McCain Statement on US Air Force Accountability Regarding the Boeing 767 Tanker Lease Deal
(Source: Office of Sen. John McCain; issued Nov. 19, 2004)
Sen. John McCain (R-Ariz.) has conducted a vigorous campaign against the controversial Boeing plan to lease tanker aircraft to the US Air Force.

In a Nov. 19 speech on the Senate floor, McCain recapped the reasons for which he opposes the deal, and released internal Pentagon e-mails that he said reflect a "systemic Air Force failure in procurement oversight, willful blindness or rank corruption."


TEXT OF McCAIN’S SENATE SPEECH

Mr. President:

Nearly three years ago, behind closed doors, appropriators slipped a $30 billion rider in the FY2002 Defense Appropriations Bill. This rider authorized the Air Force to lease from Boeing up to 100 767s for use as aerial refueling tankers. Before the rider appeared in the bill, Air Force leadership never came to the authorizing committees about it. In fact, tankers have never come up in either the President’s budget or the Defense Department’s unfunded priority list. The Air Force’s Tanker Lease Program was borne of a virgin birth.

The rider was in fact the result of an aggressive behind-the-scenes effort by the Boeing Company, with considerable assistance from senior Air Force procurement official Darleen Druyun and others. After the President’s signed that bill into law, the Air Force embarked on negotiating with Boeing on a lease that would have cost taxpayers about $6 billion more than buying them would have.

Soon after Air Force Secretary Jim Roche submitted to the four defense committees a report on plans to lease these tankers from Boeing, three out of the four summarily approved the lease—without even looking at the contract. Two did so without even holding a single hearing. Much to his credit, Senate Armed Services Committee Chairman John Warner held the line and refused to authorize the proposal. Through the hearings and investigations that followed, we unearthed a crushing body of evidence on how much a folly the proposal actually was.

Throughout 2002 and the beginning of 2003, even agencies within the Defense Department and the Air Force, including Program, Analysis and Evaluation; the Office of Management and Budget; and even the Air Force’s own General Counsel’s Office, raised salient concerns about aspects of the proposal. These concerns, however, would not get in the way of Air Force leadership. Rather than resolve these concerns, Air Force proponents continued to aggressively push the deal in the press.

A Wall Street Journal editorial, entitled “John McCain’s Flying Circus,” published on the very same day as my tanker hearing in the Commerce Committee, is particularly notable. It was obviously drafted with considerable help from the Office of Air Force Secretary. In it, tanker proponents accused me of “trying to prevent approval by running up my own Jolly Roger” and brazenly exaggerated the Air Force’s need for tankers by describing how, during Secretary Roche’s visit to Tinker Air Force Base, he “peeled back the skin of a tanker being refurbished and found the metal underneath disintegrating before his very eyes.”

By this time, Air Force leadership’s aggressive press campaign was well underway. On April 25, 2002, Secretary Roche’s special assistant William Bodie told Secretary Roche that he “saw Rudy deLeon [who heads Boeing’s Washington Office] at the Kennedy Ctr and politely asked the Great White Arab Tribe of the North [which is what these folks called Boeing] to unleash their falcons on our behalf for once. And, I talked to [defense analyst] Loren [Thompson], who is standing by to comment to this reporter about the national security imperatives of tanker modernization. [Editor of Defense News and Air Force Times] Vago [Muradian] is also standing by. I will get with [Assistant Air Force Secretary for Acquisitions Marvin] sambur first thing to rehearse talking points. We will get with you before we talk to the reporter.”

Among the falcons that Boeing “unleashed” was an op-ed that subsequently appeared in Vago Muradian’s Defense News. This piece, which strongly endorsed Boeing’s tanker lease, was supposedly written by former Commander-in-Chief for U.S. Pacific Fleet Admiral Archie Clemins. However, Admiral Clemins has admitted, and Boeing’s e-mails reflect, that it was in fact ghost-written and placed by Boeing.

As this indicates, rather than address salient concerns regarding the tanker deal raised by their own staff, Air Force leadership focused on using the press, which Mr. Bodie described as “3rd Party support at its best” to perpetuate the fiction that “the lease was the exact opposite of a Boeing ‘bailout.’” Among the spin that lease advocates fed the press, were statements like, “[I] will not succeed in blocking a 767 lease because tanker replacement is critical and [I] have offered no alternatives to leasing.”

