Those Lobbyists Again...

by hilzoy

Newsweek:

"One of John McCain's most celebrated achievements in recent years was his crusade to block a Pentagon contract with Boeing for a new fleet of midair refueling tankers. Incensed over what he denounced as a taxpayer "rip-off," McCain launched a Senate probe that uncovered cozy relations between top Air Force officials and Boeing execs. A top Air Force officer and Boeing's CFO ended up in prison. Most significantly, the Air Force was forced to cancel the contract—saving taxpayers more than $6 billion, McCain asserted.

But last week, McCain's subsequent effort to redo the tanker deal was dealt a setback. Government auditors ruled that the Air Force made "significant errors" when it rebid the contract and awarded the $35 billion project to Boeing's chief rival, partners European Aeronautic Defense and Space Co. (or EADS) and Northrop Grumman. It's likely the Air Force will have to redo the bid yet again, which analysts say will delay the replacement of the fleet's 1950s-era refueling tankers. The auditors' ruling has also cast light on an overlooked aspect of McCain's crusade: five of his campaign's top advisers and fund-raisers—including Tom Loeffler, who resigned last month as his finance co-chairman, and Susan Nelson, his finance director—were registered lobbyists for EADS.

Critics, including some at the Pentagon, cite in particular two tough letters McCain wrote to Deputy Secretary of Defense Gordon England in 2006 and another to Robert Gates, just prior to his confirmation as Defense secretary. In the first letter, dated Sept. 8, 2006, McCain wrote of hearing from "third parties" that the Air Force was about to redo the tanker competition by factoring in European government subsidies to EADS—a condition that could have seriously hurt the EADS bid. McCain urged that the Pentagon drop the subsidy factor and posed a series of technical questions about the Air Force's 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, who asked for anonymity when discussing a politically sensitive matter. The assumption within the Pentagon, the official added, was that McCain's letters were drafted by EADS lobbyists. "There was no one else that would have had that level of detail," the official said. (A Loeffler associate noted that he and Nelson were retained by EADS after the letters were drafted.)"

The McCain campaign denies that the letters were "provided, or drafted, by EADS or Northrop Grumman or … submitted on their behalf." Moreover, while I am not a defense procurement wonk, my sense is that McCain was absolutely right to go after the initial Boeing contract -- after all, people went to jail over that one. But the subsequent process -- the one that awarded the contract to Northrop Grumman and EADS -- seems to have been badly flawed. (The GAO report hasn't been released, but a summary is here (pdf); it lists some errors that are very significant, like violating its own rules; screwing up the cost estimates in a way that affected who came out ahead in that category; and telling Boeing that it had met a key criterion, changing its mind without telling Boeing, and then docking Boeing for not meeting it.) The response in the papers is full of quotes like this:

"Richard Aboulafia, a defense analyst at the Teal Group in Fairfax, said it is rare for the GAO to uphold a protest and issue such a harsh rebuke of the Pentagon.

"We've not seen a document as scorching as this from an independent, nonpolitical agency," he said. "They are essentially saying there is either incompetency in the Air Force or there was political interference that led them to bend over backwards to benefit one competitor because they feared the power of the purse strings. Either way, the Air Force procurement system has gone horribly, horribly wrong.""

At times like that, having five lobbyists for EADS in senior positions in your campaign is a real problem, and a completely needless one.

Comments

[Fledermaus]

You know, in the end the entire defense contracting industry is a huge racket. Both of them have probably paid decision-makers off. But for what it's worth, if were gonna give money to crooks, let's at least give it to american crooks.

[felix culpa]

Off thread but still.
I laughed until I cried (a bit). Really good production values.
John McCain">http://sobeale.blogspot.com/">McCain called his wife a *. (But you knew that.)

[RepubAnon]

Was John McCain protesting corruption by Boeing - or that the corrupt decision went against the EADS folks making those big campaign donations?

For that matter, maybe it is totally innocent. I'd sure be sure not to cut Boeing any breaks after the initial contract was rescinded due to corruption. Still, it isn't enough to be actually honest - one must also be perceived as honest. "Reputation is what others think they know about you - integrity is what you know about yourself."

