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Fresh Questions Raised About Lease of Boeing 767s by Air Force
Dozens of e-mail exchanges among Boeing Co, the Air Force and the Pentagon released on Saturday raised fresh questions about a controversial $22.5 billion deal to lease, then buy 100 Boeing 767 tankers. The documents were among over 8,000 provided to the Senate Commerce Committee as it investigated a deal its chairman, Sen. John McCain describes as a "military-industrial rip-off" and a government bailout of Boeing, whose commercial aircraft sales slumped after the September 2001 hijack attacks.
If the lease is such a bad idea, John, why not sponsor a bill to buy them at a fair price?
The documents contain no "smoking guns," congressional sources say, but they show a close relationship between Boeing and Air Force officials, including Air Force Secretary James Roche, as well as details of a rival bid by Airbus SA. In other memos, Boeing officials say Air Force officials gave them details of the size and price of the Airbus 330 bid. Boeing has denied receiving any proprietary information from the Air Force. Air Force acquisitions chief Marvin Sambur said he did not believe the Air Force had improperly shared any proprietary data with Boeing but said it would take appropriate actions if that proved to be the case.
It's just not done, y'know... Officially.
McCain’s aides released the documents just days before the Senate commerce, budget and armed services committees are due to review the deal and before a possible vote on the deal by the Senate Armed Services Committee as early as Thursday.
Ah, politics.
That vote is the last hurdle facing the deal, under which the Air Force will lease 100 Boeing 767s from a nonprofit trust for six years, with the chance to buy them for an additional $4.4 billion at the end of the lease period. "This sets the stage for some very, very interesting hearings next week," said Keith Ashdown with Taxpayers for Common Sense. He said the documents raised serious questions about the Air Force’s role in negotiating the deal. "Instead of the Air Force acting as an independent reviewer of this nearly $30 billion deal, they’ve acted as a silent business partner of Boeing," said Ashdown.
Well, duh! Let’s see, we can buy Boeings, made in America, or Airbuses, made in Europe, in a contract worth billions. At the time we make this decision, we can remember which way Mr. Chirac would go.
The Air Force acknowledges it will pay more to lease the planes than buy them, but says the lease will allow quicker replacement of its 43-year-old fleet of KC-135 tankers. Boeing says it is guaranteeing the Air Force the lowest price ever for the tankers and even agreed to give back funds if its profits exceeded 15 percent over the life of the deal. The Congressional Budget Office says a lease will cost $5.7 billion more than a purchase over time, and said the deal violated four out of six requirements for federal leases.
On the other hand, it's much easier on the cash flow. And Congress has the habit of cutting funding or moving acquisition into the out years in the course of the budget process. The out years end up getting outer and outer...
Critics say the deal is being treated as an operating lease, rather than a lease-purchase, which means the full price will not be reflected in the federal budget. The Air Force says it wants to buy the 100 tankers, but it needs congressional approval before including it in its budget. The Pentagon’s Office of Inspector General, an in-house watchdog agency, will decide by next week if it should investigate whether Air Force officials improperly disclosed proprietary information to Boeing, defense officials said. Boeing denied on Friday it might have obtained proprietary information while it negotiated the lease deal. In an internal Boeing memorandum dated April 1, 2002, Darleen Druyun, hired by Boeing after leaving her job as a top Air Force acquisition official last year, is quoted as telling the Chicago-based company "several times" that Airbus’s price was $5 million to $17 million less than Boeing’s. In a memorandum dated March 29, 2002, Boeing lobbyist Andrew Ellis, said Bill Bodie, an assistant to Roche, told him the Air Force opted against the Airbus partly because the A330 was 81 percent larger than the KC-135 without commensurate additional fuel capacity.
Regardless of the lower price.
Both memos came after the Air Force decided on March 28, 2002 to reject the bid from Airbus, which is 80-percent owned by European Aeronautic Defense and Space Co. (EADS) consortium, and 20 percent by Britain’s BAE Systems Plc
Posted by: Steve White 2003-08-31
http://www.rantburg.com/poparticle.php?ID=18165