While Air Force leadership was focused on pushing the deal in the press, analyses from several independent bodies, including the Defense Department’s Office of the Inspector General, the Government Accountability Office, the Congressional Budget Office, the Congressional Research Service, the National Defense University, the Center for Naval Analysis, the Institute for Defense Analyses, and others criticized almost every aspect of the program. Perhaps most notably, a Defense Science Board Task Force, vetted for conflicts with industry only after my insistence, concluded that the need to replace the current tanker fleet was not urgent. The Task Force’s finding debunked the numerous representations Air Force leadership made to the contrary. Indeed, the Defense Science Board suggested that the Air Force’s case on corrosion was virtually cut from whole cloth. Air Force leadership repeatedly cited this case as the biggest reason for having taxpayers pay Boeing billions more than necessary.

About two months ago, Ms. Druyun was sentenced to nine months in prison on public corruption charges. Her crime: negotiating the $30 billion deal with Boeing while negotiating with Boeing for a job. Ms. Druyun’s sentencing occurred months after Boeing’s board of directors fired her and former Chief Financial Officer Michael Sears for misconduct arising from the tanker negotiations. Boeing’s Chief Executive Officer Phil Condit soon left the company under a cloud of suspicion.

In court papers accompanying her sentencing, Ms. Druyun admitted to overpricing Boeing’s 767s as a “parting gift” to Boeing. She admitted that she did this to “ingratiate herself” with her future employer and help secure employment for her daughter and future son-in-law at the company. Astonishingly, Ms. Druyun also admitted that she similarly harmed the United States on behalf of Boeing on several other major defense programs, including the NATO AWACS, C-130 AMP, and the C-17 programs. How much taxpayers were fleeced remains unclear. But this matter remains under investigation by the Justice Department and other authorities. The scope of these investigations seems to widen almost weekly. Ultimately, it is likely that Ms. Druyun’s misconduct cost taxpayers an astronomical sum.

Over the past few weeks, Air Force leadership has tried to delude the American people into believing that all of this happened because of one person, and that because no one else has been hired for her position, the problem has been solved. I don’t buy it. I simply cannot believe that one person, acting alone, can rip off taxpayers out of possibly billions of dollars. This appears to be a case of either a systemic failure in procurement oversight, wilful blindness, or rank corruption. Either way, full accountability among Air Force leadership is in order.

Just this week, Secretary Roche and Ms. Druyun’s old boss, Assistant Secretary of the Air Force for Acquisitions Marvin Sambur, announced their resignations. But, among Air Force leadership, no one has assumed responsibility for this debacle. Ms. Druyun is, perhaps grudgingly, accepting responsibility for her role. To some extent, Boeing has accepted responsibility for its. The Justice Department and others are continuing to ferret out others who may be responsible. However, accountability among Air Force leadership has been inadequate. It seems that it business as usual. Air Force leadership remains content laying all the blame at the feet of a single individual, Darleen Druyun.

I’m not buying it.

Just on the Tanker Lease Proposal, the conduct of Air Force leadership has been unacceptable. First, Air Force leadership was never interested in doing a formal “analysis of alternatives” for the multibillion dollar tanker program. Such AOAs are typically always done for major defense programs.

Second, Air Force leadership misrepresented to Congress how bad corrosion afflicted the current tanker fleet. They did this to devise a reason why taxpayers needed to lease new tankers from Boeing, rather than simply buy them at a much lower cost.

Third, according to independent analyses, Air Force leadership overstated “operation and supply” cost-growth estimates for the current tanker fleet. This too was done to artificially bolster the case that the current fleet needed to be replaced immediately, at a dramatically higher cost.

Fourth, Air Force leadership repeatedly misrepresented that its proposal was merely an “operating lease.” Their plan was to slip the program in the budget at a relatively modest initial cost, only to have actual costs balloon in the out-years. We now know that this was done to conceal the Tanker Lease Proposal’s real budgetary impact.

