Tuesday, June 17, 2008

Forget the GAO, House Defense Appropriators will Determine the Fate of the Air Force Tanker Contract

NSR Memo #101

All eyes are on the Government Accounting Office (GAO) as it prepares to make a recommendation on whether the $40 billion contract to build 179 air refueling tankers for the Air Force was properly awarded to Northrop Grumman / European Aeronautic, Defence, & Space Company (NG/EADS). But the GAO recommendation is just a prelude to the battle that is likely to erupt between House defense appropriators and supporters of the NG/EADS contract. Representative Jack Murtha, a Democrat from Pennsylvania and Chairman of the House Appropriations Committee on Defense (HAC-D), has pledged never to include funding for an air refueling tanker made by NG/EADS in any appropriations bill drafted by his committee. This pledge, fueled by Murtha’s distain of Senator John McCain’s derailing of tanker deal that Mr. Murtha approved four years ago will create a near certainty that the NG/EADS contract will never see a dollar of Congressional funding beyond FY08.

In March 2008, Boeing filed a protest with the GAO claiming that the Air Force had changed contract specifications during the competition for the contract award and claiming that illegal subsidies from European governments had given NG/EADS an unfair advantage. The recommendation concerning Boeing’s protest of the contract award will be delivered on or before the 19th of June.

Jack Murtha Strikes Back

Representative Murtha has been aggressively pushing for an Air Force tanker replacement contract since before 2002 when the HAC-D and the Senate Appropriations Committee on Defense (SAC-D) inserted language that paved the way for the proposed lease of Boeing tankers in the DOD Appropriations Act.[1] Though the language became law, and had the approval of three of the four defense committees in Congress (the SAC-D, HAC-D, and the House Armed Services Committee), the Senate Armed Services Committee (SASC), buried all chances of a lease in 2004 at the urging of Senator John McCain.

McCain had reasons to question the previous tanker deal: the corruption trial of Air Force acquisition official Darlene Druyun, his belief that the KC-135 was not old enough to replace, and his belief that the lease arrangement would cost more than buying the jets outright.

Mr. Murtha disagrees. He claims that “… [McCain’s] stopping [of] what the Air Force had already approved ... is costing billions of dollars” more than it would have if the first tanker deal had gone down the way he intended. [2] Murtha, while he believes that officials inside Boeing and the Air Force who engaged in corrupt activity should have been punished, does not believe the Air Force should have been punished by delaying recapitalization of its aging tanker fleet. Nor does he believe that the American people should have been punished by kicking the “procurement can” further down the road at more expense to the taxpayer.

Like Senator McCain four years ago, Mr. Murtha stands poised to block this Air Force tanker replacement contract. Mr. Murtha has made it clear that he does not plan to include funding for an air refueling tanker made by NG/EADS in any appropriations bill drafted by his committee. At a HAC-D hearing which he chaired on March 5th, he was very clear about his opposition to an NG/EADS contract when he told Air Force officials that they would be powerless to do anything about funding a tanker contract unless his committee provided the appropriation.[3] The basis for Murtha’s statement is found in Article I, Section 9, Clause 7 of the U.S. Constitution which says that “no money shall be drawn from the Treasury, but in Consequence of Appropriations made by law.” This means that not a penny "...can be paid out of the Treasury unless it has been appropriated by an act of Congress.”[4] As long ago as 1850, the Supreme Court ruled that “however much money may be in the Treasury at any one time, not a dollar of it can be used in the payment of anything not… previously sanctioned [by a congressional appropriation].” [5]

Mr. Murtha not only has the power and committee jurisdiction to write a defense appropriations bill that would withhold funding for a NG/EADS contract, he could also go a step further. He could put specific language in the bill that forbids the use of any appropriated funds for the purpose of procuring Air Force refueling tankers from NG/EADS. Were such a bill to become law, NG/EADS would be completely cut off from funding for its tanker program. In United States v. Will and United States v. Dickerson the U.S. Supreme Court confirmed Congress’ right to prohibit the use of funds for a particular purpose in its yearly appropriations bills.[6] Therefore, as Chairman of the HAC-D, Jack Murtha could conceivably block NG/EADS tanker funding, one year at a time, for years to come.