[hilzoy]

RepubAnon: I have no problem with his protesting the original Boeing contract. I have a big problem with the idea that he might have tried to influence the subsequent rebid. And I think it's at best an unforced error, again: if you must employ a gazillion lobbyists, it's relatively easy to not send letters to the Pentagon in support of their clients.

[the Pale Scot]

Totally off the top of my head, I remember reading that the decisive event in this was that Airbus actually built demo models of the the refueling boom and associated tech, while Boeing's response was just "yea, we can do that", and we all know how well that works for defense projects.

[LFC]

McCain would NEVER be influenced to do ANYTHING improper by lobbyists. He told us so.

[Incertus]

Didn't this kind of story come up again and again in 2000 when McCain ran? It seems to me--and my memory is foggy here--that he has a habit of doing this kind of thing, and then pivoting on it by saying "yes, this is why we need to get money out of politics" or some crap like that.

[Rocky]

Can you tell me which is worse, giving a contract to a German Co. that comes here and gives jobs to Americans or to American co that ships jobs to India???

[Brick Oven Bill]

There are three types of personalities common in Naval Aviation:

1. The quarterbacks who got As in calculus. You don’t see them on TV because the network managers do not want to broadcast images of strong white males. It threatens the agenda and the executives on a personal level. Everybody in the Airwing wants to be like these guys.
2. Good pilots who accept the reality that they are not calculus-quarterbacks and are nonetheless confident in their own skin.
3. Competitive people who aren’t of the same caliber as the calculus-quarterbacks and have a hard time coming to grips with it. Their personal insecurities usually manifest themselves in some sort of bravado. Extreme cases may end up in politics.

[Michael Cain]

Srsly, how hard is it to get your top campaign staff to list their clients from the last few years and have your Senate staff keep you from writing or saying dumb things based on that? At some point, some of this has to stick and you come off as either too dumb, or too arrogant, to be trusted with the Presidency.

[bleh]

No question about the political tone-deafness of the McCain campaign when it comes to corporate lobbyists. And no surprise either; this is so business-as-usual for Bush-era Giveaway Government (has there been one this bad since the Grant administration?) that I wouldn't be surprised if there were Republicans who are surprised by the blowback. "What? What's the problem? This is how things are done."

That said, having some experience in Pentagon procurement, I'll offer the opinion that the picture offered by even detailed news coverage of the matter is almost guaranteed to be so shallow as to be useless.

It is, to be blunt, utterly naive to expect military procurement -- other than, say, for boots or copier paper -- to be substantively objective or politically insulated in any meaningful way. The technical interaction required is almost beyond management (have you ever designed an airplane?), the processes are painfully slow (Pentagon technology typically is at least a decade behind commercial technology), and the scale -- billions of dollars of public money -- is one of the major reasons that we have a government, Senators and all.

I'm all for bashing McCain, by any means. But we should keep in mind which reasons are sound and which are ... um ... convenient.

[dmbeaster]

At times like that, having five lobbyists for EADS in senior positions in your campaign is a real problem, and a completely needless one.

"Needless"? How would he run his campaign without them?

As for whether this project was motivated by going to bat for friendly lobbyists or to combat waste, I would keep this in mind. This activity is no different than what he was doing for Lincoln Savings and Keating, except this time there really was bad conduct by the government (instead of by McCain's "client").

That's the problem when your agenda consists of which of the lobbyists that surround you seems to have the best pitch line.

[novakant]

if were gonna give money to crooks, let's at least give it to american crooks.

Northrop is a US company.

giving a contract to a German Co.

EADS is actually a European company.

But, yeah, they're all crooks.

[Phil]

1. The quarterbacks who got As in calculus. You don’t see them on TV because the network managers do not want to broadcast images of strong white males.

I don't know which implication here is funnier: The one where there's some significant number of Naval Aviation personnel on television from which ol' B.O.B.* is drawing his sample size, or the one in which white folks have a tough time getting on TV.

*BiO-sanitation Battalion, for fans of Disney's The Black Hole, of which I may be the only one living.