McCain, Lobbyists and the Air Tanker Deal

Posted by AzBlueMeanie:

You may have read several articles since last Wednesday when the GAO released an auditor’s report condemning the U.S. Air Force for its bid process on a new air tanker deal Audit Says Tanker Deal Is Flawed – NYTimes.com:

The auditors, with the Government Accountability Office, agreed with Boeing that the Air Force unfairly evaluated the merits and overall cost of the Boeing bid, and urged the Air Force to reopen negotiations. The tanker contract, which could eventually grow to $100 billion to build a fleet of 179 refueling planes, is one of the most lucrative ever awarded by the Pentagon.

“Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman,” said the G.A.O., the agency that Congress has designated to review federal contract disputes. “We therefore sustained Boeing’s protest,” it added.

The Times continued:

One of the leading players in the tanker contract dispute is Senator John McCain, the presumptive Republican nominee, who scuttled an initial deal between the Air Force and Boeing in 2004 as a member of the Senate Armed Services Committee.

That plan, in which the Air Force was to have leased the tankers from Boeing, collapsed in a corruption scandal that sent two Boeing executives to prison and later cost the chief executive his job.

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Mr. McCain’s top advisers, including a co-chairman of his presidential campaign, were lobbyists for EADS. And Mr. McCain had written to the Defense Department, urging it to ignore a trade dispute between the United States and Europe over whether Airbus received improper subsidies. Mr. McCain said that he was asking the Air Force only to maintain a level playing field as it considered the two bids.

Michael Isikoff at Newsweek adds additional context Military: McCain’s Boeing Battle Boomerangs | Newsweek Periscope | Newsweek.com:

The auditor’s ruling has also cast light on an overlooked aspect of McCain’s crusade: five of his campaign’s top advisers and fund-raisers—including Tom Loeffler, who resigned last month as his finance co-chairman, and Susan Nelson, his finance director—were registered lobbyists for EADS.

Critics, including some at the Pentagon, cite in particular two tough letters McCain wrote to Deputy Secretary of Defense Gordon England in 2006 and another to Robert Gates, just prior to his confirmation as Defense secretary. In the first letter, dated Sept. 8, 2006, McCain wrote of hearing from "third parties" that the Air Force was about to redo the tanker competition by factoring in European government subsidies to EADS—a condition that could have seriously hurt the EADS bid. McCain urged that the Pentagon drop the subsidy factor and posed a series of technical questions about the Air Force’s process. "He was trying to jam us and bully us to make sure there was competition by giving EADS an advantage," said one senior Pentagon official, who asked for anonymity when discussing a politically sensitive matter. The assumption within the Pentagon, the official added, was that McCain’s letters were drafted by EADS lobbyists. "There was no one else that would have had that level of detail," the official said. (A Loeffler associate noted that he and Nelson were retained by EADS after the letters were drafted.)

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McCain said last week his "paramount concern" was "that the Air Force buy the most capable aerial refueling tankers at the most reasonable cost." But some defense analysts say the controversy over the Air Force rebid—and the higher costs that will result—have taken some of the shine off McCain’s efforts. "This shows how a sort of naive crusade for good government can actually backfire," said Loren Thompson, of the Lexington Institute, a defense think tank.

The GAO auditor report raises legitimate concerns whether Senator McCain used his senate committee position either to steer a contract to EADS, or to financially benefit members of his campaign staff who were working as lobbyists for EADS.  Or could it be the case that McCain was easily manipulated by these slick lobbyists into doing their bidding? 

Once again, McCain’s all too-cozy relationship with K Street lobbyists has tarnished his phony reputation as a reformer and raised the specter of a scandal reminiscent of the Keating Five scandal.