[Congressional Record Volume 154, Number 43 (Thursday, March 13, 2008)]
[Senate]
[Pages S2123-S2125]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
KC-X TANKER DECISION
Mr. WARNER. Mr. President, on February 29, 2008, the Secretary of the
Air Force, Michael W. Wynne, announced that the Air Force had made a
selection in the KC-X competition for development and procurement of up
to 179 tanker aircraft, which are urgently needed to support our armed
forces.
This was a critical step forward in the recapitalization of an aging
fleet of aircraft that are essential for force projection,
intelligence, surveillance, and global strike capabilities. A modern
tanker force is at the heart of our national security.
I understand that it was a carefully constructed and transparent
process that the Department of Defense and the Department of the Air
Force structured and faithfully implemented to reach this decision. As
Secretary Wynne said, the announcement ``is the culmination of years of
tireless work and attention to detail by our acquisition professionals
and source selection team, who have been committed to maintaining
integrity, providing transparency and promoting a fair competition for
this critical aircraft program.''
The Boeing Company has filed a protest, as is their right under law,
with the Government Accountability Office concerning the Air Force's
award of this contract to Northrop Grumman. Further, as provided by
law, the GAO will issue their decision within the next 100 days.
I now would like to provide some context and historical background to
the ongoing discussion by reviewing the oversight process employed by
Senate oversight committees beginning
[[Page S2124]]
with the original proposed tanker lease procurement.
Nearly 6 years ago, a $30 billion authorization provision, placed in
the fiscal year 2002 Defense appropriations bill, provided the Air
Force the authority to lease, not purchase, up to 100 767s from Boeing,
a sole source contract, for use as aerial refueling tankers.
Authority to fund and execute this lease required approval of the 4
congressional committees of jurisdiction over defense programs. Three
approved; but, the fourth, the Senate Armed Services Committee,
disapproved.
Under Senate procedure, the chairman of the committees made the
decision for their respective committees. As chairman of Armed Services
at the time, I found fault with the proposed lease contract and after
consultations with Members--in particular Senator McCain, who provided
valuable oversight of the entire process--the committee declined to
approve the proposal.
Additionally, consultations with outside experts had corroborated
that procedures and provisions related to the lease contract required
further oversight by Congress.
Following a full committee hearing on September 4, 2003, I directed
the Department of Defense, by letter to investigate the Air Force's
initial proposal and analyze alternatives that would meet the
operational requirement.
Furthermore, in letters to the General Accounting Office, the
Congressional Budget Office, and the Office of Management and Budget,
among others, I directed that these other agencies provide assessments
of the proposal.
These assessments, as well as further oversight conducted by both the
Senate Armed Services and Commerce Committees, led Deputy Secretary of
Defense Wolfowitz to order a ``pause'' in the execution of the proposed
lease contract.
On December 2, 2003, I sent a letter to the Deputy Secretary to
concur with the decision requiring a ``pause'' in execution, and stated
further:
The Department of Defense Inspector General inquiry should
pursue the trail of evidence wherever it leads, in accordance
with standard IG procedures.
By February 2004, Secretary of Defense Rumsfeld put a ``halt'' to the
entire tanker lease process, pending the DOD inspector general report.
During the following 3 years, the investigative process uncovered
evidence revealing serious, criminal breaches in the very process that
Americans trust to provide their service members with the equipment
necessary to defend our great Nation. In fact, these efforts resulted
in jail sentences for senior persons from the Air Force and Boeing, and
a settlement of $600 million that was paid to the U.S. Treasury.
The findings confirmed--the view of the Senate Armed Services
Committee--that the Air Force's tanker lease proposal was faulty.
Actions by the Congress allowed for the requisite time within which the
executive branch could establish a free and fair competition. This
ultimately resulted in a new proposed contract.
On December 1, 2006, Senator McCain, then chairman of the Airland
Subcommittee, wrote a letter to Robert Gates, then the President's
nominee to be Secretary of Defense. In his letter, Senator McCain
encouraged Secretary Gates to ensure a fair and open competition by
issuing a second draft request for proposals in an effort to make
certain that there was no ambiguity in the competition process. As
chairman of the committee, I concurred with his initiative, given I
have been a very strong proponent of competition.