There are Democrats, There are Republicans, and then there are Appropriators

The HAC-D does not engage in partisan infighting like many House committees. Though the solidarity of the appropriators may have eroded slightly since my days as a Defense Assistant to a former Chairman of the HAC-D, members of the committee, under Mr. Murtha, still tend to act in accord with their fellow appropriators and not along party lines when money matters are being considered in Congress. One need look no further than Full Appropriations Committee Chairman Jerry Lewis’ battle with the House Budget Committee in 2006 over spending caps in the FY07 House Budget Resolution to see how appropriators will break with party leadership (even a Speaker as popular at Denny Hastert) to follow their chairman when appropriations committee turf is threatened.[7]

Representatives Norm Dicks of Washington (Democrat) and Todd Tiahrt of Kansas (Republican) both sit on the HAC-D with Murtha. They both have Boeing manufacturing plants in their districts. Their opposition to the NG/EADS contract, along with Murtha’s strong hand on the rudder of the committee, will create a near certainty that the NG/EADS contract, even if approved by the GAO and released from the current freeze by the Air Force, will never see a dollar of Congressional funding beyond in FY08.

Without House support, any bill that goes to the President will not include funds for NG/EADS tanker procurement. Only Senate Defense Appropriations Bill Conference Committee members (if they support NG/EADS, which is not a foregone conclusion – just ask Senator Patty Murray of Washington) would be able to save NG/EADS by convincing the House to support the contract when the two chambers get together to reconcile the differences in their bills. Since the House conferees are typically made up of Mr. Murtha and his committee, a change in the House position at conference is unlikely.

Can Murtha turn Conflict into Compromise?

The Air Force has taken a real beating over the replacement of its old air refueling tankers. When the Air Force awarded a tanker contract to Boeing a few years ago, the SASC scuttled the plan. But now, as a result of this year's Air Force contract award, the Congressional outcry, especially from the HAC-D, will likely scuttle the NG/EADS contract.

All the while, the Air Force need for more tankers grows more desperate. Those being flown today are, on average, over 47 years old. Members of Congress, on both sides of the issue, know that it is essential that new tankers begin to roll off production lines soon. Otherwise, Air Force pilots will be flying 70 year-old tankers before the last of the KC-135s can be replaced years down the road.

All the talk about the GAO and potential court cases is pointless unless the parties involved can find a way to satisfy the Chairman of the HAC-D. In the end, Mr. Murtha may be the only one with the clout, jurisdiction, and resolve to find a way to get a tanker built. The likely result – after both sides see that each has the capability of scuttling the other’s contract – will be a compromise arrangement where no one is happy, but both sides get a piece of a “partnered” Air Force tanker procurement contract. Let's just hope everyone comes to that realization in time enough to build some new tankers in our lifetimes.

[1] Section 8159 (MULTI-YEAR AIRCRAFT LEASE PILOT PROGRAM) of the FY2002 DOD Appropriations Act (P.L. 107-117 of January 10, 2002)
[2] From the 5 March 2008 House Appropriations Committee on Defense open hearing on the Air Force contract award for the tanker replacement program with Ms. Sue Payton, Assistant Secretary of the Air Force for Acquisition and LTG John “Jack” Hudson, ASC Commander and Program Executive Officer.
[3] Ibid.
[4] Cincinnati Soap Co. v. United States, 301 U.S. 308, 321 (1937).
[5] Reeside v. Walker, 52 U.S. (11How.) 272, 291 (1850).
[6] See, e.g., United States v. Will, 449 U.S. 200, 222 (1980); United States v. Dickerson, 310 U.S. 554 (1940). For a recent example of this, see Atlantic Fish Spotters Ass’n v. Evans, 321 F.3d 220, 225, 229 (1st Cir. 2003).
[7] See “House Fails to Agree on Budget; Boehner Retreats,” OMB Watch, http://www.ombwatch.org/article/articleview/3386/1/86?TopicID=1. “What ultimately derailed the negotiations was not a breakdown between moderates and conservatives (although that rift was far from repaired), but Boehner's move to allow a specific proposal requiring that the Budget Committee approve all non-defense emergency spending over $4.3 billion. This proposal angered Appropriations Chairman Jerry Lewis (R-CA), who then publicly stated his opposition to the budget. Lewis was subsequently able to use his sway in the committee to get other Republicans to defect, leaving the party far short of the number of votes it would need in a caucus already divided between two factions--moderates who wanted more discretionary spending and conservatives who wanted less.”

No comments: