Congressional Record: November 20, 2004 (Senate)
Page S11776-S11789
BOEING 767 TANKER LEASE
Mr. McCain. Mr. President, yesterday I spoke on the Senate floor
regarding the investigation into the Air Force proposal to acquire
Boeing 767 aerial refueling tankers. During my 45 minute remarks, I had
made reference to certain letters, press articles and e-mails I ask
unanimous consent that that material at a cost of $3,200.00 be printed
in the Record of today's proceedings.
U.S. Senate,
Committee on Armed Services,
Washington, DC, Dec. 2, 2003.
Hon. Paul Wolfowitz,
Deputy Secretary of Defense,
Washington, DC.
Dear Secretary Wolfowitz: I commend the Secretary of
Defense and yourself for the prompt actions you have taken
regarding the Air Force's tanker aircraft program, in light
of recent extraordinary personnel actions taken by the Boeing
Company. Your decision to require a ``pause'' in the
execution of any contracts to lease and purchase tanker
aircraft is a prudent management step.
Further, I concur in your judgment to task the Department
of Defense Inspector General, DOD-IG, to conduct an
independent assessment. However, I believe that the DOD-IG
assessment should go further than the review described ion
your letter of December 1, 2003. The DOD-IG inquiry should
pursue the trail of evidence wherever it leads, in accordance
with standard IG procedures. This inquiry should examine the
actions of all members of the Department of Defense and the
Department of the Air Force, both military and civilian, top
to bottom, who participated in structuring and negotiating
the proposed tanker lease contract which was submitted to the
Congress in July 2003.
Your recent actions clearly indicate that there are many
outstanding questions that must be answered before proceeding
with this program. I expect that you will consult further
with the Congress as you receive the report of the DOD-IG and
that no actions will be taken with respect to the lease and
purchase of KC-767 tanker aircraft until the Congress has had
an opportunity to review the DOD-IG report. Ultimately, this
program, as restructured, must be executed in a manner that
is fully consistent with Section 135 of the National Defense
Authorization Act for Fiscal Year 2004 (Public Law 108-136).
With kind regards, I am
Sincerely,
John Warner,
Chairman.
____
U.S. Senate,
Committee on Armed Services,
Washington, DC, Nov. 19, 2004.
Hon. Donald H. Rumsfeld,
Secretary of Defense,
Washington, DC.
Dear Mr. Secretary: On December 2, 2003, Chairman Warner
wrote to Deputy Secretary Wolfowitz to request that the
Department of Defense Inspector General (DOD IG) conduct a
thorough investigation of the KC-767A tanker aircraft
program. According to Chairman Warner's letter ``this inquiry
should examine the actions of all members of the Department
of Defense (DOD) and the Department of the Air Force, both
military and civilian, top to bottom, who participated in
structuring and negotiating the proposed tanker lease
contract which was submitted to the Congress in July 2003.''
A copy of that letter is attached.
It was our understanding that the requested DOD IG review
would assess not only individual responsibility for any
allegations of criminal violations of law; but, equally
important, individual accountability for management decisions
and executive oversight. In essence, the Senate Committee on
Armed Services, in order to conduct its necessary legislative
oversight of the Department of Defense, needs to know what
happened, who was accountable and what actions must be taken
to prevent this situation from happening again.
It is astonishing to us that one individual could have so
freely perpetrated, for such an extended period, this
unprecedented series of fraudulent decisions and other
actions that were not in the best interest of the Department
of Defense.
We recently found out that no such managerial
accountability review has been undertaken by the DOD IG.
Rather, the DOD IG limited his review to determining whether
there was evidence to press criminal charges. We are deeply
concerned by this development. Given the Chairman's letter,
why was a decision made not to do this work?
Congressional oversight of the proposed contract to lease
100 KC-767A tanker aircraft, a contract which is now
prohibited by section 133 of the National Defense
Authorization Act for Fiscal Year 2005, uncovered the most
significant defense procurement scandal since the Ill Wind
bribery and fraud
[[Page S11777]]
cases of the 1980s. It is imperative that the Department take
actions to hold those responsible accountable. Otherwise, the
fallout from this Air Force procurement scandal will have
disastrous effects on the integrity of the acquisition
system.
In our view, an assessment of accountability should include
a review of all members of the Department of Defense and the
Department of the Air Force, both military and civilian, who
participated in structuring and negotiating the proposed
tanker lease contract. Most importantly, this should include
Secretary of the Air Force Jim Roche, and Assistant Secretary
of the Air Force Marvin Sambur. We reiterate the Committee's
request that the DOD IG immediately initiate such an
accountability review.