Since the announcement on February 29, 2008, by the Secretary of the
Air Force with regard to the Department's acquisition decision, there
has been, in my opinion, an injection of considerable misinformation in
the public forum. Consequently, I believe I had an obligation to
recite--and document--portions of the history relative to the debate.
I am particularly concerned about allegations that the proposed
contract would adversely affect job opportunities in America, given
parts of the aircraft would be manufactured abroad.
I draw on my experience as Under then as Secretary of the Navy, 1969-
74, when I solicited bids, for major procurements of fleets of new
aircraft, from an American industrial base of many companies sized,
financed, and experienced to compete.
For many reasons that base, comprised of numerous large domestic
companies, has consolidated and narrowed, but America remains the
preeminent provider for the vast majority of our military procurements.
Today, we also rely on our global partners for a wide diversity of
technologies and support in joint military procurements. A prime
example is the Joint Strike Fighter procurement.
In closing, we must respect the right of Boeing to seek a review by
the GAO as provided by law. It is my judgment that until the GAO acts
and reports to Congress their findings; we should lower the emotional
rhetoric, be accurate with the facts, and withhold judgment of the work
done by a large dedicated group of uniformed and civilian acquisition
specialists.
I ask unanimous consent that several letters be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Committee on Armed Services,
Washington, DC, September 4, 2003.
Hon. Donald H. Rumsfeld,
Secretary of Defense, Washington, DC.
Dear Mr. Secretary: As you know, the Senate Armed Services
Committee held a hearing today on the Department's proposed
lease of 100 KC-767A tanker aircraft. There was a large
attendance of members and an extensive exchange of questions
and views in this hearing that lasted over three hours.
During the course of the hearing, Chairman Warner raised
the option of leasing a smaller number of tanker aircraft--up
to 25--to address the current, short-term need for additional
tankers, to be followed by a traditional procurement, not a
lease, of the remaining tankers, presumably under multi-year
authority. Secretary Roche said that such an option had not
been considered. We would like to draw your attention to
section 367 of the Senate version of National Defense
Authorization Act for Fiscal Year 2004, which requires the
preparation of an analysis of alternatives for the
Department's aerial refueling requirements. While this
language is not directly targeted at the KC-767A lease
proposal, it reflects the thinking of the Senate that other
alternatives should have been considered.
We request that the Department analyze the option of
leasing up to 25 tanker aircraft, followed by a procurement
of the remaining aircraft. Such an analysis should include an
examination of the budgetary and cost implications of various
options for an incremental lease-buy, including an
accelerated exercise of the purchase option in the proposed
lease.
Additionally, given the emphasis on an apparent corrosion
problem in the existing KC-135 tanker fleet, we would
appreciate your providing as with a thorough assessment of
the extent of those corrosion problems and the expected cost
of addressing those problems if tanker aircraft were
purchased according to the previous Air Force plan instead of
leased sooner as more recently proposed. Also, please provide
us with a justification of the Department's decision to pay
$10.3 million per aircraft more than the $120.7 million per
aircraft as determined by the Institute for Defense Analysis
to be a reasonable purchase price.
The Committee will await your reply prior to meeting to
discuss the pending lease proposal.
With kind regards,
Sincerely,
Carl Levin,
Ranking Member.
John Warner,
Chairman.
____
U.S. Senate,
Committee on Armed Services,
Washington, DC, September 25, 2003.
Hon. David M. Walker,
Comptroller General of the United States,
Washington, DC.
Dear Mr. Walker: As you know, the Senate Armed Services
Committee held a hearing on September 4, 2003, to review the
Department of Defense's (DOD) proposed lease of 100 KC-767
aerial refueling aircraft. Testimony by the General
Accounting Office (GAO), as well as GAO's work for the
Congress on this issue over the past year and a half, was
instrumental to the Committee during the hearing.
Subsequent to the hearing, Senator Levin and I asked DOD to
analyze the option of leasing up to 25 aircraft, followed by
a procurement of the remaining aircraft. We also asked for
more detailed pricing information and an assessment of
corrosion problems including the cost of addressing those
problems for the existing KC-135 fleet of aircraft.
