Tanker War: Passing gas in turbulent skies of AF procurement

Topeka Capital-Journal, The, Jun 29, 2008 by Tim Carpenter

By Tim Carpenter

THE CAPITAL-JOURNAL

The pulse quickens at Boeing Co. when talk turns to the politically galvanizing and corruption-plagued program to replace the Air Force's refueling tankers.

Apprehension and optimism twists along the Wichita production line at a company that has owned the nation's aerial gas station franchise for a half century. There is concern past scandal will burn through the aerospace giant's tanker business. Procurement blunders by the U.S. Air Force now offer Boeing a chance to prevent a $35 billion contract from falling to archrival, Paris-based Airbus.

Innovative avionics share billing with inflammatory rhetoric in this international wrestling match.

"We should not require our military personnel to learn to speak French to be able to operate our refueling tankers," said U.S. Sen. Sam Brownback, a Kansas Republican riding Boeing's bandwagon.

French deputy Bernard Carayon, agitated by American thunder over the tanker deal, said the war of words strikes "a serious blow to trans-Atlantic friendship."

Leaping Boeing

On Feb. 29, the Air Force humbled handicappers who thought Boeing was a lock. The Air Force was firm: Chicago-based Boeing didn't have the right stuff to deliver 179 jet tankers to begin replacing the aging armada of Boeing KC-135 tankers lining airfields.

First choice was a large, powerful aircraft offered by a consortium including European Aeronautic Defense and Space Co., parent company of Airbus, and fronted by Northrop Grumman of Los Angeles. The modified Airbus A330 would be manufactured in Europe with final assembly in Alabama.

Brownback said it appeared inconceivable during run-up to the decision that the Air Force would fly past Boeing. His colleague, U.S. Sen. Pat Roberts, R-Kan., said no modern precedent existed for handing a defense contract of this magnitude to an foreign bidder.

Boeing demanded a closed-door meeting with Air Force brass to learn why the service jettisoned the company's KC-767 airframe, which would be built in Everett, Wash., and converted to a refueler in Wichita.

"I felt like I was hearing the winner's debriefing," said Mark McGraw, vice president of tanker programs at Boeing. "Nobody's really explained to us or anybody why this decision ultimately was made."

Boeing, unwilling to forgo a contract that could grow to $100 billion, appealed March 11 to the Government Accountability Office, the audit and investigative branch of Congress. In a stunning turnabout, the GAO upheld Boeing's challenge. The agency's June 19 report recommended the Air Force reopen bidding due to "significant errors."

U.S. Rep. Todd Tiahrt, a Kansas Republican and former Boeing employee in Wichita, celebrated by holding up a banner that proclaimed "Vindication!"

Scandal

Part of Boeing's problem is self-inflicted. Boeing was sitting five years ago on a no-bid earmark to build and lease 100 tankers to the Air Force when Sen. John McCain, R-Ariz., unraveled a brazen scandal that killed the deal. Boeing's chief financial officer and a former Air Force official went to prison. Boeing paid the largest fine ever imposed on a military contractor for program improprieties: $615 million.

Air Force weapons buyer Darleen Druyun had covertly taken on the role of Boeing procurement fixer at the Pentagon. She twisted the right screw in 2002 to make certain Boeing claimed the $23 billion lease contract when it came time for the Air Force to begin swapping out KC-135s, a Cold War relic that is a headache to maintain but fills a critical role in the military's global strategy.

In court documents, Druyun said Boeing CFO Mike Sears reciprocated by giving jobs to Druyun's daughter, Heather, and her son-in-law, Michael McKee. Sears also handed Druyun a $250,000-a- year Boeing vice presidency.

Their business relationship came to a spectacular end when Druyun pleaded guilty in 2004 to a conspiracy charge for jumping in bed with Boeing while still supervising the company's work for the Air Force. The scandal also brought down Sears, who served prison time along with Druyun.

The U.S. Department of Justice put a price tag on Boeing's indiscretion, extracting a $565 million civil settlement and $50 million criminal penalty.

"The American people rightly expect government officials and contractors to act with integrity," said Paul McNulty, deputy attorney general.

Democrats attempting to sabotage McCain's current run for the White House say the senator turned his back on American workers by sidetracking the lease. McCain's campaign staff bristles at the claim.

"Is it really possible that there are members of Congress saying that John McCain was wrong to fight and stop the corruption?" said Steve Schmidt, a senior campaign adviser.

Bring it on

The embarrassing episode triggered a wave of interest in the global marketplace for military hardware.

Roberts played a role in retooling the procurement landscape by deleting from a defense bill a provision that would have forbidden EADS from joining the tanker war. Roberts' son, David, started lobbying for EADS. Tiahrt hailed opening of an Airbus office in Wichita. In the Senate, Brownback and Roberts helped pass a McCain amendment broadening exemptions to "Buy American" laws on military purchases.