Congressional Record: November 19, 2004 (Senate) Page S11536-S11542 Investigation Into Air Force Leasing of Boeing Aerial Refueling Tankers Mr. McCAIN. Madam President, I intend to address the Senate for a period of time today. I believe I have as much as an hour under postcloture debate, but I will be discussing an issue I have been involved in for some 3 years now and have not reached a conclusion, although certainly enormous progress has been made in trying to address this issue. But during these 3 years since the appropriators slipped a $30 billion rider in the fiscal year 2002 Defense appropriations bill, a lot of strange and unusual things have happened, I am sad to say, that are a very damming commentary about the way the Pentagon in general and the Air Force in particular conducts its business. I am going to tell a story that has not, as I said, reached its end. But it has uncovered the very strong likelihood, because of the confession by Ms. Druyun in Federal court when she pled guilty, that there could be many billions of dollars of the taxpayers' money that were wasted, criminally treated, and misused because of the decisions made by Ms. Druyun. The question is, How could Ms. Druyun have done all this by herself? Did she have accomplices or was the system in the Pentagon so broken that one individual [[Page S11537]] could make contracting decisions which entailed tens of billions of dollars, and in this case may have cost the taxpayers of America millions and even billions of dollars as well? Nearly 3 years ago, behind closed doors, the Appropriations Committee slipped a $30 billion rider in the fiscal year 2002 Defense appropriations bill. This rider authorized the Air Force to lease from Boeing up to 100 767s for use as aerial refueling tankers. Before the rider appeared in the bill, Air Force leadership never came to the authorizing committees about this issue. In fact, tankers have never come up in either the President's budget or the Defense Department's unfunded priority list. The Air Force's tanker lease program was born of a virgin birth. The rider was, in fact, the result of an aggressive behind-the-scenes effort by the Boeing Corporation with considerable assistance from senior Air Force procurement official Darleen Druyun and others. After the President signed the bill into law, the Air Force embarked on negotiating with Boeing a lease that would have cost the taxpayers around $6 billion more than an outright purchase of these aircraft would have. Soon after Air Force Secretary Jim Roche submitted to the four Defense committees a report on plans to lease these tankers from Boeing, three out of the four authorizing committees summarily approved the lease without even looking at the contract. Two did so without even holding a single hearing. Much to his credit, Senate Armed Services Committee Chairman John Warner held the line and refused to authorize the proposal, as did the ranking member, Senator Carl Levin. Through the hearings and investigations that followed, we unearthed a crushing body of evidence on how much a folly the proposal actually was. Throughout 2002 and in the beginning of 2003, even agencies within the Defense Department and the Air Force, including Program, Analysis and Evaluation, the Office of Management and Budget, and even the Air Force's own General Counsel's Office raised salient concerns about aspects of the proposal. These concerns, however, would not get in the way of Air Force leadership. Rather than resolve these concerns, Air Force proponents continued to aggressively push the deal in the press. A Wall Street Journal editorial entitled ``John McCain's Flying Circus,'' published on the very same day as the tanker hearing we had in the Commerce Committee, is particularly notable. It was obviously drafted with considerable help from the Office of the Air Force Secretary. In it, tanker proponents accused me of ``trying to prevent approval by running up my own Jolly Roger'' and brazenly exaggerated the Air Force's need for tankers by describing how, during Secretary Roche's visit to Tinker Air Force Base, he ``peeled back the skin of a tanker being refurbished and found the metal underneath disintegrating before his very eyes.'' By this time, Air Force leadership's aggressive press campaign was well underway. On April 25, 2002, Secretary Roche's special assistant, William Bodie, told Secretary Roche that he: saw Rudy deLeon [who heads Boeing's Washington office]-- And, by the way, he has rotated back and forth between the Congress and defense corporations and the Defense Department--he: saw Rudy deLeon at the Kennedy Center and politely asked the Great White Arab Tribe of the North [which is what these folks called Boeing] to unleash their falcons on our behalf for once. I talked to [defense analyst] Loren [Thompson], who is standing by to comment to this reporter about the national security imperatives of tanker modernization. [Editor of Defense News and Air Force Times] Vago [Murandian] is also standing by. I will get with [Assistant Air Force Secretary for Acquisitions Marvin] Sambur first thing to rehearse talking points. Get that, ``to rehearse talking points'' with the editor of Defense News and Air Force Times and defense analyst Loren Thompson: We will get with you before we talk to the reporter. Among the falcons that Boeing ``unleashed'' was an op-ed that subsequently appeared in Vago Muradian's Defense News. This piece, which strongly endorsed Boeing's tanker lease, was supposedly written by former Commander-in-Chief for U.S. Pacific Fleet Admiral Archie Clemins. However, Admiral Clemins has admitted, and Boeing's e-mails reflect, that it was in fact ghost-written and placed by Boeing. As this indicates, rather than address salient concerns regarding the tanker deal raised by their own staff, Air Force leadership focused on using the press, which Mr. Bodie described as ``3rd Party support at its best'' to perpetuate the fiction that ``the lease was the exact opposite of a Boeing `bailout.' '' Among the spin that lease advocates fed the press, were statements like, ``[I] will not succeed in blocking a 