The Department has responded to that letter, and identified
several alternative acquisition strategies, with associated
estimates of cost and savings. I ask that the GAO review the
Department's response, a copy of which is attached. Please
provide the Committee with your assessment of the validity of
DOD's assumptions and the accuracy of the cost and savings
estimates, and identify
[[Page S2125]]
any other alternative acquisition strategies the Committee
should consider.
Sincerely,
John Warner,
Chairman.
____
U.S. Senate,
Committee on Armed Services,
Washington, DC, September 25, 2003.
Mr. Douglas Holtz-Eakin,
Director, Congressional Budget Office, 402 Ford House Office
Building, Washington, DC.
Dear Mr. Holtz-Eakin: As you know, the Senate Armed
Services Committee held a hearing on September 4, 2003, to
review the Department of Defense's (DOD) proposed lease of
100 KC-767 aerial refueling aircraft. Testimony by the
Congressional Budget Office (CBO), as well as CBO's work for
the Congress on this issue over the past year and a half, was
instrumental to the Committee during the hearing.
Subsequent to the hearing, Senator Levin and I asked DOD to
analyze the option of leasing up to 25 aircraft, followed by
a procurement of the remaining aircraft. We also asked for
more detailed pricing information and an assessment of
corrosion problems including the cost of addressing those
problems for the existing KC-135 fleet of aircraft.
The Department has responded to that letter, and identified
several alternative acquisition strategies, with associated
estimates of cost and savings. I ask that the CBO review the
Department's response, a copy of which is attached. Please
provide the Committee with your assessment of the validity of
DOD's assumptions and the accuracy of the cost and savings
estimates, and identify any other alternative acquisition
strategies the Committee should consider.
I ask that the CBO provide the results of this assessment
as soon as possible.
Sincerely,
John Warner,
Chairman.
____
U.S. Senate,
Commitee on Armed Services,
Washington, DC, October 2, 2003.
Hon. Joshua B. Bolten,
Director, Office of Management and Budget, Washington, DC.
Dear Director Bolten: On September 4, 2003, Deputy Director
Kaplan testified before the Senate Armed Services Committee
on the proposed Air Force lease of 100 KC-767 tanker
aircraft.
After the hearing, we wrote a letter to the Secretary of
Defense (copy attached) in which we requested three things:
(1) an analysis of the option of leasing up to 25 tanker
aircraft; followed by a procurement of the remaining 75
aircraft; (2) a thorough assessment of the extent of
corrosion problems in the existing KC-135 tanker fleet and
the expected cost of addressing those problems over the
period before purchased aircraft would become available; and
(3) justification and explanation of the Department's
decision to pay $10.3 million per aircraft more than the
$120.7 million per aircraft determined by the Institute for
Defense Analysis to be a reasonable purchase price. Deputy
Secretary Wolfowitz has responded to our letter, a copy of
which is also attached.
Given the importance of this tanker leasing issue, we would
appreciate receiving the benefits of your review of Secretary
Wolfowitz's response. Specifically, do you concur with the
assessments of the advantages and disadvantages of the
various funding options that are portrayed in the Deputy
Secretary's letter, and do you agree with the stated
rationale for paying the price per aircraft as negotiated by
the Air Force? We believe that the Committee needs to hear
your views on this subject before reaching a decision on the
lease. Accordingly, we ask that you provide this matter
prompt attention.
Sincerely,
Carl Levin,
Ranking Member.
John Warner,
Chairman.
____
U.S. Senate,
Committee on Armed Services,
Washington, DC, December 2, 2003.
Hon. Paul Wolfowitz,
Deputy Secretary of Defense,
Defense Pentagon, Washington, DC.
Dear Secretary Wolfowitz: I commend the Secretary of
Defense and yourself for the prompt actions you have taken
regarding the Air Force's tanker aircraft program, in light
of recent extraordinary personnel actions taken by the Boeing
Company. Your decision to require a ``pause'' in the
execution of any contracts to lease and purchase tanker
aircraft is a prudent management step.