Again, we do not understand how one individual could have
amassed so much power that she was able to perpetuate such
fraud against the federal government and other actions that
were not in the best interest of the Department of Defense.
Where was the oversight? Where were the checks and balances?
At a minimum, the acquisition chain of the Air Force, and
perhaps DOD, was woefully inadequate. The fact that no
Departmental review of these questions has been conducted
raises significant accountability and oversight questions
that go far beyond this one case. We trust you will endeavor
to rectify the situation and hold those who are responsible
accountable.
Sincerely,
Carl Levin,
Ranking Member.
John McCain,
U.S. Senator.
John Warner,
Chairman.
____
Deputy Secretary of Defense,
Washington, DC, Nov. 19, 2004.
Hon. John W. Warner,
Chairman, Committee on Armed Services,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: As you know, the Department soon will
complete the analysis of alternatives (AoA) for
recapitalization of the KC-135 tanker aircraft fleet, and
that portion of a broader mobility capability study (MCS)
related to aerial refueling. Based upon the recommendations
of the Defense Science Board, I accelerated, to November of
this year, the schedule for completion of these initiatives.
The AoA and MCS will be critical to our development of a plan
to recapitalize the tanker fleet, and to provide adequate
aerial-refueling capabilities for military aircraft over the
long term.
In structuring the AoA and MCS, we recognized that we
should base the recapitalization of the fleet on a thorough
and careful assessment of the ways in which we might perform
the aerial-refueling mission. To ensure that we consider all
viable solutions, the AoA addresses a wide range of
alternatives, from the retention and re-engineering of KC-
135E aircraft to the development of a new military tanker
aircraft.
Let me be clear: After we have selected an appropriate
alternative, we intend to require competition. No matter
which alternative we choose, leasing is not an option without
new congressional authority.
Sincerely,
Paul Wolfowitz.
____
[From the Defense News, Nov. 3, 2003]
Full Disclosure
In March, Defense News published a commentary by Adm.
Archie Clemins, former commander in chief of the U.S. Pacific
Fleet. In it, he advocated a U.S. Air Force plan to lease 100
planes from Boeing Co., which would modify the 767s for the
Air Force's aerial refueling mission. That a Navy man would
back an Air Force program is what made it intriguing.
What we didn't know at the time was that Clemins did not
write the piece. Nor did he think on his own to write it.
Nor, for that matter, did he even think to send it to Navy
Times, a sister publication, without prompting.
In truth, a Boeing representative came up with the idea,
asked Clemins to write it, and provided a writer to help get
the job done. Boeing also suggested where he ought to send it
and provided him the e-mail address.
Clemins says he was not paid for the article and stands by
what it says. We believe that.
But he acknowledged that prior to writing the article, he
had done some paid consulting work for Boeing, and that he
has since developed a more formal consulting arrangement with
the company. He said he made no effort to ``pull the wool
over anyone's eyes.''
In publishing the piece, regardless of who actually wrote
it, we provided a forum for the free flow of ideas. That is
the purpose of our Commentary pages.
But we failed to do some things we should have done. We
should have asked Clemins if he had a financial relationship
with the program or the contractor. We should have asked if
he had, in fact, written the article himself. And we should
have weighed his answers in our thinking, because that
information is essential to the context of his article.
Had we known those things, we might still have published
his opinion. But we would have included the other writer's
name and noted Clemins' relationship with Boeing among his
credentials at the end of the article. As it was, we merely
noted that he was the former commander of the Pacific Fleet--
true, but not the whole story.
Full disclosure is what we're after. Here, we fell short.
We will work hard to ensure this doesn't happen again.
____
[From the Seattle Times, Nov. 18, 2004]
Lockheed Allegations Focus on Boeing's Chief Exec
Lockheed Martin has introduced evidence in a civil lawsuit
that allegedly demonstrates Boeing Chief Executive Harry
Stonecipher knew former Air Force acquisitions officer
Darleen Druyun gave Boeing preferential treatment in the
award of billions of dollars of Defense Department contracts
before she joined the company last year.
Additionally, Lockheed introduced evidence it says shows
Stonecipher and James Albaugh, chief executive of Boeing's
Integrated Defense Systems unit, attended a September 1998
meeting with Druyun and Air Force Col. Richard McKinney in
which Boeing allegedly received details of a confidential
Lockheed proposal to provide rocket launches to the Air
Force.
