any decision to buy weapons systems using a commercial contract. Such contracts are used to buy items widely available for commercial sale.

"Both of those legal provisions that are enacted into law are seminal legislation that can only lead to the conclusion that the C-130J multiyear procurement contract be a ... traditional procurement contract," a Senate aide said.

But another Senate aide familiar with the program pointed out that few contract conversions have ever been done, so the Air Force needs time to comply. The Army, under pressure from Congress, last year successfully converted a commercial contract in its $168 billion Future Combat Systems program.

"FCS is just briefing charts," this aide said dismissively. "They can't compare a multibillion procurement program to a [research and development] program. There are no production lines."