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Own the Sky
Comments () | Published November 1, 2010
A Run Over the Hill
Air Force officials had never seriously considered any company other than Boeing to replace the tanker fleet. The Defense Department usually conducts long and high-stakes competitions for major weapons systems, pitting companies against one another to wring out the lowest price and the greatest innovation. But the Air Force wanted the planes quickly, and Boeing, which had built the KC-135s, needed a lifeline.

The 9/11 attacks crushed the market for commercial planes. The company laid off workers in its manufacturing plants. By the time airlines and foreign governments started buying planes again, they’d want the next generation of aircraft, not the older 767. Boeing needed a customer now. The Air Force was the only one with an open wallet.

Proponents of the lease deal in the Air Force, along with Boeing’s backers in Congress, made no pretense about using taxpayer money for a corporate bailout. In the throes of a national crisis and faced with the threat of losing a major military supplier, it seemed like an uncontroversial and even advisable move. The Air Force would get its planes. Members of Congress would score a win for their constituencies and American industry. And Boeing would be saved. The three points in the “iron triangle” of the defense business were all satisfied.

But the deal faced several opponents. Chief among them was Arizona senator John McCain, a former Navy fighter pilot who was constantly on the hunt for what he saw as pork-barrel giveaways. Because he was a member of the Senate Armed Services Committee, any leasing deal would come up for his stamp of approval.

To win support, the Air Force mounted a campaign that avoided a direct fight with McCain. Heading the charge was the service’s most senior career acquisition official, Darleen Druyun. In the small world of federal procurement, Druyun was notorious. Known inside the Pentagon as the “dragon lady,” she was a shrewd and stone-tough steward of the Air Force’s multibillion-dollar budget. She was also a political climber who “would rather burn you than be your friend,” says one former Hill staffer.

Five weeks after the 9/11 attacks, Druyun ordered a general and a colonel on her staff to keep negotiations with Boeing closely held. They were to discuss the deal only with company officials and Stevens’s chief of staff on the Appropriations Committee.

In October, Patty Murray, a Democratic senator from Washington state and a stalwart Boeing supporter, joined the company’s CEO, Phil Condit, in pitching the lease to members of the Senate Appropriations Committee and the majority leader, Tom Daschle.

Meanwhile, General John Jumper, the new Air Force chief of staff, tried to win over Kent Conrad, a North Dakotan who chaired the Senate Budget Committee and worried that federal regulations might prohibit the Air Force’s plans. Officials wanted to pay for the tankers not out of the service’s budget for planes but with funds marked for operations and maintenance. Those were separate pots, and in DC the color of money matters as much as the money itself. The Air Force was using maintenance funds for the lease because it didn’t have enough cash to buy the planes outright. That made some lawmakers queasy.

Jumper met with Conrad three times in October and stressed the desperate condition of the tanker fleet. The price was high, but the lease offered a solution to a dilemma. Eventually, Conrad agreed. But other members were still balking, unwilling to relinquish their authority to allocate the defense budget on an annual basis. That was their strongest advantage over the military.

The Virgin Birth
In November, Stevens held a fundraiser in Seattle, the city where Boeing was founded in 1916 and kept its headquarters for 85 years. Thirty-one Boeing executives gave $21,900 in campaign contributions. This was new money: All but one of them hadn’t given a penny to Stevens in the previous ten years.

The next month, Stevens slid a line into the mammoth Defense spending bill during a closed session after the bill had passed both chambers. The legislation authorized the Air Force to lease the tankers and specified that the service should procure the Boeing 767.

Stevens had pulled off a maneuver known as the “virgin birth.” In Washington, every dollar the government spends comes from the union of two parents: The authorizing committees in Congress decide what to buy, and the appropriators decide how much to spend on it. Stevens circumvented that process, planting a seed in the spending bill as if by divine intervention.

By dictating to the Air Force what planes it should buy, Stevens was acting like an authorizer. He’d crossed into the territory of the Armed Services Committee—worse, he’d crossed John McCain.

The anti-pork crusader suited up for battle. Decrying Stevens’s tactics, he publicly cited a letter from the Office of Management and Budget, whose director was skeptical of the lease, putting the total cost at $26 billion over ten years. That was $6 billion more than the Air Force, Boeing, and congressional proponents had claimed. The Air Force also wanted more tankers now—100 acquired through a combination lease/purchase deal. McCain called the plan an act of “gross negligence” and a giveaway to Boeing.

Just two days later, Stevens—who was known to wear an Incredible Hulk tie when he was battling in the Senate—took to the chamber floor in shocked indignation. “This is not a last-minute bailout hidden from public view,” he said. “It takes advantage of opportunities to be had.”

Stevens, the brash World War II pilot, had outmaneuvered McCain, the cocky Navy fighter pilot of the Vietnam era. But for McCain, it was a minor setback. For a presidential hopeful and a self-styled antiestablishment maverick, the tanker deal was a gift. The real fight had just begun—and McCain, who would make defeating the lease a personal cause, was about to face his fiercest adversary.


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Posted at 12:00 AM/ET, 11/01/2010 RSS | Print | Permalink | Comments () | Articles