Druyun received a nine-month prison sentence last month for
holding job talks with Boeing while still overseeing Boeing
business at the Air Force. She further admitted to awarding
more than $5 billion of Defense Department contracts to
Boeing in exchange for jobs for her daughter, her son-in-law
and herself.
Boeing and Stonecipher have been adamant that if Druyun
showed the company any favoritism, Boeing was not aware of
it.
``The statements Ms. Druyun made in her sentencing papers
came as a total surprise,'' Boeing said last month.
However, Lockheed said in a court filing last week that it
has ``an e-mail written by Mr. Stonecipher admitting that
Darleen Druyun had favored Boeing in the past.''
It is not clear from the filing when the e-mail was
written. The e-mail itself was placed under seal by the
court.
Lockheed and Boeing officials could not be reached for
comment.
Lockheed is pursuing a civil racketeering lawsuit against
Boeing in Orlando, Fla., that accuses Boeing of using 40,000
pages of stolen Lockheed documents to gain an unfair
advantage in a multibillion-dollar competition to provide
satellite launches to the Air Force.
Druyun was not tied to that case originally. But after her
guilty plea last month, Lockheed sought Boeing e-mails and
other documents showing contacts between Boeing and Druyun
concerning both the rocket competition and several other
contracts she awarded to Boeing rather than Lockheed.
In October 1998, the Air Force awarded 19 launches to
Boeing and seven to Lockheed.
The Air Force cited Boeing's lower price-per-launch as a
major reason for giving Boeing so many launches.
Lockheed said in last week's court filing that handwritten
notes of the September, 1998 meeting between Stonecipher,
Albaugh, Druyun, McKinney and other Air Force officials
suggest Boeing also received unfair treatment in the award of
those launches by receiving confidential Lockheed pricing
data.
``The fact that high-level Boeing officials discussed their
proposal strategy and Lockheed Martin's pricing with Ms.
Druyun shortly before the final (rocket) proposal submission
is damning,'' Lockheed said.
The meeting notes, taken by David Schweikle, project
manager for Boeing's Delta IV rocket program, were, like the
Stonecipher e-mail, placed under seal.
U.S. Magistrate Judge Karla Spaulding last week agreed to
let Lockheed lawyers question a Boeing representative about
communications with Druyun on six contract competitions,
including the rocket-launch contract.
``It may lead to admissible evidence about whether Boeing
had improperly acquired proprietary information of Lockheed
and others that it discussed with Druyun,'' the judge wrote.
Boeing lawyers objected to the judge's order, and a hearing
was set for next month to resolve the objections.
The Boeing attorneys, in court filings, said Lockheed's
request for information on Druyun is too broad, has nothing
to do with the case and is an attempt by Lockheed Martin to
concoct new complaints against Boeing.
Chief weapons buyer for Air Force quits
WASHINGTON--The Air Force's chief weapons buyer said
yesterday he is resigning to help clear the way for
promotions bottled up in Congress over a stalled $23.5
billion plan to acquire Boeing 767 tanker aircraft.
Marvin Sambur said he had resigned as assistant Air Force
secretary for acquisition effective Jan. 20, or sooner should
President Bush's next choice for the job be confirmed before
then.
``It's becoming pretty apparent that if I stayed it would
be very difficult for the Air Force to have anybody
confirmed,'' Sambur said in a telephone interview.
On Tuesday, Air Force Secretary James Roche resigned in a
move aides said was also designed to free up nominations of
officers whose Senate confirmations were held up by Armed
Services Committee member John McCain, R-Ariz.
McCain had blocked a range of promotions over the Air Force
proposal to acquire 100 Boeing 767 aerial tankers, which he
slammed as a government handout to Boeing.
Sambur was once the boss of Darleen Druyun, who admitted
improperly steering billions of dollars of Air Force
contracts to Boeing before joining the company as a
[[Page S11778]]
$250,000-a-year vice president in January 2003.
A former president and chief executive of ITT Defense,
Sambur oversees the Air Force's $37 billion procurement
budget.
____
[The Wall Street Journal, Sept. 3, 2003]
John McCain's Flying Circus
No one denies that the U.S. Air Force needs more refueling
tankers. The only questions are how and when to get them.
