Posts Tagged ‘Grumman’

I’m Shocked, Shocked! To Find Politics In Defense Contracting

April 10, 2010
U.S. Sen. Richard Shelby (R-AL)

U.S. Sen. Richard Shelby (R-AL)

President Obama announced last week at a White House press conference with his French counterpart that the United States will use fair procedures to award up to $50 billion for next generation Air Force refueling planes.  The Defense Department followed up by delaying for 60 days the bid deadline so that EADS can compete with Boeing Corp. in bidding advertised as free of politics.

But a review of the ruthless tactics used so far suggests that running a politics-free contracting competition is like running a Casablanca casino that has no gambling.

Political, financial and military leaders of at least four foreign powers have pressed for U.S. taxpayer dollars in the closing months of the nearly decade-long competition between Boeing and the European Aeronautic Defense and Space Co. (EADS).  In addition to France’s president Nicolas Sarkozy, Russia’s Vladimir Putin, Germany’s Angela Merkel and the United Kingdom’s Gordon Brown have visibly pushed for a share of jobs from one of the largest U.S. military contracts in history.

Summarized below are a few of the political intrigues used to win the contract, whose value could be vastly higher than the estimated $35 billion to $50 billion because the winner gets vital momentum for similar deals with other nations.

To secure an EADS victory that would enable a large new assembly factory in Alabama, the state’s senior Republican Sen. Richard Shelby in February put a blanket Senate hold on 70 top-level Obama federal appointments, thereby disrupting the administration’s effort for more control over the federal bureaucracy before mid-term elections.  Shelby backed off after flexing his Senate muscle.

But this kind of political brinksmanship could enable EADS and its primarily Republican Senate backers to delay final Pentagon decision-making past next November’s mid-terms.  The election results could then provide EADS backers enough new clout to threaten Boeing.

On its face, the idea of unseating a U.S. contractor might seem just as far-fetched as last month’s disputed announcement that a state-owned Russian aviation consortium would try to bid.

But my work at the Justice Integrity Project has unearthed sources describing other mind-boggling tactics.  My exclusive report for Huffington Post this weekend, for example, describes how former Alabama Gov. Don Siegelman and former Air Force Assistant Secretary Darleen Druyun were imprisoned on corruption charges initiated by EADS supporters.

Siegelman, 64, clearly was framed, in my opinion.  His ostensible crime was denying Alabama his “honest services” by requesting in 1999 a donation to a pro-education non-profit, and then reappointing the donor to a volunteer state board.

But Siegelman’s real “crime” was election as a Democratic governor from 1999 to 2003 with good prospects for reelection unless targeted by the all-out criminal probes run by Republican-controlled entities. These included a remarkable level of involvement by the Air Force itself in hosting at Maxwell-Gunter Air Force Base the headquarters for a multi-year federal-state investigation targeting Siegelman.  That probe resulted in his 2005 indictment before his reelection campaign and conviction the following year.  Now free on bond after serving nearly a year of his seven-year term, he now faces Justice Department recommendations that he be imprisoned for 20 more years and that the Supreme Court deny his appeal, which is supported by an unprecedented coalition of 91 former state attorneys general saying Siegelman’s request for the education donations didn’t constitute a crime.

By contrast, I’ve seen no evidence that Druyun didn’t deserve her nine-month prison sentence for using her Air Force job to create favorable terms for Boeing tanker leases while lining up Boeing jobs for herself, her daughter and prospective son-in-law.

As a result of these prosecutions, the EADS path became easier for its long-shot bid to replace Boeing.  Former Congressman Bob Riley, Siegelman’s successor as Alabama’s governor, used his connections with European and fellow Republican leaders to plan the huge tanker parts assembly factory in Mobile, thereby providing the EADS deal with a vital Made-in-America image.

Similarly, GOP Sen. John McCain of Arizona used competitive intelligence originally developed by political operatives loyal to EADS and the Bush/Rove White House to lead a multi-year Armed Services Committee investigation of the Druyun scandal.  The probe thoroughly embarrassed Boeing and the Air Force.  Boeing’s chairman resigned, and another top-level official was imprisoned.

More important, the Air Force reopened bidding, and awarded the tanker contract in early 2008 to EADS and its then-partner Northrop Grumman Corp.  This was just as McCain’s revived presidential campaign was eliminating his Republican competitors.

In March 2008, Washington investigative reporter and now Russia Today cable commentator Wayne Madsen reported that Europe’s Rothschild family was supporting McCain and the EADs deal, as were key allies of the Bush family.  That spring, the Associated Press documented how five EADS backers supported McCain, including his co-chairman and key financial supporter Tom Loeffler.  Federal contractors and foreign citizens are forbidden to contribute, but not their allies.

McCain’s earlier investigation of Boeing had received mostly positive reviews.  “It’s the best example of congressional oversight that we’ve seen in a decade,” Taxpayers for Common Sense Vice President Keith Ashdown told the Washington Independent.  “It was before the completely bone-headed decision to bring on all those EADS lobbyists.”

Last June, the Government Accounting Office overturned the EADS/Northrop Grumman award, saying that the Bush administration’s Defense Department had slanted criteria against Boeing.  Northrop Grumman dropped out of the bidding this year, saying the process was too expensive and its bid with EADS was unlikely to succeed under the Air Force’s new specifications under Obama.

That left Boeing’s rivals scrambling for credible partners and strategies, including a way to build the factory in Mobile.  EADS kept up its momentum via the direct talks between the French and U.S. presidents last week on world issues, including a fair process for tanker bidding.

“It’s in the interest of American taxpayers,” said Obama, “and it’s also in the interest of our young men and woman who rely on this equipment in order to protect this nation.”

Sarkozy responded that he trusts Obama.  “If you say to me that the request for proposals, the call for tenders, will be free, fair and transparent,” said the French president, “then we say EADS will bid and we trust you.”

Such benign words obscure the ongoing struggle for well-paid manufacturing jobs.  Boeing, of course, has its own stable of political advocates, who argue that tanker construction is overdue.  “It’s wrong to slow down this critical procurement process,” said Republican Sen. Sam Brownback of Kansas, which has 3,000 Boeing employees.  “Our entire military relies on refueling tankers, which were built in the 1950s.”

Decision-makers downplay any pressures.  “We have been and continue to make decisions on this critical program based solely on the law of the land and the needs of our war-fighters,” said Pentagon spokesman Geoff Morrell last week.  “Politics are not a part of this process –– never have been, never will be.”

Sounds great!  And is there any gambling in the casino?