The Air Force’s Shameful Tanker Deal

There’s a great story in today’s Post that finally explores in detail an issue that’s been simmering on the Hill for many months now — a deal between the Air Force and Boeing for the procurement of new refueling tankers that seems fishy, to say the least. Some members of Congress (most notably Senator John McCain) have been trying to get this sweetheart deal torpedoed for a while now; it certainly deserves to be, if taken on the merits.

Read the story, it’s got all the details — but here’s the basic issue. The Air Force maintains a fleet of planes that are essentially airliners with the passenger seats ripped out and replaced with giant fuel tanks, for other planes to hook up to in mid-air and re-fill their tanks from. These are un-sexy but highly necessary aircraft, since they allow the Air Force to reach targets from bases thousands of miles farther away than they otherwise would be able to. (Consider that during the recent hostilities in Iraq, many of the bomber missions that hit targets there were actually launched from places like Colorado — there’s no way our bombers could make it from Colorado to Iraq and back without taking on fuel from tankers.)

The controversy comes in because of a deal that aircraft maker Boeing has cooked up to replace the Air Force’s existing tankers with new planes. Boeing, you see, has a bit of a problem. The mainstay of their product line for awhile now has been the 767, a workhorse commercial jet. However, orders for new 767s have tailed off of late, due to a fall in air travel after September 11, and due to tough competition from Airbus Industrie, which persists in building better airplanes for lower prices than Boeing does (damn Europeans!). This meant that Boeing had to find somebody who wanted to buy 767s, since that’s what they had to sell.

So, they approached the U.S. Air Force with a proposal: replace the Air Force’s existing fleet of tankers (KC-135s, which are converted Boeing 707s) with shiny new converted 767s. After all, those KC-135s were sure old, right? And wouldn’t it be nice to have some shiny new planes instead of those boring old ones?

Sure, said the Air Force brass. The only problem was, they couldn’t afford it — there wasn’t room in the budget to buy a whole new tanker fleet, since the existing tanker fleet was doing fine (even an audit from Boeing’s own consultants estimated that the KC-135s could serve until 2040). So Boeing got extra-creative and came back with a twist on their idea — don’t worry, they told the brass, we’ve figured out a way to fit it in your budget. You’re not going to buy the planes, you see — you’re going to lease them.

Yes! This was the big idea — that Boeing would sell the tankers to a shell company, who would them lease them to the Air Force, rather than the Air Force just buying them up front. Now, think of the times when leasing things makes sense in your own life. Generally, it’s when you’re acquiring something you’re pretty certain you’re going to give back in the near term — something like a car you want to trade back in three years later, or an apartment in a city you’re not sure if you’re going to live in long-term. But tankers? Does anybody think that the Air Force is not going to end up keeping these things? And since it’s a lease, it has all the drawbacks of a lease — including a much higher total cost than if you just bought the item outright. So, in other words, we taxpayers are going to be stuck with an enormous bill from Boeing somewhere down the line, so that the Air Force doesn’t have to go through the bother of reworking its budget to fit in its new toys.

I probably don’t have to tell you that the Air Force neglected to do any competitive bidding on this contract, either. Or even to test whether 767s would make particularly good tankers. They’re just gonna take Boeing’s word on the whole cost and suitability-to-task issues.

What a mess. Boeing claims now that they ginned up this whole deal to save jobs, so they wouldn’t have to close the 767 assembly line. (How noble!) But defense contracting isn’t the channel through which to be disbursing welfare payments. If we’re concerned about the assembly-line workers, let’s just pay them their salaries to stay home, like we do farmers. That way we can cut out the middlemen and save on all the executive salaries they’d be skimming. Makes sense to me.

This deal deserves to be taken down hard. Here’s hoping Senator McCain gets the support he needs to make that happen.



