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Sunday, December 26, 2004 - Page updated at 12:00 AM

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McCain still stalks Boeing tanker deal

Seattle Times Washington bureau

Tanker troubles


September 2001: After the Sept. 11 attacks and with Boeing facing massive layoffs, the company and its allies in Congress propose that the Air Force lease 100 tankers based on the Boeing 767.

December 2001: Sen. John McCain first criticizes cost of the tanker program; Air Force and Boeing begin negotiating.

Spring 2003: Air Force and Boeing wrap up negotiations and seek congressional approval.

Summer 2003: Deal stalls in Senate Armed Services Committee as McCain's staff obtains e-mails from Boeing showing details of negotiations and lobbying.

November-December 2003: Boeing fires two executives, including Chief Financial Officer Mike Sears and former Air Force weapons buyer Darleen Druyun, for ethical violations. Boeing CEO Phil Condit resigns; Pentagon puts tanker deal on hold.

2004: Tanker deal in limbo amid numerous federal investigations and studies; Druyun pleads guilty in federal court.

WASHINGTON -- Over the past few weeks, Sen. John McCain has spent many solitary hours banished to a room so cramped and dank that it evokes his time as a Vietnam POW.

It's the only place he is permitted to view certain papers related to Boeing's tanker deal with the Air Force. He isn't allowed to photocopy; he can take notes by hand. There is no phone.

These documents are not classified. But like hundreds of others McCain has publicized, they could be very sensitive -- to Boeing, the Department of Defense (DOD) and key people at the White House, which has limited his access to the papers. The restrictions are humiliating for a senior U.S. senator.

"It's obfuscation and delay, obfuscation and delay," he complained in an interview. "First came Boeing. Now the Air Force and DOD are not cooperating."

But beneath his outward frustration is more than a little pride at what he and his tiny staff have accomplished in their three-year crusade against the Boeing 767 contract and the Pentagon system for buying weapons.

And he's far from finished. McCain is about to assume the chairmanship of the Airland Subcommittee of the Senate Armed Services Committee, with direct oversight over the Air Force, Boeing's biggest customer.

McCain plans to celebrate by holding hearings on the tanker issue and the "Iron Triangle" of the Defense Department, Congress and industry.

Since late 2001, when he spotted a $26 billion contract for leasing tankers in a footnote in the federal budget, McCain and his two aides have outmaneuvered Air Force brass and Boeing's 35-person Washington lobbying operation in a classic Washington power play and a media blitz worthy of Madison Avenue.

McCain's efforts killed the deal and sparked criminal convictions; spurred the resignations of top Air Force and Boeing officials, including Boeing CEO Phil Condit; and brought to light the biggest Pentagon weapons scandal in 20 years.

"Everyone was confident that the fix was in" for the Boeing tanker deal "and that not one senator could block this," McCain said. But one did, singlehandedly.

In the Puget Sound region, McCain's victory could soon mean the end of the 767 and the jobs that go with it. Boeing has all but stopped selling commercial versions of the plane, and a top executive says the company must decide by mid-2005 to shut down the line if the tanker contract can't be revived.

But to McCain, the Boeing mess has become a poster child for everything that's wrong with the way government does business with defense contractors.

For Boeing's shell-shocked allies in Washington, D.C., McCain's ascendancy lends urgency to the question: What else does he want?

For starters, the head of Rudy deLeon, chief of Boeing's Washington, D.C., operation. Possibly more resignations from the Air Force and DOD, including Secretary Donald Rumsfeld. A sea change in the defense-procurement process. And one more thing: a hold on any new tanker contract.

Flunking "sniff test"

After the 9/11 attacks, the Air Force unveiled a plan to replace its aging fleet of KC-135 tankers with new 767s from Boeing. It planned to avoid the lengthy authorization process with the Armed Services Committee by making the contract a lease instead of a purchase and slipping it through.

"The deal did not pass the sniff test," McCain said. He exploded about it on the floor of the Senate in late 2001. Reluctantly, he agreed to a compromise at the end of 2002.

Nine months later, though, McCain's staff obtained devastating internal e-mails and memos from Boeing after threatening the company with a congressional subpoena.

Revelations from those e-mails sent Armed Service Committee leaders rushing to McCain's side. By the end of 2003 the deal was on hold, a criminal investigation had begun and Condit had resigned.

Then in October came the guilty plea of former Air Force and Boeing executive Darleen Druyun, who admitted that as a top Pentagon acquisitions official she had done favors for Boeing on several billion dollars' worth of contracts, including the tanker deal.

Washington state politicians say that, back in 2002, they never saw it coming. "We didn't hear how much he [McCain] was opposed to it until he was on the floor raising Cain," said Sen. Patty Murray, a Democrat. Rep. Norm Dicks, D-Bremerton, says the delegation underestimated McCain's tenacity.

It was difficult for Washington state's leaders to initially gauge McCain's anger. Alternately charming and temperamental, he's known to jump on issues ferociously, demand heads, then suddenly back off.

Recently, he threatened to investigate Barry Bonds' home-run record, prompting columnist George Will to call McCain the "National Scold." But McCain's interest in baseball and steroids lasted, as one staff member at the Senate Commerce Committee had predicted, one week.