767 lease because tanker replacement is critical and [I] have offered no alternatives to leasing.'' While Air Force leadership was focused on pushing the deal in the press, analyses from several independent bodies, including the Defense Department's Office of the Inspector General, the Government Accountability Office, the Congressional Budget Office, the Congressional Research Service, the National Defense University, the Center for Naval Analysis, the Institute for Defense Analyses, and others criticized almost every aspect of the program. Perhaps most notably, a Defense Science Board Task Force, vetted for conflicts with industry only after my insistence, concluded that the need to replace the current tanker fleet was not urgent. The Task Force's finding debunked the numerous representations Air Force leadership made to the contrary. Indeed, the Defense Science Board suggested that the Air Force's case on corrosion was virtually cut from whole cloth. Air Force leadership repeatedly cited this case as the biggest reason for having taxpayers pay Boeing billions more than necessary. About 2 months ago, Ms. Druyun was sentenced to 9 months in prison on public corruption charges. Her crime: negotiating the $30 billion deal with Boeing while negotiating with Boeing for a job. Ms. Druyun's sentencing occurred months after Boeing's board of directors fired her and former Chief Financial Officer Michael Sears for misconduct arising from the tanker negotiations. Boeing's Chief Executive Officer Phil Condit soon left the company under a cloud of suspicion. In court papers accompanying her sentencing, Ms. Druyun admitted to overpricing Boeing's 767s as a ``parting gift'' to Boeing. She admitted that she did this to ``ingratiate herself'' with her future employer and help secure employment for her daughter and future son-in-law at the company. Astonishingly, Ms. Druyun also admitted that she similarly harmed the United States on behalf of Boeing on several other major defense programs, including the NATO AWACS, C-130 AMP, and the C-17 programs. How much taxpayers were fleeced remains unclear. These contracts were in the billions. But this matter remains under investigation by the Justice Department and other authorities. The scope of these investigations seems to widen almost weekly. Ultimately, it is likely that Ms. Druyun's misconduct cost taxpayers an astronomical sum. In yesterday's paper, Lockheed is bringing suit against Boeing for allegedly having involvement with bid rigging on other contracts as well. Over the past few weeks, Air Force leadership has tried to delude the American people into believing that all of this happened because of one person, and that because no one else has been hired for her position, the problem has been solved. I don't buy it. I simply cannot believe that one person, acting alone, can rip off taxpayers out of possibly billions of dollars. This appears to be a case of either a systemic failure in procurement oversight, willful blindness, or rank corruption. Either way, full accountability among Air Force leadership is in order. Just this week, Secretary Roche and Ms. Druyun's old boss, Assistant Secretary of the Air Force for Acquisitions Marvin Sambur, announced their resignations. But, among Air Force leadership, nor one has assumed responsibility for this debacle. Ms. Druyun is, perhaps grudgingly, accepting responsibility for her role. To some extent, Boeing has accepted responsibility for its. The Justice Department and others are continuing to ferret out others who may be responsible. However, accountability among Air Force leadership has been almost nonexistent. It seems that it is business as usual. Air Force leadership remains content laying all the [[Page S11538]] blame at the feet of a single individual, Darleen Druyun. I'm not buying it. Just on the Tanker Lease Proposal, the conduct of Air Force leadership has been unacceptable. First, Air Force leadership was never interested in doing a formal ``analysis of alternatives'' for the multibillion dollar tanker program. Such AOAs are typically always done for major defense programs. Second, Air Force leadership misrepresented to Congress how bad corrosion afflicted the current tanker fleet. They did this to devise a reason why taxpayers needed to lease new tankers from Boeing, rather than simply buy them at a much lower cost. Third, according to independent analyses, Air Force leadership overstated ``operation and supply'' cost-growth estimates for the current tanker fleet. This too was done to artificially bolster the case that the current fleet needed to be replaced immediately, at a dramatically higher cost. Fourth, Air Force leadership repeatedly misrepresented that its proposal was merely an ``operating lease.'' Their plan was to slip the program in the budget at a relatively modest initial cost, only to have actual costs balloon in the intervening years. We now know that this was done to conceal the Tanker Lease Proposal's real budgetary impact. By the way, they also had plans that the money to fund in the later years, known as outyears in Pentagonese, that would be taken from the other services' budget. Fifth, according to the Defense Department's Inspector General, the commercial procurement strategy that Air Force leadership used in the tanker proposal (and, incidentally, the C-130J program) placed the Department at ``high risk for paying excessive prices,'' and precluded ``good fiduciary responsibility for DoD funds.'' Sixth, the Inspector General found that, when the specifications for the tanker were being developed, Air Force leadership let Boeing tailor those specifications to Boeing's proposed tanker. They were not tailored to the operational requirements of the warfighter. They should have been. Yet, Air Force leadership allowed an Air Force briefer to tell the Joint Staff that the tanker ``operational requirements document'' was not tailored to Boeing's aircraft. The Defense Department Inspector General, however, found that it was. I could go on, but I'll stop here for now. As I've gone into many of these points in excruciating detail in my letter to Secretary