EADS Lobby May Have Assisted Senator In Original KC-X Bid Probe

With Boeing's protest to the KC-X aerial tanker contract award to EADS being sustained by the Government Accountability Office (GAO) last Wednesday, eyes are falling onto some recent correspondence from John McCain that may turn around and bite the presidential candidate according to a Newsweek article on June 21.

McCain (right) spearheaded the effort to originally block the Pentagon contract with Boeing in 2003 after a probe led by him uncovered cozy relations between top Air Force officials and Boeing executives – later landing a top USAF officer and a Boeing CFO in prison. McCain asserted his quest to create “good government” saved taxpayers more than $6 Billion after the Air Force cancelled the contract which he called a “rip off”.

As reported by ANN, the GAO concluded “the Air Force had made a number of significant errors” when it rebid the tanker contract and awarded the $35 Billion project to the EADS and Northrop Grumman team. The Air Force will likely need to redo the bid for a second time, further delaying the replacement for the aerial refueling fleet still using 1950’s vintage KC-135 aircraft.

According to Newsweek, the GAO ruling has also cast light on an aspect of McCain’s crusade many have overlooked: five of his top presidential campaign advisers and fund-raisers were registered lobbyists for EADS -- including Tom Loeffler, former finance co-chairman, and Susan Nelson, his finance director.

Critics cite as evidence of the potential conflict, two strongly worded letters from McCain to Deputy Secretary of Defense Gordon England in 2006 and another to Robert Gates prior to his confirmation as Defense secretary.

The first letter, dated September 8, 2006, McCain explained hearing from “third parties” that the Air Force was on the verge of redoing the tanker competition and factoring in European government subsidies to EADS – an issue which would seriously hurt the EADS bid. McCain urged the subsidy factor be dropped from consideration and posed a series of specific technical questions about the Air Force’s bidding process.

"He was trying to jam us and bully us to make sure there was competition by giving EADS an advantage," said one senior Pentagon official to Newsweek, asking for anonymity when discussing the politically sensitive matter.

The official added, within the Pentagon, it was assumed McCain’s letters were drafted by EADS lobbyists. "There was no one else that would have had that level of detail” they added.

Newsweek adds, a Loeffler associate noted that he and Nelson were retained by EADS after the letters were drafted.

Chris Paul, McCain's top aide on the issue, wrote in an e-mail to the magazine that "the letters.. were absolutely not provided, or drafted, by EADS or Northrop Grumman or.. submitted on their behalf. Those letters arose from, and reflect, Senator McCain's longstanding interest in... full and open competition." The McCain camp further barred Paul from answering follow-up questions about whether McCain had input from EADS lobbyists on the letters or about the identity of the "third parties" he had mentioned.

McCain reinforced last week his "paramount concern" was "that the Air Force buy the most capable aerial refueling tankers at the most reasonable cost." Analysts question whether the controversy over the rebid process, the subsequent replacement delay, and the higher costs that will result make McCain’s efforts worth it.

"This shows how a sort of naive crusade for good government can actually backfire," said Loren Thompson, of the Lexington Institute, a defense think tank.

FMI: www.gao.gov/legal/aboutbid.html, www.johnmccain.com, www.pentagon.gov