Fifth, according to the Defense Department’s Inspector General, the commercial procurement strategy that Air Force leadership used in the tanker proposal (and, incidentally, the C-130J program) placed the Department at “high risk for paying excessive prices,” and precluded “good fiduciary responsibility for DoD funds.”

Sixth, the Inspector General found that, when the specifications for the tanker were being developed, Air Force leadership let Boeing tailor those specifications to Boeing’s proposed tanker. They were not tailored to the operational requirements of the warfighter. They should have been. Yet, Air Force leadership allowed an Air Force briefer to tell the Joint Staff that the tanker “operational requirements document” was not tailored to Boeing’s aircraft. The Defense Department Inspector General, however, found that it was.

I could go on, but I’ll stop here for now. As I’ve gone into many of these points in excruciating detail in my letter to Secretary Rumsfeld on July 28, 2004, I’ll simply ask for unanimous consent to have my letter entered into the record.

What I would like to do now is discuss documents, belatedly produced by the Defense Department, that underscore the need for accountability among Air Force leadership regarding the Tanker Lease Proposal. While the total number of documents that the Defense Department has produced remains unsatisfactory, the few that have been produced are compelling.

On February 5, 2002, Air Force Secretary Roche personally assured me, in testimony before the Senate Armed Services Committee on the tanker program, that he “believed in competition,” and “would come back to Congress” if another competitive proposal was particularly good.

Secretary Roche’s e-mails, however, suggests that he is indeed a man who allows his personal animus to stifle competition. For example, on September 5, 2002, Darleen Druyun wrote to Secretary Roche, “I read with disgust the article on Airbus tankers from the new EADS CEO of North America. What BS ... should not have been surprised at the slime ... his day of reckoning will come hopefully.”

Secretary Roche answered, “Oy. I agree. I had hoped you would have stayed and tortured him slowly over the next few years until EADS got rid of him!” This, from a person who testified that he “believes” in competition.

Secretary Roche’s personal contempt for one defense contractor and, in particular, its CEO, is clearly reflected in his other e-mails. For example, on August 7, 2002, when Secretary Roche learned that Ralph Crosby, with whom Secretary Roche once worked at Northrop Grumman, was appointed to head EADS’ North American operations, Secretary Roche wrote to his special assistant William Bodie, “Well, well. We will have fun with Airbus.”

The day after, William Swanson at Raytheon asked Secretary Roche, “Did you see the notice on Ralph and EADS?”

Secretary Roche responded:

“Right. Privately between us: Go Boeing! The fools in Paris and Berlin never did their homework. And, Ralphie is the CEO and Chairman of a marketing firm, for that’s all there is to EADS, North America. The [Air Force] has problems with EADS on a number of levels. The widespread feelings about Crosby in the Air Staff, Jumper especially, will only make their life more difficult. Smiles.”

On September 4, 2002, Mr. Bodie wrote Secretary Roche, complaining about statements EADS issued about its tanker proposal, “We don’t have to turn the other cheek, you know. I’m ready to tell the truth about Airbus’s boom, footprint, and financial shortcomings. But maybe we should sleep on it.” In response, Secretary Roche wrote, “No, Sir, save it and blow him away. He admits that they were not technically qualified! And, we keep their record of bribes as our trump card!”

Taken together, these documents inject serious doubt into Secretary Roche’s commitment to competition in contracting—about which he assured me in congressional testimony.

During hearings on the controversy in my Senate Commerce Committee, and the Senate Armed Services Committee, I expressed concern about Secretary Roche asking Boeing to pressure dissenting elements within the OSD into playing ball on tankers.

However, in congressional testimony, Secretary Roche categorically denied this. For example, at a September 3, 2003, Commerce Committee hearing, I asked Secretary Roche about a Boeing e-mail dated June 23, 2003, “Subject: Roche Meeting 23 June 2003.” In particular, I asked Secretary Roche, “Do you have any recollection whatsoever of telling ... anyone ... from Boeing to put pressure on [Acting Assistant Secretary for Acquisitions] Mike Wynne to convince [Program, Analysis, and Evaluation] to write a new letter essentially undoing the first letter [which criticized the proposal]?” After significant waffling, Secretary Roche responded: “No, sir. I talked to [PA&E Director] Ken Krieg, and in fact, I told him, ‘Don’t bother writing another letter.’ We understood these were his arguments.”