Rumsfeld on July 28, 2004, I'll simply ask for unanimous consent to have my letter printed into the Record. There being no objection, the material was ordered to be printed in the Record, as follows: July 28, 2004. Hon. Donald H. Rumsfeld, Secretary, Department of Defense The Pentagon, Washington, DC. Dear Mr. Secretary: I am concerned about how the Analysis of Alternatives (AoA) for the Tanker Lease Proposal will be conducted. In particular, I am concerned about the participation of Air Force leadership in the AoA, and the involvement of the Air Force's federally funded research and development center (FFRDC)--RAND, which I understand is spearheading this effort. The conduct of Air Force leadership regarding the Tanker Lease Proposal has been unacceptable. Frankly, its credibility on the recapitalization of the tanker fleet has been fundamentally called into question. Notably, many of the problems that the Department of Defense Office of the Inspector General (DoD-OIG) found in the Tanker Lease Proposal are similar to those it recently found in the multibillion dollar C-130J procurement program. Bases for my concern about the participation of Air Force leadership in the AoA include, but are not limited to, the following. First, the Air Force has provided Congress inaccurate information in an attempt to justify its original proposal to lease 100 Boeing KC-767As. For example, Air Force Secretary Jim Roche has repeatedly advised Congress that, in the existing KC-135 fleet, ``corrosion is significant, pervasive, and represents an unacceptable risk.'' Secretary Roche has also emphasized to Congress increased operating costs in the current fleet as a basis for entering into the tanker lease. Air Force leadership has indicated that these elements create an ``urgent'' need to recapitalize the fleet. However, as you of course know, the DSB task force concluded that the Air Force's claims of unmanageable corrosion problems and cost growth were overstated. As such, the task force also concluded that ``[t]here is no compelling material or financial reason to initiate a replacement program prior to the completion of the AoA and the MCS.'' Thus, the task force jettisoned the ``dominant reason'' Secretary Roche first cited in his July 10, 2003, report to Congress as the basis for having taxpayers pay billions of dollars more for leasing tankers than they would for buying them. The Air Force's representations on this issue remains a matter of continuing investigative concern. In another example, to comply with the original authorizing statute, the Air Force misrepresented to Congress that its proposal to lease 100 Boeing KC-767 tankers was merely an operating lease. This would have obviated the requirement that the White House obtain advance budget authority for the whole lease proposal. But, the DoD-OIG and Program Analysis and Evaluation (PA&E), as well as the Congressional Budget Office (CBO) and the General Accounting Office (GAO) found that the procurement of these tankers is, in fact, a lease purchase. In addition, facts surrounding the original lease proposal made it clear that the transaction was a lease- purchase: under the original proposal, the Air Force conceded that the DoD is ``committed to earmark[ing] an additional $2B in FY08 and FY09 for the purchase of aircraft covered by the multi-year program under the terms of the proposed contract'' to head off a funding spike over the Future-Years Defense Program. Second, the DoD-OIG and the NDU concluded that the Air Force's commercial item procurement strategy ``prevented any visibility into Boeing's costs and required the Air Force to use a fixed-price type contract . . . The strategy also exempted [Boeing] from the requirement to submit cost or pricing data. The strategy places the Department at high risk for paying excessive prices and precludes good fiduciary responsibility for DoD funds.'' The NDU similarly concluded that ``[i]n a sole source, monopoly commercial environment, the government is not served well with limited price data'' and suggested that the Air Force neglected its fiduciary/ stewardship responsibilities. Notably, the DoD-OIG arrived at similar conclusions regarding the Air Force's mismanagement of the C-130J procurement program. In particular, the DoD-OIG found that, because the C-130J was improperly acquired as a commercial item, the Air Force did not have contractor-certified information on contract prices, costs, or profits, and therefore was ``limited'' in its ability to protect the Government against possible overpricing. Third, the DoD-OIG and the NDU also concluded that the operational requirements document (ORD) for tankers was not tailored, as it should have been, to the requirements of the warfighter, but rather to closely correlate to the Boeing KC- 767A. The DoD-OIG found that senior Air Force staff directed that the ORD closely correlate to the Boeing KC-767A that was being developed for a foreign government, in anticipation of the authorizing legislation. This is particularly troubling where, according to an internal Boeing document regarding the ORD, Boeing planned to ``establish clearly defined requirements in ORD for the USAF Tanker configuration that results in an affordable solution that meets the USAF mission needs and will prevent an AOA from being conducted.'' Under the current proposal, the first 100 tankers produced will not be capable of, among other things, interoperability with Navy, Marine, or coalition assets, or simultaneously refueling more than one receiver aircraft. Rear Adm. Mark P. Fitzgerald, USN, recently suggested that in theater, such a limitation restricts the Navy's long range striking capability and fosters a needlessly risky aerial refueling environment. Notably, with respect to the C-130J procurement program, the DoD-OIG similarly found that, while the Air Force conditionally paid Lockheed Martin about $2.6 billion, the C- 130J is not operationally suitable or effective and cannot perform its intended mission. Furthermore, to date, 36 deficiency reports that ``could cause death, severe injury or illness, major loss of equipment or systems, or that