Senator John McCain calls the Pentagon's answer, a leasing
arrangement with Boeing, an unsavory example of the modern
``military-industrial complex,'' a mistaken argument he will
no doubt pursue today at hearings before his Commerce
Committee. It's hard to overestimate the importance of these
flying gas stations. Long-range bombers make it to their
targets only because they can refuel in the air. It was our
tankers that enabled coalition aircraft to circle high above
Iraq's battlefields for hours, providing ground troops with
the capability to call in immediate, precision air strikes on
emerging targets. ``Our tanker force is what makes us a
global power'' is the way the Air Force chief of staff,
General John Jumper, puts it.
Yet for all that power, America's tanker fleet is in sad
shape because the tankers are simply too old to keep flying.
The Pentagon is hoping to remedy this quickly by leasing the
tankers from Boeing, and three of the four relevant
committees in Congress have given their approval to the
contract. The fourth--the Senate Armed Services Committee--
will hold hearings tomorrow. Senator McCain's Commerce
hearings today are his way of trying to preempt approval by
running up his own Jolly Roger.
Let's hope he doesn't draw the fight out too long. The
average tanker is now more than 43 years old. During a visit
last year to Oklahoma's Tinker Air Base, then-Air Force
Secretary James Roche realized the urgency of the problem
when he peeled back the skin of a tanker being refurbished
and found the metal underneath disintegrating.
Age isn't the only problem. Not only will the new Boeing
767s be able to refuel all planes in the military's
inventory--unlike the existing KC 135E's--they carry up to
20% more fuel and three times the cargo. And the leasing
arrangement used to get them to the Air Force is similar to
the way foreign militaries buy planes, selecting off-the-
shelf technology and then signing a contract for rapid
delivery. This is how Israel and Singapore get the latest F-
16s five years before the U.S. Air Force.
We're as opposed to sweetheart deals as anyone. But it
seems to have escaped Senator McCain's notice that Boeing's
main competitor here, the European consortium that produces
Airbus, virtually defines corporate welfare. And so far as we
can tell, the e-mails between Boeing, the Pentagon and the
Air Force released by his committee last week seem to show
only that Boeing was lobbying hard for a multibillion-dollar
deal (surprise!) and that cost was a big concern.
In short, the real issue the Senate Armed Services
Committee needs to zero in on here isn't just overall
lifetime cost but value for money. The Air Force needs
tankers now, and the leasing arrangement was deemed the way
to get tankers into its hands most expeditiously, not least
because it bypasses procurement procedures that could stretch
out a buying decision for years.
Senator McCain and other critics like to talk about what he
says are the billions more that a leasing deal will cost over
buying these birds outright. Leaving aside the huge dispute
over the price tag, let's hope the Armed Services Committee
considers the costs our military might incur by not getting
these tankers as soon as possible.
____
USAF e-mails on Boeing 767 Tanker Lease Proposal
Originator, Date, Subject
Roche, August 07, 2002, FW: Crosby Finds a Home at EADS;
Bodie, Sept 04, 2002, Re: Fw: Defense Week Daily Update:
EADS: Our Tanker Offer Cost Less Than Boeing's; Druyun, Sept
05, 2002, Our friend; Hodges, June 20, 2003, FW: KC-767
``Savings'' for comment & Courtesy Copy of Memo; Wynne, June
23, 2003, Tankers; Weaver, May 7, 2003, 767 Lease; Druyun,
Oct 9, 2002, Tanker Leasing; Calbis, Nov 7, 2001, CBO has
questions about your scoring of the tankers; Roche, Friday,
November 28, 2003, RE: Tankers; Roche, August 8, 2002, Re:
hello?
Albaugh, Wednesday, September 18, 2002 8:03 PM, RE: Marvin
Sambur; Ellis, Tuesday, December 17, 2002 9:36 PM, notes from
jim Albaugh's meetings; Albaugh, Monday, June 23, 2003 3:00
PM, FW: Roche mtg 23 Jun 03; Wynne, Tuesday, July 08, 2003,
Re: 767 and DepSecDef; Roche, Wednesday, April 16, 2003, RE:
Tankers; Roche, Nov 19, 2002, 767 Lease; Roche, Monday,
December 17, 2001 7:24pm, Re: 767 Leasing; Jumper, Tuesday,
February 25, 2003 8:58pm, Re: Offsets for tanker lease;
Wynne, Wednesday, June 25, 2003, RE: OSD(C) AND 767 LEASE;
Lemkin, June 25, 2003, OSD(C) and 767 Lease.