Again, on September 4, 2003, at a hearing before the SASC, I asked the same question to Secretary Roche: “Do you have any recollection whatsoever of telling ... anyone ... from Boeing to put pressure on Mike Wynne to convince PA&E to write a new letter essentially undoing the first letter?”

This time Secretary Roche testified, “I did not ask them to put pressure [on Wynne].” Finally, in testimony before the SASC on March 2, 2004, Secretary Roche adamantly denied asking the Boeing Company to put pressure on Mike Wynne. Secretary Roche said, “I’ve told you there was no pressure....[I] certainly did not tell them to pressure anybody.”

Secretary Roche’s e-mails, however, paint a very different picture. From Boeing’s e-mails, here’s what we know.

In a June 23, 2003, e-mail to Jim Albaugh, the head of Boeing’s defense subsidiary, Boeing executive Thomas Owens described a meeting during which Secretary Roche expressed serious concern about a letter from Ken Krieg. Mr. Krieg is the Director of Program, Analysis and Evaluation (PA&E) at the Office of the Secretary of Defense. His letter was key. In that letter, Director Krieg concluded that the original Boeing proposal failed two key government accounting rules and, therefore, violated the authorizing legislation. According to Mr. Owens’ e-mail, Secretary Roche “ask[ed] [Boeing] to put pressure on [Acting Assistant Secretary of Defense for Acquisitions] Mike Wynne to convince PA&E to write a new letter essentially undoing the first letter.”

Soon after Dr. Sambur wrote Secretary Roche regarding the PA&E’s letter saying, “Boss. This getting ridiculous,” Secretary Roche wrote to Acting Assistant Secretary Wynne as follows:

“Ever since [Acting Assistant Secretary Wynne’s predecessor] Pete [Aldridge] left, the bureaucrats who opposed the 767 lease have come out of the woodwork to try to kill it—yet, once again, Mike, I won’t sign a letter that makes the case that we shouldn’t lease the planes. Ken Krieg’s memo attached is a cheap shot, and I’m sure has already been delivered to the enemies of the lease on the Hill. It is a process foul. And Ken needs to be made aware of that BY YOU! I can’t control the corporate staff on acquisition issues. Mike, this is their way of asserting dominance over you. I know this sounds wild, but animals are animals. Pete had beaten them down. Now, they’re taking you on. I’m sorry. Expecting professional behavior from them is something I gave up on a while back. Among other things, they are about to embarrass SecDef, who having approved the lease, will now have to explain why his staff is destroying the case for it. I’ll do whatever I can to help you, Mike, but [it’s] your job to get the corporate staff under control. If not now, then they will overrun you whenever you “don’t behave” according to their desires. This is a game they have played for years. [They] and OMB are trying to set the Air Force up to be destroyed by Sen McCain WITH OSD AND OMB ARGUMENTS. As you might imagine, I won’t give them the chance, but I will make it clear who is responsible to Don [Rumsfeld]. I refuse to wear my flack jacket backwards!”

Subsequently, Acting Assistant Secretary Wynne reprimanded Director Krieg. In response to an e-mail from Director Kreig that attempted to clear the air, Secretary Roche rather disingenuously answered, “Kenny, I love you, and you know that. I think you have been had by some members of the famous PA&E staff. You never should have put what you put in writing. It will now be used against me and Don Rumsfeld.”

Other e-mails corroborate that Secretary Roche suggested to Boeing that it lobby the OSD to undercut PA&E.

For example, a December 17, 2002, e-mail from Boeing’s top lobbyist Andy Ellis to Rudy deLeon, who heads Boeing’s Washington office and served as a Deputy Defense Secretary in 2000 and 2001, described “some quick notes from jim [Albaugh]'s meetings today.” It instructed, “pls. do not re-distribute this email." The e-mail memorialized what was said during “[a] meeting with Sec. Roche” as follows:

“A&E now a problem on tankers–arguments include price, 767 footprint and prospects for ‘used 767s.’ boeing needs to do more on behalf of tankers in osd. PA&E working to convince aldridge to delay—reengine while doing an AoA. we should vector hill support for tankers at aldridge .... said he is very comfortable with the price air force has on tanker, and very comfortable with overall deal. it is the right time to do this deal. he is waiting until early January to push on omb—wants to deal with the next congress, not the current .... boeing needed to work white house and especially osd.”

Other e-mails recently produced by the DOD corroborate this shocking dynamic, whereby Secretary Roche apparently orchestrated efforts against tanker lease critics within the OSD. For example, in a May 7, 2003, e-mail, Paul Weaver, a Boeing lobbyist and former Director of the Air National Guard, wrote Secretary Roche as follows:

“Rudy [DeLeon] called me and said that Marv Sambur was getting beat up by Mike Wynne again concerning the $125M dollar number per aircraft. Rudy would like to know if he needs to do anything like calling in the big guns to help out. I told him I would query you to get your advice.”

In response, Secretary Roche wrote, “It’s time for the big guns to quash Wynne! Boeing won’t accept such a dumb contract form and price, and Wynne needs to ‘pay’ the appropriate price!”

These e-mails call into serious question whether Secretary Roche was truthful in testifying that he had not directed Boeing to pressure tanker lease critics within the OSD to play ball.

During last year’s hearings, we released e-mails indicating that Secretary Rumsfeld’s policy analysts may have been improperly lobbying the Office of the Secretary of Defense in support of the Tanker Lease Proposal. Another set of e-mails, only recently produced, give a fuller picture of this issue.

For example, in an October 9, 2002, e-mail, Darleen Druyun wrote Secretary Roche and Dr. Sambur saying:

“I would like to informally brief [Defense Science Board Chairman] Bill Schneider on tanker leasing when he gets back from Germany. I had briefed him during the transition about the idea of leasing as a viable acquisition alternative. He has apparently had a positive conversation with Wolfowitz on leasing and is interested in quietly helping us. If you give the nod we will use the same charts we used to brief Gingrich which was very positively received by him.”

Secretary Roche responded, “Pls do. Thanks much.”

This e-mail, and others I have released, raise serious questions about the undue influence that industry exerts on procurement decisions in the Pentagon. What is striking here is that, in this case, Air Force leadership seems to have been deep in the middle of it.

To what I’ve described already, add the doctoring of documents produced to Congress.

After SASC staff returned from their visit from Tinker Air Force Base in October 2003, they asked for placards reflecting unusually low failure rates associated with component parts of KC-135s maintained there. Shockingly, what SASC staff received were altered versions of what they asked for.

I conveyed my concerns about these doctored documents directly to Secretary Roche. In Secretary Roche’s February 27, 2004, response to me, he conceded that the information the SASC requested was intentionally deleted. In particular, he explained, “As those placards featured ‘Tinker-only’ information, and because our installations and logistics professionals strive to present a complete and timely picture of our fleet, they amended the placard file by omitting the ‘Tinker-only’ occurrence factors.” To add insult to injury, the “explanation” that Air Force leadership provided the press about what happened was different entirely. Furthermore, we have yet to learn who in Secretary’s Roche’s office directed that the information that Congress asked for be doctored before they were delivered.

It seems that whatever documents that Air Force leadership didn’t doctor, they improperly withheld.

For example, on Friday, September 10, 2004, the White House Counsel's Office and the Office of Management and Budget brought to my staff’s attention a very troubling e-mail stream between Secretary Roche and senior OMB official Robin Cleveland. After Darleen Druyun went to work for Boeing, Ms. Cleveland, the Associate Director for National Security Programs, represented the Government in negotiating with Boeing on the Tanker Lease Proposal.

In this e-mail stream, beginning on May 9, 2003, Ms. Cleveland asked Secretary Roche to help her brother get a job at Northrop Grumman, “Jim — This is my brother’s [Peter Cleveland’s] stuff. I would appreciate anything you can do to help with NG. He is an incredibly hard working, disciplined guy — worked full time, with two little kids putting himself through law school at night. I would be grateful. Thanks very much, Robin.”

About a half-hour later, Secretary Roche gave Mr. Cleveland’s resume and cover letter, and (under color of his office and title) vouched for him, to Steve Dyslas, a Northrup Grumman executive, “I know this guy. He is good. His sister (Robin) is in charge of defense and intel at OMB. We used to work together in senior staff. If Peter Cleveland looks good to you, pls [sic] add my endorsement ....”

A few minutes later, Secretary Roche wrote Ms. Cleveland, “Be well. Smile. Give me tankers now. (Oops. Did I say that? My new deal is terrific.) [ ].”

On May 15, 2003, Ms. Cleveland responded to her brother, in an e-mail entitled, “Interview at NG,” saying, “Great. Hope it works before the tanker leasing issue gets fouled up.”

Until these e-mails were brought to our attention by the White House, we never even knew about them. In a meeting with me on September 13, 2004, White House Counsel Judge Alberto Gonzales told me that “someone in Secretary Roche’s office concluded [that these e-mails were] a joke and that they therefore did not need to be produced.” Given all the scandal and controversy surrounding the Tanker Lease Proposal, and especially given the keen interest that Chairman Warner and I have expressed regarding potential Air Force misconduct, the unilateral decision made by Air Force leadership to withhold this document is profoundly disturbing.

Keeping a defense contractor’s “record of bribes” as a “trump card”; “torturing” a defense contractor “slowly”; pressuring dissenting elements within the Office of the Secretary of Defense whose job it was, particularly in the absence of a Defense Acquisition Board, to vet this procurement program; signing off on a plan to get the chairman of the Defense Science Board to “quietly help” on the tanker lease inside the OSD; doctoring and improperly withholding documents requested by Congress: this is the picture that we’re getting on what happened with the tanker proposal, and we’ve received only a few documents from six out of thirty people we’ve asked for!

This is the picture we’re getting, but no one among Air Force leadership stands up to assume responsibility. Instead, what we get from Air Force leadership are deeply troubling statements in the press about how rosy things are. For example, in a recent op-ed appearing in Defense News, Dr. Sambur describes the current acquisition process as “healthy” and “on track.”

Hoping that Air Force leadership will “get it” now may perhaps be too much, when they didn’t “get it” then. In that context, I find particularly troubling an e-mail from Air Force Under Secretary Teets to Secretary Roche sent just 3 days after Boeing announced the firing of CFO Michael Sears and Vice President Darleen Druyun. In it, Under Secretary Teets writes:

“Jim, I think it is important for you to know all I know about the situation surrounding the tankers .... Late Tuesday afternoon I [ ] talked to Marv Sambur and got his assurance that a thorough review of the Darlene situation had been completed and there was no way Darlene had any influence on our plan for tankers. Furthermore, Marv said that a letter had been prepared for the DepSecDef to send over to the SASC indicating same, and notifying them of our intent to proceed.”

I am amazed. The Air Force’s top acquisition official gave his personal assurance that a thorough review of the Druyun situation had been completed and there was no way she had any influence on the plan for tankers—and he did so after he had more than sufficient notice that there was a potentially HUGE problem here.

One thing is for sure: the final chapter on the tanker lease proposal cannot be closed until all the stewards of taxpayers funds who committed wrongdoing, are held accountable. In order to get a full accounting of what happened on the tanker lease proposal, I will continue to insist that all the documents that the Senate Armed Services Committee has asked for, be produced—no matter how long it takes.

In closing, Air Force Doctrine Document 1-1 on Leadership and Force Development contains a section setting forth the Air Force’s core values. There are three: integrity, service before self, and excellence in all they do. The first, integrity, includes the indispensable characteristics of accountability, responsibility, honesty, and honor. When it comes to Air Force leadership’s conduct regarding the Tanker Lease Proposal and related congressional probes, I must however ask: where is the accountability and the responsibility; where is the honesty and the honor; where have these core values been over the past three years, and where are they now? To eschew accountability here is to do a profound disservice to the good men and women who wear the uniform of the United States Air Force honorably, capably, and proudly.

Mr. President, I ask for unanimous consent that all the documents I have with me, some I have mentioned on the floor of the Senate today, be made part of the record.

For those in the public interested in what I’ve discussed today, I will be posting all of these documents on my website, www.mccain.senate.gov

Thank you, Mr. President

-ends-




prev next

Official reports See all