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 
  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 
       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 
       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 
       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 
       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 
       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 

[[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 
       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 
       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.
                                                      John McCain,

  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 

       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 
  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-

       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 
  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 
  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,
  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 
  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 
  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.