could directly restrict combat or operational readiness'' have been received. Finally, Boeing documents suggest that the Air Force allowed Boeing to modify the requirements in the ORD while it was being developed. These documents also reflect that the Air Force induced the Joint Requirements Oversight Council (JROC) into approving and validating the corrupted ORD by falsely representing that it was not tailored to a specific aircraft. This is of continuing investigative interest to the Committee. Interestingly, as a result of the commercial specifications of the C-130J not meeting user needs, the Air Force (and Marine Corp) decided to ``revise its requirements document'' to reduce the initial capabilities required and to satisfy operational requirement deficiencies through block upgrade programs at the Government expense. I am very concerned about this. I understand that RAND (the Air Force's FFRDC), and Project Air Force in particular, is spearheading the AoA. Generally, the Air Force, specifically Dr. Sambur, is ``the overall sponsor'' for Project Air Force activities. However, having argued against the need for an AoA as early as November 2002, according to a recently produced internal DoD e-mail, Dr. Sambur has apparently prejudged its outcome: ``A formal AoA will cost money, delay the program two years, and still come up with the same answer we have today. There are only a few aircraft that can serve as tankers, they are already in production, and so analyzing their respective capabilities and costs won't take long--in fact, it's already been done and the results passed to OSD. What's left to study?'' [[Page S11539]] As I originally indicated in my letter of March 12, 2004, Air Force Vice Chief of Staff General T. Michael Moseley similarly touted the Air Force's proposal to lease and buy Boeing 767s during recent budget hearings. In particular, General Moseley provided ``opinion'' testimony suggesting that the KC-767 tanker is the Air Force's only viable option. For example, in testimony before the Projection Force Subcommittee of the House Armed Services Committee, General Moseley specifically rejected re-engining remaining KC-135Es (as the DSB task force recommended); modifying used aircraft (for example, DC-10s, also as the DSB task force suggested); using contractor support services (as the GAO recently opined), and other options that your office's AoA guidance specifically required the Air Force to examine. While General Moseley attempted to explain away his testimony as ``personal opinion,'' at no time was he asked to provide his personal opinion and at no time during his testimony did General Moseley indicate that he was conveying a personal opinion. Considering General Moseley's role as the chairman of the Air Force Steering Group for Project Air Force and, respectfully, despite your assurances in your March 17, 2004, letter, I remain concerned that the Air Force and RAND have effectively prejudged the outcome of the AoA regarding the Tanker Lease Proposal. Several recently produced internal DoD e-mails call into question whether the ongoing AoA will be conducted objectively. For example, in an e-mail, dated August 15, 2003, from Secretary Roche to Dr. Sambur and Acting Undersecretary Wynne, Secretary Roche dissuaded the OSD and Air Force staff from initiating an AoA. In this e-mail, Secretary Roche said the following: ``Agggggg, stop the nonsense! Don't even begin to start an unnecessary AoA at this point. All this would do is give the enemies of the lease an excuse from DoD to delay the 'lease, and really honk off the Appropriators. Let's see what comes out of conference, damn it! If the lease is approved then we can talk about how to decide on the recapitalization of the other 400 airplanes, but there is no rush here.'' Soon thereafter, Acting Secretary Wynne responded, ``I agree with Jim, [sic] What started this flurry of activity? I'd hate for our story to change.'' The foregoing does not inspire confidence that the current AoA will be conducted properly. My concern that RAND, in particular, may have prejudged the outcome of the AoA is underscored by its conclusion regarding tanker recapitalization in a recent report. In a December 2003 report entitled ``Investigating Optimal Replacement of Aging Air Force Systems,'' RAND, in particular Project Air Force, found--without the benefit of an AoA--that ``it appears to be optimal to replace the KC-135 by the end of the decade.'' Apparently relying on Air Force data and analysis that was ultimately rejected by the DSB task force, this conclusion comes unacceptably close to prejudging the outcome of the AoA and is inconsistent with the conclusions of the Air Force's own Economic Service Life Study; the GAO; and, most recently, the DSB task force, all of which found that the current fleet is viable through 2040. In light of the relationship between the RAND and the Air Force, as described above, there can be no assurance that RAND will conduct the AoA here with the desired independence. My concerns appear to be reflected in a recently released internal DoD e-mail from Eric Coulter, Deputy Director for Theater Assessments and Planning at Program, Analysis and Evaluation (PA&E) to Nancy Spruill, co-chairperson of the Leasing Review Panel Working Group, dated August 7, 2003: ``I do not support RAND as the sole source or lead to conduct the Congressionally-directed independent tanker AoA. First, its [sic] sad that it takes Congress to direct the Department to do something it should do on its own. We've been Wingto get the AF to conduct an AoA for several years, but could never get AT&L's support to direct one. The AF clearly wanted to postpone it for as long as possible to delay the issue of recapitalizing the fleet. Now the Department is playing catch up. That said, [the Institute for Defense Analyses (IDA)] has more experience to conduct this type of effort. In fact, [Air Mobility Command] relies on IDA to do a lot of its mobility analyses both for airlift and tankers. I believe the Department will get a better, more objective product than we would from RAND. I hope we're not letting IDA's cost review