McCain's Boeing-EADS Woes

[boloboffin]

Remember the recent controversy over the Pentagon's awarding a European company the contract to help replace aging refueling planes? Boeing felt passed over and wronged in the process, and there were quite a few hearings about it on Capitol Hill.

Well, it turns out McCain's involved in this up to his eyeballs. He took part in denouncing an earlier deal with Boeing to replace the planes. And now government auditors has said the new deal with EADS was conducted improperly, making for a third go-around on the contract process for these continuing-to-age refuelers.

And McCain's campaign is STUFFED with EADS lobbyists. Well, it was stuffed. Two of them have departed in recent weeks. But there's still plenty of them left. It seems some people in the Pentagon are willing to bet that McCain's letters denouncing the first deal came straight from the pen of EADS lobbyists. McCain through an aide denies this, of course.

Running interference on an American company to ship high-paying jobs out of the country while cozying up to the competition's lobbyists. That's going to look simply smashing on McCain's resume.

 

[quixotecoyote]

I don't understand what's bad about EADS getting the contract and I also don't understand why it's bad the McCain had contact with EADS lobbists, given all the lobbists running around like roaches over both campaigns.

 

[boloboffin]

EADS lobbyists used McCain's office to destroy a contract with their rival, gaining the contract in the process -- that's what Pentagon officials think happened here.

 

[jj]

There would appear to be lots of dirt on both sides here, both Boeing (look at why the previous contract was abrogated) and in the way that the present contract was set up.

It is disturbing, if in fact it's true, that McCain's staff is rife with EADS lobbyists, given the government support that would imply he's endorsing against the US manufacturers.

 

[corplinx]

EADS lobbyists used McCain's office to destroy a contract with their rival, gaining the contract in the process -- that's what Pentagon officials think happened here.

Unnamed pentagon officials. Gotta love those unnamed sources.

 

[corplinx]

Reading more into this Tom Loeffler and Susan Nelson were only brought into the McCain staff this past summer. There seems to be great sin of omission in this article. They couldn't have sunk the original Boeing deal.

One of the Loeffler groups main focuses is ethics compliance.

This whole thing started because there was corruption at the Pentagon and collusion with Boeing. People went to jail over this. It sounds like some sour grapes "unnamed sources" are working the smear circuit and Newsweek going along with it.

 

[Puppycow]

Well, it turns out McCain's involved in this up to his eyeballs. He took part in denouncing an earlier deal with Boeing to replace the planes.

In McCain's defense (and I am pro-Obama) IIRC McCain was in the right on that because there was a plan for Boeing to lease tankers to the DoD (or Airforce) at a cost that would be higher than simply buying the planes outright. One of those too-expensive defense contracts that might have slipped under the radar if no-one in congress had noticed or no-one had stood up and blown the whistle.

 

[Puppycow]

Here is a story from 2003 about that lease deal.

JULY 7, 2003
Inside Boeing's Sweet Deal
Is it a stealth bailout by the military or just smart business on both sides?

It seemed like a good idea at the time. The U.S. Air Force needed tanker planes to refuel its jets, Boeing (BA) Co. needed orders. Pentagon purse strings were tight, but with creative accounting and strategic politicking, Air Force brass and Boeing executives crafted what they see as a stroke of bureaucratic brilliance: a $19.6 billion deal under which the service will lease 100 new 767s to replace its KC-135s tankers, and Boeing's production line will keep humming.

That was before the firestorm. The novel deal has drawn heat from all sides. Watchdog groups on the Right and Left see it as a brazen Boeing bailout. Defense Dept. civilians say Boeing was asking too much, while others say a lease's finance charges drive up the cost. Even just-departed Budget Director Mitch Daniels at one point called the idea "irresponsible." Senator John McCain (R-Ariz.) blasts the arrangement as a "profligate waste of federal revenues." And at least three congressional committees are looking into the deal, which could still be blocked.

The tanker lease -- and the unusual and secretive way it was developed -- raised plenty of red flags during an intensive review by BusinessWeek. Congress awarded the lease to Boeing before any hearings or competing bids. To make leasing seem cheaper than buying, the Air Force tinkered with key assumptions about the planes' cost. The agreement includes a potential 15% profit for Boeing, triple its margin on commercial planes. Without high-powered lobbying -- reaching right into the Oval Office -- Boeing couldn't have overcome objections from White House budgeteers and the top echelons of the Defense Dept.

The implications go far beyond this deal. By leasing instead of laying out the cash upfront to buy the planes, the Air Force pushed spending into the future, allowing it to get new tankers without cutting other programs. And the Pentagon plans more leasing, potentially rewriting the rules for how it spends $200 billion a year. "The precedent is horrific," says Keith Ashdown of Taxpayers for Common Sense, a watchdog group. Leasing could "become this end run around procurement."

 

[kallsop]

Here is a story from 2003 about that lease deal.

That reads like McCain has been conspiring to save taxpayer money and eliminate corporate welfare and fraud. The old dude is losing it!

 

[Rob Lister]

That reads like McCain has been conspiring to save taxpayer money and eliminate corporate welfare and fraud. The old dude is losing it!

The only sin, if there was one, was farming out major military equipment production to a non-domestic source (albeit greatly mitigated by contractual terms).

The only greater sin might have been to allow Boeing to get the contract. I can't think of a company more deserving of an out-of-hand loss.

 

[BigAl]

FWIW, a friend is an historian of the Air Force and aviation technology and as big a critic of the current administration and the "inside the beltway" Air Force as can be found anywhere. When the contract went to EADS he spoke about it and approved because, he said, the Boeing offer was a bunch of subsystems from different planes that had yet to be succesfuly combined and was a problem for the couple of countries that took delivery on one. EADS was a real plane. I could go back and get specifics.

He approves of the shakeup of the Air Force leadership by Gates.

I haven't made up my mind yet about McCain's role, good or bad is on this.

 

[Darth Rotor]

Boeing was in the driver's seat on this deal some years ago, and blew it. It's not like they haven't been around for a few decades, getting Defense Contracts.

Hubris, thy name is Boeing.

 

[Rob Lister]

indeed. 'tis a shame too.

 

[Chaos]

EADS lobbyists used McCain's office to destroy a contract with their rival, gaining the contract in the process -- that's what Pentagon officials think happened here.

And you "know" that this is what happened?

Rather than, for example, that Boeing, unable to secure a contract by offering an inferior plane for a higher price, turned instead to dirty methods of destroying a contract with their rival, to gain the contract in the process?

Sorry, but the old "foreign companies that are successful against US companies are by definition evil" trope stinks.

No, scratch that, I´m NOT sorry about that.