October 27, 2003
11:47 am

The main problem is the air force mentality that fighter jets are all that matter. So they spend all the money they on the F-22 Raptor (oh, now it’s the F/A -for attack- 22 Raptor because it could maybe drop one bomb). Meanwhile, the missions that matter most, Transportation and supporting army ground operations, are carried out by 50 year old B-52s, 25 year old A-10s, and 40 year old KC-135s. We’re lucky that Lockheed builds the C-130J in Georgia, because Samm Nunn and Newt Gingrich made sure The Air Force kept buying those workhorses while they were in Congress.
Having said that, the KC-767 is vastly more efficient than the KC-135, it has two fuel efficent engines, (the KC-135 has four engines, based on the 1940s technology used in makeing B-52 engines), carries more fuel than the 135, and can also carry some extra cargo or troops. Also, maintenance on a 40 year old 707 airframe will cost more than maintenance on a 767 frame. The most updated (and therefore most cost-effective) KC-135s will be shifted to the reserves, and the even older planes that the guard and reserve operate will be retired. So the added cost of leasing these tankers will probably be made up by the savings of operating the KC-767 instead of the KC-135. The KC-767 has already been bought by Italy, and Boeing still has a lot more experience in building air to air tankers than Airbus, which has almost none. So I don’t mind the no-bid contract because there is no one to bid with. We should have bought these planes intstead of leasing them, and started buying them a couple of years ago, but we need them and there is no money or time to do it properly. The main villan (this time)is the F-22 and the Air Force’s “single brave knight in the sky” fighter jock mentality, not Boeing. We need to kill the F-22, put the money into more building and maintaining transports, tankers, and ground attack aircraft.
Of course, Boeing isn’t complaining about the F-22 because they are one of the main sub-contractors to Lockheed Martin, and the two companies have complete market power over advanced military aircraft design in this country, and maybe the planet.

Jason Lefkowitz

October 27, 2003
12:09 pm

Heh… no argument here about the F-22. The AF has *lousy* judgment about what its priorities should be. A great example is ditching the A-10 and replacing it with re-fitted F-16s. WTF? I should hope that the A-10’s performance in Iraq embarrassed whoever made that decision. And transports, bombers, etc. are all short changed so that glamour-boy projects like the F-22 can go on.
But I still stand by my contention that this particular deal stinks — there’s just no excuse for the whole leasing arrangement, for one thing; it’s just a shell game designed to shift costs into future budgets rather than dealing with them now.
And while the KC-135 fleet is aging, if Boeing’s own estimates give it 30 years more service life, I don’t see why we can’t take another year or two and just start rolling the purchase cost to buy the things outright into the next defense appropriation. Why not do it the right way, if we’ve got the time?


October 31, 2003
2:28 am

You mean the A-10’s performance in this or the last Gulf War??? Those things have out-performed anything else there is at tank-plinking every time they’ve flown.
-He who grew up under the training flight path of the Devil’s Cross from Myrtle Beach AFB.
That being said, an Air Force that can beat anybody is expensive and needs bombers, transports, tankers, and, yes, advanced fighters that can send the Rafale to sleep just so the frogs know their place and the Russkis don’t make the sort of claims that Frontline was parroting mindlessly in 1990 about the MiG-29. It gives people ideas. Better they not have them. And all that costs money. You want to not use your military, you need to spend on it in peacetime. Otherwise, you “short-change” troops in wartime by only remembering to spend money on them then, when it’s too late. So I won’t vote against the F-22, the A-10, or the KC 767, except to agree that buying beats leasing.
But Bill Clinton and Geo. Bush, Sr. Do Not Need Prescription Coverage!!!! Or health care, for that matter. Up theirs.

John Matheny

July 7, 2005
4:12 pm

…Airbus Industrie, which persists in building better airplanes for lower prices than Boeing does…
That sounds distressing, and I would like a resource for learning more about Boeing’s loss of competiveness.
I cannot fathom letting the French into our defense industry–certainly any more than they have managed to penetrate already. Everytime this country exports jobs and imports workers (or whole factories), it just gives away a little more of its sovereignty. I cannot imagine exporting more US dollars (balance of payments) and thinking that we’ve gained jobs for US workers. Oh, hell, our workers will have the most mundane assembly jobs, and most of the aircraft will ship from Europe as many sub-assemblies and sub-systems. Can we count on the French to provide us with spare parts if they disagree with our policies? Are there any patriots in this country?