Under the Radar
The inside story of a Pentagon deal that will cost taxpayers billions
Over the next week, Boeing came back with new numbers that reduced the cost for each plane to $131 million. The White House signed off. Ellis asked Cleveland if the deal was, in fact, for 200 planes, not just 100. "She said YES, that was Andy Card's view of the deal," Ellis wrote. ". . . We may actually be looking at a $35+B [billion] deal with some additional political work." The Air Force's Sambur says Boeing received no promises for more planes. McCain says he thinks there was a tacit agreement: Cut the price, and we'll make it worth your while.
After the White House signed off, Boeing and the Air Force haggled over the fine print. An Air Force lawyer, Ty Hughes, raised questions about the fairness of the deal. He said a 15 percent cap on Boeing profits wouldn't work unless the government could audit the company regularly. But the current lease deal doesn't let the government see Boeing's numbers until about 2012. Boeing went after Hughes--by offering to drop one of its lawyers if the Air Force dropped Hughes. "I suggest we remove the two lawyers who have been working this," a Boeing official told the Air Force. "I want to have a new set of eyes from both sides, or else I fear we will make no progress." The Air Force refused.
Although not all issues were resolved, the Air Force submitted the lease deal to Congress for approval in July. Three of the four congressional committees that must bless the deal have signed off. Senator McCain has scheduled a hearing for this week but is doubful he can stop the deal. "The fix," he says, "is in."
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