Democrats Press McCain On Defense Deal

Team Infidel

Forum Spin Doctor
Wall Street Journal
June 20, 2008
Pg. 3
GAO Report Fuels Party's Criticisms Of Bidding Process
By August Cole and John R. Wilke
Democrats are taking fresh aim at Sen. John McCain's role in the Air Force's $40 billion tanker contract, saying he jeopardized thousands of U.S. jobs by helping steer the huge award to a European-designed competitor to Boeing Co.
It is a bit of political jujitsu, seeking to turn one of the likely Republican presidential nominee's proudest Senate accomplishments -- his long campaign to save taxpayers money by scrutinizing Boeing's huge government contracting business -- into a liability. Sen. McCain cast his role as a triumph for taxpayers against corporate lobbyists, saving billions of dollars.
Now Democrats are armed with a surprising development: a government audit released Wednesday that has thrown another wrench into the already long-running saga of replacing the Air Force's aging fleet of aerial refueling tankers. The report by the Government Accountability Office found that the Air Force's process in granting the contract to a partnership between Northrop Grumman Corp. and its European supplier, European Aeronautic Defence & Space Co., was riddled with errors.
The GAO didn't mention politics, but the sweeping problems identified by the oversight group are sure to make the report a touchstone for Sen. McCain's critics. The Democrats contend Sen. McCain pressured the Air Force to favor Northrop and EADS.
"Senator McCain helped steer a tanker contract to a European company for which seven of his campaign advisors and fundraisers then lobbied -- a bidding process the GAO, the investigative arm of Congress, is now saying was full of errors," the Democratic National Committee said Thursday.
Sen. McCain countered that his advocacy promoted transparency and competition in contracting. In 2004, he led the Senate Armed Services Committee to reject a plan to lease tankers from Boeing without competition, and he helped investigate corruption at the Air Force and Boeing that eventually sent several officials and executives to prison.
More recently, he worked behind the scenes to press the Air Force to keep the bidding for the tanker fleet open to Boeing's European rival. That's given the issue bumper-sticker clarity for the Democrats: Sen. McCain tried to sell out an iconic American company, handing thousands jobs to France just as the U.S. economy was entering a tailspin.
The battle between the powerful senator and the world's largest aircraft maker also shows why Sen. McCain is looked upon with suspicion by big business. The war with Boeing has raged since 2002, when executives first circulated a confidential congressional battle plan, calling in an email for "counter-battery fire, every time Sen. McCain attacks."
Outside groups and Democratic-leaning unions have gotten into the act as well. An online ad made by an independent Democratic group, the Campaign for America's Future, opens with a banner on the Arc de Triomphe in Paris, hailing "John McCain, hero of France." In French, with English subtitles, it thanks him "for helping the U.S. military choose a French company, Airbus. Tens of thousands of jobs for the French and thousands fewer for Americans."
The intensity of the political reaction took Northrop and its European partners by surprise. "They're turning it into a red-state blue-state thing, which is crazy," Ronald Sugar, Northrop's chairman and chief executive, said in an April interview. Democrats, he said, "are trying to tar [McCain] with 'giving the tanker to France,' which is outrageous."
Boeing declined to comment.
Northrop won the bid Feb. 29, stunning Boeing's backers. Northrop had teamed with EADS, which owns Airbus. Boeing's backers immediately charged Sen. McCain with stacking the deck for the Airbus plane. They pointed to letters Sen. McCain sent during the competition to top Pentagon officials. Sen. McCain made a direct appeal in December 2006 to Robert Gates, who was then nominated to replace Donald Rumsfeld as secretary of defense.
Sen. McCain wrote that he was concerned about the contract's consideration of the World Trade Organization dispute over subsidies for Airbus jets and other trade issues could "risk eliminating competition before bids are submitted." Sen. McCain was also convinced that not adequately weighing a plane's ability to haul cargo and passengers, in addition to jet fuel, could hinder competition. Sen. McCain had already raised similar concerns with Deputy Secretary of Defense Gordon England.
Sen. McCain's involvement in the tanker saga goes back to the early part of this decade, when competition for the contract was anything but assured.
Boeing lobbyists had gotten lawmakers to push through funding for a massive sole-source contract in the defense appropriations subcommittee. The tactic would have been the largest-ever congressional earmark, allowing the contract to sidestep normal contract and competition rules.
Inside the Pentagon, senior officials were secretly backing its bid. "Privately, between us: Go Boeing," then-Air Force Secretary James Roche said in a 2002 email to a defense executive. "The fools in Paris and Berlin never did their homework."
The Air Force's top procurement official deciding the contract, Darleen Druyun, called the U.S. chief of EADS "slime." In an email sent to a colleague, she added, "his day of reckoning will come."
Sen. McCain and his staff lit into the service and Boeing determined to thwart any malfeasance. He was right: it turned out that Ms. Druyun had been discussing a job with Boeing even as she negotiated the tanker deal for the Air Force. Ms. Druyun and Boeing's chief financial officer, Michael Sears, both went to jail over illegal job negotiations.
Knowing that Sen. McCain had made so much of his saving taxpayers more than $6 billion during the campaign, Democrats turned the issue to their advantage.
On the campaign trail after the award was announced, Sen. Barack Obama told an Iraq war veteran of his concerns.
"When you've got such an enormous contract for such a vital piece of our U.S. military arsenal, it strikes me that we should have identified a U.S. company that could do it," the Illinois senator said.
Sen. McCain's campaign struck back, asking in a statement, "Are the Democrats now the party of no-bid contracts?"
 
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