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Thu, Oct 23, 2003

McCain Wants Answers on 767 Deal

After a flurry of press releases and a lot of Capitol Hill arm-twisting by the Air Force (and presumably Boeing lobbyists) all Summer, and a flurry of GAO reports that question the methodology of the scheme, the Air Force on Friday made a heavy appeal to Congress to get the KC-767A (767-based tanker) deal approved.

Senator John McCain, who has been skeptical of the leasing plan -- or even the need for fleet replacement -- from the start, now wants Joshua Bolten, Director of the White House Office of Management and Budget, to submit, in writing, the reasons why the proposed deal doesn't square with the OMB's guidelines -- or why it shouldn't have to.

The controversy runs on two levels: until Boeing's financials looked so really lousy (in the post-September 11 era), the Air Force didn't have any urgent complaints about its old, but little-used tanker fleet. In report after request, the Air Force's "need for new tankers" wasn't up there on the list of "things we really need." That changed recently; and -- surprise -- Boeing (the logical choice, at any rate) just happened to have a 767-based tanker design... almost ready to go.

The other level has to do with how the Air Force wants to pay for the new birds, and how much of our money they're going to use, to do just that. The price looks steep to many; and beyond that, there's a really sweet leasing deal, that's even more expensive (and more-expensive yet, the more information gets out). Though there is a "price-protection" clause worked in, it's effective only if Boeing sells similar aircraft to somebody else, for a lower price. Just who would be bidding, and who would be allowed to take delivery -- is a matter for not much conjecture.

At any rate, the OMB has until Tuesday to spin this deal into something that at least looks legit. McCain's Senate Armed Services Committee is the last of four legislative panels that needs to approve the deal; and, assuming the spin can't cover the "interesting" aspects of the deal, McCain's doggedness may yet save the taxpayers a few dozen million dollars.

FMI: www.af.mil; www.boeing.com; http://mccain.senate.gov/

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