By: Jen Dimascio

As the Pentagon mounts a new effort to buy $35 billion in aerial refueling tankers, the controversy engulfing the competition could haunt John McCain, the presumptive Republican presidential nominee.

Defense Secretary Robert Gates said Wednesday that the Pentagon will accept new proposals for the competition. It will also make changes to reflect flaws found by the Government Accountability Office in the way the Air Force originally chose Northrop Grumman to make the tankers.

The GAO’s recommendation and the path ahead for the contract will be discussed Thursday before the House Armed Services Air and Land Forces Subcommittee. And along with those issues, the hearing could turn one of McCain’s great strengths — his efforts to tighten the Pentagon’s unwieldy acquisition system — into a never-ending headache, the type of uncontrollable problem that presidential campaigns dread.

McCain helped ensure that Northrop Grumman and its partner, the European Aeronautic Defence and Space Co., remained in the competition against Boeing Co. And Boeing supporters may start asking about his role.

“I have to think there will be some question about the obvious external pressure that this group was experiencing,” said George Behan, spokesman for Rep. Norm Dicks (D-Wash.). The congressman is not a member of the House subcommittee but plans to sit in on its hearing.

“I don’t know who is going to raise that issue,” Behan said, “but it was clear to the GAO that the Air Force really blew it, and one of the reasons was they were under pressure from a very powerful senator.”

The process is beginning anew, with fresh proposals from each of the companies and a new team in charge of picking the winner. In an effort to build confidence among lawmakers, the Pentagon has taken the process away from the Air Force. And the Pentagon’s top weapons buyer, John Young, will award the next contract for tankers as early as December.

As debate over the tankers continues, questions about McCain’s role in the competition aren’t likely to stop with Thursday’s hearing, Behan said. They could dog the Arizona senator through the presidential debates this fall.

“You can see where that’s going to come up at every opportunity,” Behan said.

McCain has a long history with the tanker program. He helped derail an earlier sole-source lease deal with Boeing that ended in a scandal for the company and the Air Force.

Throughout 2006, McCain corresponded with senior Pentagon officials about draft versions of the Air Force’s request for a new tanker. In a September 2006 letter to Deputy Defense Secretary Gordon England, the senator asked whether the draft request for proposals would set a precedent for restrictions on the purchase of goods in foreign countries.

According to the letter, the inclusion of a provision related to World Trade Organization disputes “improperly injects into what should be a full and open competition an element of arbitrariness and capriciousness.”

In early 2007, before the final request for proposals for the tanker competition was issued, Northrop was on the fence about whether it would stay in the game. But after changes were made, Northrop stayed in.

After the contract was awarded, several people who lobbied for EADS later worked for McCain’s campaign. Tom Loeffler, the head of lobbying firm The Loeffler Group, left the campaign after it instituted a new policy on lobbying in May.

McCain’s longtime friend and unpaid campaign adviser, former Navy Secretary William L. Ball, has raised money for the campaign. And Susan Davis, who once lobbied for EADS through Loeffler’s shop, is the campaign’s finance director.

Still, those connections don’t prove any wrongdoing, Richard Aboulafia, an analyst for the Teal Group Corp., said on his personal blog, RichardAboulafia.com.

“No one has been able to connect these four data points and prove that McCain and his lobbyist associates pushed the Air Force into actively favoring the Northrop/EADS plane,” Aboulafia said. “McCain’s office has very skillfully maintained plausible deniability.”

Had Northrop dropped out, Boeing would have been the sole-source provider of aerial refueling tankers — opening the Air Force to questions that plagued the service during the previous tanker-lease scandal.

“Sen. McCain’s leadership and the investigation is a real example of his commitment to taking on the status quo,” McCain campaign spokesman Brian Rogers said, adding that the senator’s role in the tanker deal is a testament to his toughness.

“If the Democrats want to attack John McCain for saving taxpayer dollars, then that’s a fight we’ll take,” Rogers said.

Whether the Senate will hold hearings similar to the one to be held in the House on Thursday is an open question.

Sen. Maria Cantwell (D-Wash.) sent letters Monday to Senate Armed Services Committee Chairman Carl Levin (D-Mich.) and McCain, the committee’s ranking Republican, prodding them to hold closed-door meetings on the tankers.

Levin talked with Gates on Wednesday about the Pentagon’s decision but has not yet decided whether to schedule hearings, Levin’s office said.

Sen. Joseph I. Lieberman (I-Conn.), chairman of the Senate Armed Services Airland Subcommittee and a McCain endorser, is also taking a wait-and-see attitude.

“I haven’t seen a role for the committee to do an investigation, but I will wait and watch for what comes out of the House side,” Lieberman said Tuesday, adding that he has been pleased with the way the process has played out and that there will be a new competition, given that engines from Connecticut-based Pratt & Whitney would be used on the Boeing tankers.

Northrop, which had won the contract, said in a short statement that the “Air Force has already picked the best tanker, and we are confident that it will do so again.”

Boeing, which protested the award, welcomed the redo but said it was concerned that the new competition may “significantly alter” the original proposal.

“It’s encouraging that the Defense Department intends to take steps to ensure a fair and open competition that, among other things, fully accounts for life-cycle costs, such as fuel, to provide the most capable tanker at the best value for the American taxpayer,” Boeing said.

On Capitol Hill, reaction was largely positive, drawing praise from House Speaker Nancy Pelosi (D-Calif.); Rep. John P. Murtha (D-Pa.), chairman of the House Appropriations Defense Subcommittee; and Rep. Rosa DeLauro (D-Conn.), who had written a letter signed by 70 lawmakers calling for a new competition.

Even the Northrop camp was supportive.

Sen. Richard Shelby, a senior Republican member of the Senate Defense Appropriations Committee from Alabama, where Northrop Grumman and EADS are based, emphasized that the GAO upheld only a fraction of Boeing’s complaints.

“This is the best of all options,” Shelby said. “The plan the Department of Defense has come up with is an appropriate solution to remedy the minor procedural flaws the GAO found in the initial award.”

The delegations in Washington and Kansas, two states in which Boeing intends to assemble tanker aircraft, have been the most outspoken in calling for a new competition.

While they, too, praised the decision, they were cautious about the way ahead.

“There must now be a real bid, not a rehash — a rebid that protects our national security, shields the American taxpayer from operating and infrastructure costs, and buys a tanker that can refuel the entire fleet,” Cantwell said.

Rep. Todd Tiahrt (R-Kan.) threatened to withhold funding for the program unless the Air Force chose Boeing or called for new bids. He will watch over the next phase of the competition closely, said spokeswoman Wendy Cook.

Copyright © 2008 Capitol News Company, LLC | Distributed by Noofangle Media