Pentagon Delays $23.5 Billion Deal 

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today congratulated the Pentagon for announcing a  six-month deferment on a Boeing Company contract for refueling tankers in order to consider other options.  Secretary of Defense Donald Rumsfeld made the final call to delay Boeing’s plan to lease and then sell 100 refueling tankers to the Air Force for $23.5 billion.  CAGW was one of the deal’s earliest and harshest critics, calling it budget-busting and scandalous even before controversy erupted following Boeing's admission that it illegally hired the former Air Force official who negotiated the deal. 

“Secretary Rumsfeld has cleared the way for less-expensive options that might finally drive a needle through the heart of this insider deal,” CAGW President Tom Schatz said.  “CAGW has said for three years that leasing the planes was more expensive than upgrading existing planes or buying the planes outright.  Now that numerous investigations and studies have confirmed our position, it’s time for the lease plan to meet its demise so that taxpayers can chalk up a victory.”  

The Pentagon’s announcement comes on the heels of a report by the Defense Science Board (DSB), a Pentagon advisory panel, that concluded the aging of the current fleet is manageable, and other options should be examined before it needs to be replaced.  The report states that at its current rate of use, the fleet is capable of flying until 2040.  The DSB report is one of three due out this month concerning the tanker lease deal.

“Those who invoke national security and the War on Terror to rubber-stamp wasteful corporate welfare have their own agenda,” Schatz continued.  “There is no critical demand for these tankers.  Thankfully for taxpayers, Defense Secretary Donald Rumsfeld, along with Sens. John McCain (R-Ariz.) and Peter Fitzgerald (R-Ill.), questioned the logistics and ethics of the deal long enough for the truth to come out.”

A frenzied lobbying campaign involving senior Boeing officials, Air Force officers, interested lawmakers and military retirees led to the deal’s inclusion in the 2002 Defense Appropriations bill and ultimately CAGW’s 2003 Congressional Pig Book.  The deal is unprecedented in that federal law requires government acquisitions to be bought outright.  Such a deal would alter the way government purchases goods and would cost taxpayers more money in the long run.  After the lease deal was revealed, the Congressional Budget Office and the General Accounting Office (GAO) found that the lease plan could cost as much as $5.5 billion more than buying the planes outright.  According to the GAO, the cost to upgrade, modernize, and repair planes the Air Force already owns would be approximately $3.2 billion.  One alternative mentioned in the DSB report would be to re-engine planes in the current fleet, a move that would also increase fuel efficiency.

“Over the course of the last three years, CAGW has worked tirelessly to block the lease deal,” Schatz concluded.  “As more reports are released and ethical violations come to light, this is proving to be the worst example of corporate welfare and back-room deal-making in recent memory.”

Citizens Against Government Waste is the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.