Further, I concur in your judgment to task the Department
of Defense Inspector General (DOD-IG) to conduct an
independent assessment. However, I believe that the DOD-IG
assessment should go further than the review described in
your letter of December 1, 2003. The DOD-IG inquiry should
pursue the trail of evidence wherever it leads, in accordance
with standard IG procedures. This inquiry should examine the
actions of all members of the Department of Defense and the
Department of the Air Force, both military and civilian, top
to bottom, who participated in structuring and negotiating
the proposed tanker lease contract which was submitted to the
Congress in July 2003.
Your recent actions clearly indicate that there are many
outstanding questions that must be answered before proceeding
with this program. I expect that you will consult further
with the Congress as you receive the report of the DOD-IG and
that no actions will be taken with respect to the lease and
purchase of KC-767 tanker aircraft until the Congress has had
an opportunity to review the DOD-IG report. Ultimately, this
program, as restructured, must be executed in a manner that
is fully consistent with Section 135 of the National Defense
Authorization Act for Fiscal Year 2004 (Public Law 108-136).
With kind regards, I am
John Warner,
Chairman.
____
John McCain,
U.S. Senate,
Washington, DC, December 1, 2006.
Dr. Robert M. Gates,
President, Texas A&M University,
One Circle Drive, College Station, TX
Re: Tanker Replacement Program
Dear Dr. Gates: Subject to the confirmation of your
nomination, perhaps the most important new major defense
acquisition program for which you will be responsible, will
arise from the replacement of the KC-135 aerial refueling
tanker fleet. As you probably know, this program is currently
valued at about $200 billion.
Given the regrettable history of the Air Force's prior
attempt to recapitalize the fleet, it is vital that this
program obtain the best possible joint aerial refueling
capability at the most reasonable price. In my view, this can
only be achieved by conducting a competition for replacement
aircraft fully, openly and transparently--using objective,
verifiable metrics. More to the point, if this very important
program is to reach production timely, I respectfully suggest
that the final Request for Proposals (RFP) must be
unambiguous and uncontroversial. Unfortunately, I am not sure
we are yet on that course.
In recent correspondence to Deputy Secretary Gordon
England, I conveyed concern about the unprecedented inclusion
of an element related to litigation between the United States
and the European Union Trade Commission currently pending
before the World Trade Organization (WTO), in the draft
Request for Proposals (dRFP). I remain troubled that, without
clarity on how answers to this provision will be evaluated,
this element (and other similarly troubling provisions,
including an overly restrictive invocation of the Berry
Amendment and a questionable extension of ITAR regulations)
may risk eliminating competition before bids are submitted. I
understand that the Department will issue a final RFP on
December 15, 2006.
Recent developments in the program underscore my concerns.
On Tuesday, November 28, 2006, the Air Force held an
Acquisition Strategy Panel (ASP) to review tanker
requirements and select an acquisition strategy for
replacement aircraft. I understand that the ASP selected a
strategy that did not include a ``capabilities-based
acquisition.'' As such, the approach that the ASP selected
appears to deviate from what I understand the Joint
Requirements Oversight Council (JROC) prescribed. I
understand that, in vetting the KC-X Operational Requirements
Document (ORD), the JROC called on the Air Force to consider
tanker aircraft options that maximize cargo and passenger
capacity. But, without a capabilities-based evaluation that
objectively and verifiably measures capability beyond
thresholds in either the primary mission area (aerial
refueling) or other inherently critical missions available
from large aircraft platforms (such as airlift), it is
difficult to see how the JROC's recommendation can be
implemented. As a result, competition may, once again, be
eliminated before bids are even submitted.
Against this backdrop, I respectfully suggest that issuing
a second dRFP, which can address issues raised by all
prospective offerors in their responses to the first dRFP,
and conducting a capabilities-based evaluation, which can
help assure that the warfighter and the taxpayer obtain the
most capable platform at the best possible value, may be
useful.
If you are confirmed, I respectfully ask for the following:
that you withhold releasing the final RFP until you have
provided me with an explanation of how you intend to assure
that the competition for tanker aircraft will be conducted
fully, openly and transparently--particularly in light of the
issues described above.
Sincerely,
John McCain,
Chairman, AirLand Subcommittee.
____________________