Once it became clear his interest in the tanker deal was lasting, McCain complains, Washington state politicians defended Boeing too long. "We heard nothing, except press releases, from Sen. Murray," he says. "Congressman Dicks was advocating moving forward with it [the tanker contract] long after it became abundantly clear that very bad things had gone on."

McCain singles out Sen. Maria Cantwell, a Democrat, as the only state politician who attempted to hear him out. "She and I had numerous discussions on this issue; I thought she was very mature in her approach to it. She was trying to assist Boeing in every way, but she also was trying to understand our side of this issue."

Cantwell reacted carefully to McCain's praise, noting, "It was always clear to me that he was always going to be in a key position -- so it was important to work with him. I explained that it wasn't the Boeing people who brought [the tanker issue] up to me -- it was the people at Fairchild Air Force Base."

But McCain said even that was orchestrated by Boeing and Air Force officials, who encouraged Air Force officers around the country to lobby their congressional delegations.

McCain still unhappy

McCain still isn't satisfied with either Boeing or the Air Force. "Boeing reacted to the scandal and vowed to change. But they've still got their same lobbying team here in Washington that did bad things, and who should not be here, headed by Mr. Rudy deLeon," he said, pausing to growl the "Mr."

"DeLeon and others were up to their necks [in this]," McCain said.

Boeing CEO Harry Stonecipher defended deLeon in a statement: "Rudy deLeon is a key and valued member of the Boeing Executive Team. There is no reason for him to step down."

But McCain is continuing to draw battle lines. Even Defense Secretary Rumsfeld is under fire for suggesting that Druyun just needed better guidance.

"Rumsfeld's the one that made the statement that the problem with Druyun was there were not enough people to supervise her. That doesn't pass the laugh test," McCain said.

"The Pentagon and U.S. Air Force has not in any way acknowledged any responsibility of any kind, which is infuriating. "

Rumsfeld riled McCain by publicly praising the departing secretary of the Air Force, James Roche, and his chief of acquisitions, Marv Sambur.

Sambur, who is also leaving the Pentagon, lashed out to The Times over his experience with McCain and Druyun, comparing it to that of the hostage kidnapped by a "hit man" in the recent movie "Collateral."

"Tom Cruise takes the taxi-cab driver and makes him go around with him as he does his assassinations," Sambur said. "It was like a twilight zone. I was in the cab ride; the driver was innocent but he got framed."

McCain shot back, "The rank outrageousness of Dr. Sambur's comment aptly demonstrates how beneficial his departure will be to the Air Force and the department."

McCain says it is important for people in Washington state to know why he is so angry and so skeptical of the immediate need for any new large tanker contract.

During the nearly two years he was trying to get the Boeing-Air Force e-mails, McCain thinks Boeing and the Air Force were out to get him personally. For example, in one recently discovered memo, McCain says, Air Force Secretary Roche suggested calling him "Joe McCain," as in Joe McCarthy.

McCain says Boeing used allies among labor unions to attack him in his home state of Arizona, citing a memo from a Boeing executive on the tanker deal that mentions "union strategy in play." He's still seething over radio shows in Arizona in which an aerospace-union representative said McCain should register as a foreign agent for all his help to Airbus, which has been trying to persuade the Pentagon to consider European-made tankers.

McCain contends the tanker deal itself was an attempt to profit from the sense of crisis after the 9/11 attacks, and that the underlying need for new tankers to replace the Air Force's KC-135s has still never been proved.

"Prior to 9/11, they said that they didn't need to start replacing tankers until 2040," he said.

He points to a Sept. 25, 2001, memo describing a meeting in Druyun's office. Just two weeks after 9/11, Druyun, Boeing lobbyists and Air Force officers came together, paused for a moment of silence for the victims of the Trade Center and Pentagon attacks, and then began drawing up a strategy for the tanker deal.

Last year, the Air Force accidentally gave McCain a new ally in Sen. John Warner, R-Va., chairman of the Armed Services Committee, when it was discovered that Air Force officials had erased key data on slides they sent to Warner's committee showing that problems with the aging KC-135s were fairly rare.

The fallout is that McCain won't OK a new tanker contract until it is studied more. But he doesn't trust the latest Air Force analysis being done by the RAND Corp., because of RAND's dependence on the Pentagon.

"It's become so incestuous that it's hard to find an objective organization to make this evaluation of the need for the tankers," he said.

Boeing and Washington state's politicians argue for moving ahead with the tanker contract based on worries that the U.S. might be forced to buy European-made tankers from Airbus, at the cost of thousands of American jobs. If Boeing is forced to close its 767 line for lack of orders, Airbus could win the contract by default, they suggest.

But McCain says the public should not "get sucked into" the foreign-ownership argument.

"I obviously hope that [the winner] would be a U.S. corporation. But having said that, I want the best product that we can possibly get, so that the men and women in the military will have the maximum capability for the least cost."

Meantime, asked how many more days he expects to spend in the vault room looking at tanker documents, he laughed. "Not a lot -- I hope."

Translation: however long it takes.

Alicia Mundy: 202-622-7457 or amundy@seattletimes.com

Copyright © 2004 The Seattle Times Company

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