of the tanker lease color our opinion. Please convince me otherwise.'' I am also concerned about the fact that Project Air Force may have received as much as $50 million for FY03 and FY04 and is expected to get at least another $25 million for FY05. This financial relationship between the Air Force and RAND renders RAND unsuitable for conducting the AoA on this multibillion dollar procurement proposal. Given the foregoing, I respectfully suggest that the Air Force not enter into an agreement to procure aerial refueling aircraft until an entity independent of the Air Force--on the basis of a study not funded directly or indirectly by the Air Force--completes the AoA. As always, I appreciate your consideration. Sincerely; John McCain, Chairman. Mr. McCAIN. What I would like to do now is discuss documents, belatedly produced by the Defense Department, that underscore the need for accountability among Air Force leadership regarding the tanker lease proposal. While the total number of documents that the Defense Department has produced remains unsatisfactory, the few that have been produced are compelling. On February 5, 2002, Air Force Secretary Roche personally assured me, in testimony before the Senate Armed Services Committee on the tanker program, that he ``believed in competition,'' and ``would come back to Congress'' if another competitive proposal was particularly good. Secretary Roche's e-mails, however, suggests that he is indeed a man who allows his personal animus to stifle competition. For example, on September 5, 2002, Darleen Druyun wrote to Secretary Roche, ``I read with disgust the article on Airbus tankers from the new EADS CEO of North America. What BS . . . should not have been surprised at the slime . . . his day of reckoning will come hopefully.'' Secretary Roche answered, ``Oy. I agree. I had hoped you would have stayed and tortured him slowly over the next few years until EADS got rid of him!'' This is from the guy who says he believes in competition. His personal contempt for one defense contractor, and particularly its CEO, is clearly reflected in his other e-mails. For example, on August 7, 2002, when Secretary Roche learned that Ralph Crosby, with whom Secretary Roche once worked at Northrop Grumman, was appointed to the head EADS' North American operations, Secretary Roche wrote to his special assistant, William Bodie: Well, well, we'll have fun with Airbus. The day after, William Swanson at Raytheon asked Secretary Roche: Did you see the notice on Ralph in EADS? Secretary Roche responded: Right. Privately between us: Go Boeing! The fools in Paris and Berlin never did their homework. And, Ralphie is the CEO and chairman of a marketing firm, for that's all there is to EADS, North America. The [Air Force] has problems with EADS on a number of levels. The widespread feelings about Crosby and the Air Staff, Jumper especially, will only make their life more difficult. Smiles. On September 4, 2002, Mr. Bodie wrote Secretary Roche complaining about statements EADS issued about its tanker proposal: We don't have to turn the other cheek, you know. I'm ready to tell the truth about Airbus' boom, footprint, and financial shortcomings. But maybe we should sleep on it. In response, Secretary Roche wrote: No, sir, save it and blow him away. He admits they were not technically qualified! And, we keep their record of bribes as our trump card! This is the Secretary of the Air Force communicating with an assistant of his saying ``we keep their record of bribes as our trump card.'' Remarkable. Taken together, these documents inject serious doubt into Secretary Roche's commitment to competition in contracting, about which he assured me in congressional testimony. During hearings on the controversy in the Senate Commerce Committee and the Senate Armed Services Committee, I expressed concern about Secretary Roche asking Boeing to pressure dissenting elements within the Office of the Secretary of Defense into playing ball on tankers. However, in congressional testimony, Secretary Roche categorically denied this. For example, at a September 3, 2003, Commerce Committee hearing, I asked Secretary Roche about a Boeing e-mail dated 23 June 2003, ``Subject: Roche Meeting 23 June 2003.'' In particular, I asked Secretary Roche: Do you have any recollection whatsoever of telling . . . anyone . . . from Boeing to put pressure on [Acting Assistant Secretary for Acquisitions] Mike Wynne to convince [Program Analysis, and Evaluation] to write a new letter essentially undoing the first letter [which criticized the proposal]? After significant waffling, Secretary Roche responded: No, sir. I talked to [PA&E Director] Ken Krieg, and in fact, I told him, ``Don't bother writing another letter.'' We understood these were his arguments. Again, on September 4, 2003, at a hearing before the Senate Armed Services Committee, I asked the same question to Secretary Roche: [[Page S11540]] Do you have any recollection whatsoever of telling . . . anyone . . . from Boeing to put pressure on Mike Wynne to convince PA&E to write a new letter essentially undoing the first letter? I might say that the first letter from this part of the Pentagon was very critical of the tanker lease deal. This time Secretary Roche testified: I did not ask them to put pressure [on Wynne]. Finally, in testimony before the Senate Armed Services Committee on March 2, 2004, Secretary Roche adamantly denied asking the Boeing company to put pressure on Mike Wynne. Secretary Roche said: I've told you there was no pressure. . . .[I] certainly did not tell them to pressure anybody. Secretary Roche's e-mails, however, paint a very different picture. From Boeing's e-mails, here is what we know. In a June 23, 2003, e- mail to Jim Albaugh, who is head of Boeing's defense subsidiary, Boeing executive Thomas Owens described a meeting during which Secretary Roche expressed serious concerns about this letter from Mr. Ken Krieg. Mr. Krieg is the Director of Program Analysis, and Evaluation at the Office of the Secretary of Defense. His letter was key. In that letter, Director Krieg concluded that the original Boeing proposal failed two key Government accounting rules and, therefore, violated the authorizing legislation. According to Mr. Owens's e-mail, Secretary Roche ``ask[ed] [Boeing] to put pressure on [Acting Assistant Secretary of Defense for Acquisitions] Mike Wynne to convince PA&E to write a new letter essentially undoing the first letter.'' Soon after, Dr. Sambur wrote Secretary Roche regarding the PA&E letter saying: Boss, this is getting ridiculous. Secretary Roche wrote to Acting Assistant Secretary Wynne as follows: Ever since Pete-- They are talking about former Assistant Secretary Aldridge-- left, the bureaucrats who opposed the 767 lease have come out of the woodwork to try to kill it--yet, once again, Mike, I won't sign a letter that makes the case that we shouldn't lease the planes. Ken Krieg's memo attached is a cheap shot, and I'm sure has already been delivered to the enemies of the lease on the Hill. It is a process foul. And Ken needs to be made aware of that by you! I can't control the corporate staff on acquisition issues. Mike, this is their way of asserting dominance over you. I know this sounds wild, but animals are animals. Pete had beaten them down. Now, they're taking you on. I'm sorry. Expecting professional behavior from them is something I gave up on a while back. Among other things, they are about to embarrass SecDef-- That is Secretary of Defense-- who having approved the lease, will now have to explain why his staff is destroying the case for it. I'll do whatever I can to help you, Mike, but [it's] your job to get the corporate staff under control. If not now, then they will overrun you whenever you ``don't behave'' according to their desires. This is a game they played for years. [They] and OMB are trying to set the Air Force up to be destroyed by Sen McCain with OSD-- Office of Secretary of Defense-- and OMB-- Office of Management and Budget-- arguments. As you might imagine, I won't give them the chance, but I will make it clear who is responsible to Don [Rumsfeld]. I refuse to wear my flack jacket backwards! This is after testifying before the Senate Armed Services Committee that Secretary Roche never put any pressure on anybody. This is remarkable. Subsequently, Assistant Secretary Wynne reprimanded Director Krieg. In response to an e-mail from Director Krieg that attempted to clear the air, Secretary Roche rather disingenuously answered: Kenny, I love you, and you know that. I think you have been had by some members of the famous PA&E staff. You never should have put what you put in writing. It will now be used against me and Don Rumsfeld. Other e-mails corroborate that Secretary Roche suggested to Boeing that it lobby the Office of the Secretary of Defense to undercut Program Analysis and Evaluation. For example, a December 17, 2002, e- mail from Boeing's top lobbyist Andy Ellis to Rudy deLeon, who heads Boeing's Washington office and served as a Deputy Defense Secretary in 2000 and 2001 described ``some quick notes from Jim [Albaugh]'s meeting today. It instructed, ``Please do not re-distribute this e-mail.'' The e-mail memorialized what was said during ``[a] meeting with Sec. Roche'' as follows: PA&E now a problem on tankers--arguments include price, 767 footprint and prospects for ``used 767s.'' Boeing needs to do more on behalf of tankers in the Office of Secretary of Defense. PA&E working to convince Aldridge to delay--reengine while doing an analysis of alternatives. We should vector hill support for tankers at Aldridge. . . . said he is very comfortable with the price air force has on tanker, and very comfortable with overall deal. It is the right time to do this deal. He is waiting until early January to push on the Office of Management and Budget--wants to deal with the next congress, not the current. . . . Boeing needed to work White House and especially Office of Secretary of Defense. That is from the Secretary of the Air Force. Other e-mails recently produced by the Department of Defense corroborate the shocking dynamic whereby Secretary Roche apparently orchestrated efforts against tanker lease critics within the Office of the Secretary of Defense. For example, in a May 7, 2003, e-mail, Paul Weaver, a Boeing lobbyist and former Director of the Air National Guard, wrote Secretary Roche as follows: Rudy [DeLeon] called me and said that Marv Sambur was getting beat up by Mike Wynne again concerning the $125 million number per aircraft. Rudy would like to know if he needs to do anything like calling in the big guns to help out. I told him I would query you to get your advice. In response, Secretary Roche wrote: It's time for the big guns to quash Wynne! Boeing won't accept such a dumb contract form and price, and Wynne needs to ``pay'' the appropriate price! Now, that is the Secretary of the Air Force talking about another member of the Pentagon in the Office of the Secretary of Defense, Program Analysis and Evaluation: Wynne needs to ``pay'' the appropriate price. I wonder what he was talking about. These e-mails call into serious question whether Secretary Roche was truthful in testifying that he had not directed Boeing to pressure tanker lease critics within the Office of the Secretary of Defense to play ball. During last year's hearings, we released e-mails indicating that Secretary Rumsfeld's policy analysts may have been improperly lobbying the Office of the Secretary of Defense in support of the tanker lease proposal. Another set of e-mails, only recently produced, give a fuller picture of this issue. For example, in an October 9, 2002, e-mail, Darleen Druyun wrote Secretary Roche and Dr. Sambur saying: I would like to informally brief [Defense Science Board Chairman] Bill Schneider on tanker leasing when he gets back from Germany. I had briefed him during the transition about the idea of leasing as a viable acquisition alternative. He has apparently had a positive conversation with Wolfowitz on leasing and is interested in quietly helping us. This is the head of the Defense Science Board, who is supposed to be making decisions about weapons systems and other acquisitions, and he is ``interested in quietly helping us.'' If you give the nod we will use the same charts we used to brief Gingrich which was very positively received by him. Secretary Roche responded: Please do. Thanks much. This e-mail, and others I have released, raise serious questions about the undue influence that industry exerts on procurement decisions in the Pentagon. What is striking here is that in this case, Air Force leadership seems to have been deep in the middle of it. To what I have described already, add the doctoring of documents produced to Congress. After SASC, Senate Armed Services Committee, staff returned from their visit from Tinker Air Force Base in October 2003, they asked for some placards that reflected unusually low failure rates associated with component parts of the KC-135s maintained there. That is the present Air Force fleet of tankers. Shockingly, what the Senate Armed Services Committee staff received were altered versions of what they asked for. I conveyed my concerns about these doctored documents directly to Secretary Roche. In Secretary Roche's February 27, 2004, response to me, he conceded that the information that the Senate Armed Services Committee requested was intentionally deleted. In particular, he explained: [[Page S11541]] As those placards featured ``Tinker-only'' information, and because our installations and logistics professionals strive to present a complete and timely picture of our fleet, they amended the placard file by omitting the ``Tinker-only'' occurrence factors. To add insult to injury, the explanation that the Air Force leadership provided to the press about what happened was different entirely. Furthermore, we have yet to learn who in Secretary Roche's office directed that the information that Congress asked for be doctored before it was delivered. It seems that whatever documents Air Force leadership did not doctor, they improperly withheld. For example, on Friday, September 10, 2004, the White House Counsel's Office and the Office of Management and Budget brought to my staff's attention a very troubling e-mail stream between Secretary Roche and senior OMB official, Robin Cleveland. After Darleen Druyun went to work for Boeing, Ms. Cleveland, the Associate Director for National Security Programs, represented the Government in negotiating with Boeing on the tanker lease proposal. In this e-mail stream beginning on May 9, 2003, Ms. Cleveland asked Secretary Roche to help her brother get a job at Northrop Grumman. The e-mail said: Jim, this is my brother's [Peter Cleveland's] stuff. I would appreciate anything you can do to help with NG-- that means Northrop Grumman-- He is an incredibly hard working, disciplined guy--worked full-time, with two little kids, putting himself through law school at night. I would be grateful. Thanks very much. Robin About half an hour later, Secretary Roche gave Mr. Cleveland's resume and cover letter, and, under color of his office and title, vouched for him to Steve Dyslas, a Northrop Grumman executive: I know this guy. He is good. His sister (Robin) is in charge of defense and intel at OMB. We used to work together in senior staff. If Peter Cleveland looks good to you, pls [sic] add my endorsement. A few minutes later, Secretary Roche wrote Ms. Cleveland in an e- mail: Be well. Smile. Give me tankers now. (Oops. Did I say that? My new deal is terrific.) Now, the person who is responsible for overseeing the national security programs at the Office of Management and Budget, the watchdog of all the budgetary issues in America, that one specifically charged with overseeing tankers, asked the Secretary of the Air Force to get her brother a job. He, under his title and name, contacts the defense corporation that does business with the U.S. Air Force and asks them to give Ms. Cleveland's brother a job, and then after sending it, sends an e-mail back to Ms. Cleveland: Be well. Smile. Give me tankers now. (Oops. Did I say that? My new deal is terrific.) On May 15, 2003, Ms. Cleveland responded to her brother in an e-mail entitled: ``Interview at NG,'' saying, ``Great. Hope it works before the tanker leasing issue gets fouled up.'' Until these e-mails were brought to our attention by the White House, we never even knew about them. In a meeting with me on September 13, 2004, White House Counsel Judge Alberto Gonzales told me that someone in Secretary Roche's office concluded that these e-mails were a joke and therefore they did not need to be produced. That has to be taken in the context that they told me that they would give me these e-mails as part of our oversight responsibility. The Secretary of the Air Force decided the e-mails that I just cited were not relevant to the tanker deal. So if there is some level of mistrust that exists between me and my office and the Secretary, maybe that clears up that degree of mistrust a little bit. Given all the scandal and controversy surrounding the tanker lease proposal, and especially given the keen interest that Chairman Warner and I have expressed regarding potential Air Force misconduct, the unilateral decision made by Air Force leadership to withhold this document is profoundly disturbing. Keeping a defense contractor's ``record of bribes'' as a ``trump card''; ``torturing'' a defense contractor ``slowly''; pressuring dissenting elements within the Office of the Secretary of Defense whose job it was, particularly in the absence of a Defense Acquisition Board--in other words a formal analysis--to vet this procurement program; signing off on a plan to get the chairman of the Defense Science Board to ``quietly help'' on the tanker lease inside the OSD; doctoring and improperly withholding documents requested by Congress: this is the picture that we are getting on what happened with the tanker proposal, and we have received only a few documents from 6 out of 30 people we have asked for. This is the picture we are getting, but no one among Air Force leadership stands up to assume responsibility. Instead, what we get from Air Force leadership is deeply troubling statements in the press about how rosy things are. For example, in a recent op-ed appearing in Defense News, Dr. Sambur describes