Senate, House Reject $23 Billion Boeing Tanker Lease Deal

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The U.S. Senate joined the House in rejecting Boeing Co.’s $23 billion bid to lease and sell 100 aerial-refueling tankers to the U.S. Air Force, which may force the company to compete for the program.


The Senate late Saturday unanimously approved a measure to block the deal to lease 20 tankers and buy the rest from Boeing as part of legislation authorizing $420 billion in defense spending for the fiscal year that started October 1.


It was identical to a bill passed by House lawmakers 359-14 earlier in the day.


The bill “brings the Air Force’s plan back to square one,” Senator McCain, the Arizona Republican who has opposed the tanker deal since it was proposed, said in an e-mailed statement.


Defense Secretary Donald Rumsfeld put Boeing’s tanker deal on hold in May. A month before that, former Pentagon acquisition official Darleen Druyun pleaded guilty in a case stemming from the deal. She was offered a job by Boeing while negotiating for the Air Force on the tankers.


Ms. Druyun was sentenced October 1 to nine months in prison on a conspiracy charge. As part of the plea agreement she admitted giving Boeing pricing data during the tanker talks and agreeing to a higher per-plane price than appropriate before she went to work for the company in January 2003.


“Under the bill, the Air Force may not enter into a sole-source contract with Boeing to lease or buy 767 tankers,” Mr. McCain said. It “makes clear that at the end of the day, the Air Force plan to modernize its tanker fleet must be subject to full and open competition.”


Rep. Norman Dicks of Washington state disagreed. Mr. Dicks, a Democrat, represents an area that includes Boeing employees who work in the Everett, Wash., plant where the company builds the basic 767.


“McCain is wrong,” he said in a telephone interview. “Nowhere in the bill does say they have to recompete this.”


Still, because of the Druyun case and questions raised in Pentagon reviews, the agreement will have to be renegotiated, he said.


“We want it cleaner than a Huskie’s tooth,” he said.


Senator Warner, the Virginia Republican who heads the Armed Service Committee, said on the Senate floor that it was his intent to open the tanker program to competition.


Boeing, the second-largest American defense contractor, has been trying for several years to get the tanker lease deal approved. The Chicago-based company, which lost its ranking as the world’s biggest commercial plane maker to Airbus SAS last year, has become more dependent on military business to boost sales.


“We will continue to work with the Air Force to provide a tanker solution,” a Boeing spokesman, Doug Kennett, said in a statement. “The need for new aerial refueling tankers is clear and the path forward is clear.”


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