Taxpayer Advocacy Group: "It's Dead As Disco"

A newspaper investigation shows the Air Force gave Boeing five months to examine and, in many cases, rewrite the Request For Proposal on a fleet of refueling aircraft to replace the aging KC-135s. Knight-Ridder Newspapers reports Boeing officials eliminated 19 of the specific capabilities requested by the USAF. There were only 26 in total.

That's not all. The newspaper chain reports Air Force procurement officials then gave Airbus just 12 days to answer the bid before awarding the contract to Boeing. Even so, Airbus met 20 of the 26 original conditions.

Among those conditions reportedly written out of the contract:

• The 767-200 tankers would have to be able to refuel every aircraft in the US arsenal.
• They would have to refuel more than one aircraft at a time.
• They would have be able to carry passengers and wounded service members.
• The 767-200s would have to be at least as efficient and reliable as the KC-135 tanker fleet they're supposed to replace.

The Air Force says it's not at fault. "This was not a competitive bid process," said Undersecretary for Acquisitions Marvin Sambur. "The Air Force was ordered by Congress to work with Boeing on the new tanker program."

That sentiment is echoed on Capitol Hill by Sen. Sam Brownback (R-KS). "Everyone who knew anything about the tanker proposal has known for a long time that this was gift-wrapped for Boeing and no one else," he said. The government "was going to do whatever it took to make sure this contract went to this company."

The scandal broke when one senior USAF member, Assistant Undersecretary Darleen Druyun, a member of the Pentagon's negotiating team working closely with Boeing executives on the contract, later joined Boeing as a vice president. Boeing's man in charge of the tanker deal, Bob Gower, wrote in an email during the five month rewrite, "Meeting today on price was very good. Darleen (Druyun, then still an Air Force official) spent most of the time bringing the USAF price up to our number. ... It was a good day. She may be running her own covert operation on this one, so we probably don't want to discuss openly."

The Boeing tanker contract is worth an estimated $23.5 billion.

Druyun and Boeing CFO Mike Sears were later fired as the tanker deal came under closes scrutiny by the Pentagon. Boeing CEO Phil Condit resigned, also under pressure about the tanker bid.

Boeing proposed that the USAF lease 100 tankers in a deal that even the company admitted would cost more money than buying the aircraft outright. Boeing and its advocates in Washington (DC) said that the KC-135 fleet was so decrepit the lease deal would be the only way to keep American warplanes in the air -- especially during the Afghanistan and Iraq campaigns.

But another email indicates even Boeing insiders were a bit dubious about that plan. Walter Skowronski, the vice president for finance wrote, "Briefly, the OMB A-94 Business Case Analysis will most likely pass the test. But this test measures the illogical conclusion that it is better to lease now than to buy now. This won't make sense in the newspapers. Further, neither Boeing nor SSMB (Salomon Smith Barney) would ever put its hand on a Bible and say that makes economic sense."

The lease deal was later amended to cover 20 planes. The balance of 80 aircraft would be purchased.

Opponents of the Boeing tanker deal say these are the straws that break the camel's back.

"It's dead as disco," said Keith Ashdown, policy director for the Washington group Taxpayers for Common Sense.

"It's too heavily tarred" by scandal, said Richard Aboulafia, aerospace analyst with the Teal Group, speaking with a reporter from the Wichita Eagle.

Earlier this month, however, the Pentagon indicated there are no fatal flaws in the deal, although it might have to be renegotiated.

Monday, Boeing went on the offensive, saying Knight-Ridder never contacted its executives about the story. "There's huge errors in fact in the article," Doug Kennett, a Boeing spokesman, said.

"We were never given the opportunity nor were we interviewed. It was a story that was written without out assistance, without our input. And we are in fact, right now, going through point by point to respond."

Congressman Todd Tiahrt (R-KS) said Airbus can't meet the requirements set forth by the USAF -- 20 of which the newspaper article said Airbus actually met. That would be pretty tough to do, said Tiahrt, given that Airbus has never built a tanker before.

FMI: www.boeing.com