the current acquisition process as ``healthy'' and ``on track.'' Hoping that Air Force leadership will ``get it'' now may perhaps be too much, when they didn't ``get it'' then. In that context, I find particularly troubling an e-mail from Air Force Under Secretary Teets to Secretary Roche sent just 3 days after Boeing announced the firing of CFO Michael Sears and Vice President Darlene Druyun. In it, Under Secretary Teets writes: Jim, I think it is important for you to know all I know about the situation surrounding the tankers . . . Late Tuesday afternoon I talked to Marv Sambur and got his assurance that a thorough review of the Darlene situation had been completed and there was no way Darlene had any influence on our plan for tankers. Furthermore, Marv said that a letter had been prepared for the DepSecDef to send over to the SASC indicating same, and notifying them of our intent to proceed. So two people are fired by Boeing because of information that has come to light about improper behavior and later the individual pleads guilty in court--in fact, both of them have now pled guilty in court. Ms. Druyun has confessed that she rigged the contracts as a ``parting gift to Boeing'' in behalf of her daughter and son-in-law's employment. Meanwhile, the Under Secretary of the Air Force writes to the Secretary of the Air Force that he talked to Marv Sambur, the Assistant Secretary of the Air Force for Acquisition, and got his assurance that ``a thorough review of the Darlene situation had been completed and there was no way Darlene had any influence on our plan for the tankers.'' I am amazed. I am amazed. One thing is for sure: the final chapter on the tanker lease proposal cannot be closed until all the stewards of taxpayers funds who committed wrongdoing, are held accountable. In order to get a full accounting of what happened on the tanker lease proposal, I will continue to insist that all the documents that the Senate Armed Services Committee has asked for, be produced--no matter how long it takes In closing, Air Force Doctrine Document 1-1 on Leadership and Force Development contains a section setting forth the Air Force's core values. There are three: integrity, service before self, and excellence in all they do. The first, integrity, includes the indispensable characteristics of accountability, responsibility, honesty, and honor. When it comes to Air Force leadership's conduct regarding the tanker lease proposal and related congressional probes, I must however ask: where is the accountability and the responsibility; where is the honesty and the honor; where have these core values been over the past 3 years, and where are they now? To eschew accountability here is to do a profound disservice to the good men and women who wear the uniform of the United States Air Force honorably, capably, and proudly. For those in the public interested in what I have discussed today, I will be posting all of these documents on my website, www.mccain.senate.gov. In closing, the scandal continues to widen. Yesterday one of the competitors of Boeing alleged that information was leaked by Ms. Druyun, and the CEO of Boeing. I don't know if it is true. I doubt if it is true. I have no way of knowing. But the scandal continues to unfold. As I said, we have only received a small percentage of the documents and e-mails that we have asked for. This is a very sad chapter. I was asked last week by a reporter for the Air Force Times if this was personal with me, this issue I have discussed on the Senate floor for the past half hour or so. [[Page S11542]] It is personal in this respect. It is personal that I had the privilege of serving in the U.S. military and wearing the uniform. I believe we always expect not only the same standard but a higher standard of conduct of the men and women who wear the uniform, and the vast majority, 99 and 44/100 percent of the men and women who wear the uniform conduct themselves with the highest degree of honor, courage, and integrity. But here we have individuals who have, obviously, behaved in a less than honorable fashion. That is why it is necessary we get to the bottom of this. Next year, beginning January, we are going to have to look at the whole procurement process as it works today in the Department of Defense, because we have just found out that Ms. Druyun, in her guilty plea, said she was involved in rewarding Boeing on several other contracts, not just the Boeing tanker lease. We have no idea how much money that is. But it brings a profound question here: How could one person do this? How could one person alone in the whole Pentagon--I have forgotten how many thousands of people work there--have done this and they not know about it? If they didn't know about it, what kind of a system is it that allows such a thing to take place, over a period of years? I deeply regret having been involved in this. But I also remind my colleagues that the way this thing started was the insertion in an appropriations bill that was one line that no member of the Senate Armed Services Committee had any knowledge of nor did the Senate Armed Services Committee have a single hearing on before this appeared as a line item in an appropriations bill. That is not the way to do business. I would allege to you right now, if it had gone through the normal authorization process perhaps this whole scandal wouldn't have unfolded the way it did because we would have had a hearing. We would have scrutinized the proposal. We would have gone through the normal process. Instead, we spent 3 years fighting a rearguard action and through the sheerest kind of luck, in many respects, we are able to identify this wrongdoing. I hope we can get to the bottom of this as quickly as possible and find lessons learned, find out how much money we can reclaim, if necessary, on behalf of the taxpayers, so that if, indeed, Ms. Druyun's statement is true--and I have no reason not to believe what she confessed to, that she issued a number of contracts that were detrimental to the cause of the American taxpayer--we can reform the system so this kind of thing can never happen again. I yield the floor.