Roche, Tuesday, July 08, 2003 9:44 pm, Re: Footnote; Roche,
Tuesday, July 08, 2003, Lease; Roche, Wednesday, September
03, 2003, Re: Ken Kreig ltr; Wynne, Wednesday, July 09, 2003,
RE: FW: Footnote; Cleveland, 15 May 2003, 1913, Re: Interview
at NG; Jumper, June 22, 2002, RE: CNBC Interview--Tanker
Recapitalization; Sambur, June 17, 2003, FW: USAF Green
Aircraft Pricing; Sambur, October 10, 2002, RE: Tanker
Leasing; Essex, August 03, 2002, FW: Potential OMB Problems
with 767 Lease; Sambur, October 21, 2002, 767 meeting with
OMB.
Sambur, September 11, 2002, 767 Tanker justification;
Sambur, July 25, 2003, Re: SASC Tanker Lease Hearing; Sambur,
November 19, 2003, FW: Tankers; Zakheim, November 25, 2002,
RE: KC-767 Lease Delay; Wynne, July 08, 2003, RE: Footnote;
Walker, August 21, 2003, Re: Revised OMB Circular A-11;
Sambur, November 21, 2003, FW: 767 Update; Walker, Nov. 26,
2002, More Updates from GC; Wynne, June 24, 2003, Meeting;
Wynne, July 17, 2003, Good Luck.
Wynne, November 01, 2003, RE: Two Issues--Tankers and Ship
Funding; Burkhardt & Associates, May 3, 2002, WSJ; Roche, May
14, 2002, RE: Call from Boeing; Bodie, April 25, 2002, RE: US
News; Roche, December 13, 2001, Fw: 767 lease; Roche,
December 13, 2001, RE: Several items; Roche, March 30, 2002,
RE: Tanker story; Custer, March 30, 2002, NDAA; Jumper, April
9, 2002, RE: Tanker Article; Roche, April 28, 2003, RE:.
Bodie, January 2, 2002, RE: Dear Bob; Aldridge, May 16,
2003, RE: Boeing; Roche, May 13, 2001, RE: 767 lease; Bodie,
Friday, June 21, 2002 11:26 AM, RE: CNBC Interview--Tanker
Recapitalization; Druyun, Wednesday, October 09, 2002 8:17
AM, OSD BRIEF TO LEASING WORK GROUP; Wynne, Tuesday, Jul 08,
2003, Re: FW: Footnote; Sambur, Tuesday, July 08, 2003 9:58
PM, Fw: Tanker Leasing Report to the Congress; Sambur,
Tuesday, August 26, 2003 7:59 AM, $2B Issue with PA&E;
Aldridge, Monday, November, 04, 2002 1:22 PM, Tankers and B-
52's; Spruill, Tuesday, November 12, 2002 9:22 PM, RE: Tanker
Leasing.
____
Some of the following records are transcriptions made by
Senate staff of original documents provided by the Department
of Defense.
USAF e-mails on Boeing 767 Tanker Lease Proposal
From: James Roche
To: William Bodie
Date: August 07, 2002
Subject: FW: Crosby Finds a Home at EADS
Well, well. We will have fun with Airbus!
Jim.
From: Miriam Thorin
To: James Roche
Date: August 07, 2002
Subject: FW: Crosby Finds a Home at EADS
Paris.--European Aeronautic Defense & Space Co. NV (N. EAD)
said Wednesday that it has appointed Ralph Crosby to head its
North American operation. Until January, Crosby was president
of Northrop Grumman's Integrated Systems division, EADS said
in a statement.
``As our senior official in the U.S., (Crosby) will oversee
our efforts to expand our business, develop industrial
partnerships, and ensure strong customer relationships in
this critical market,'' EADS said.
Crosby will assume his position on Sept. 1. Manfred von
Nordheim, EADS's current top representative in the U.S., will
continue to work as a senior adviser, the company said.
Cordially,
Alex.
From: Bill Bodie
To: James Roche
Date: Sept 04, 2002
Subj: Re: Fw: Defense Week Daily Update: EADS: Our Tanker
Offer Cost Less Than Boeing's
We don't have to turn the other cheek, you know. I'm ready
to tell the truth about Airbus's boom, footprint, and
financial shortcoming. But maybe we should sleep on it.
W.C. Bodie,
Special Asst. to the Secretary and Director, Air Force
Communications.
From: James Roche
To: Bill Bodie
Date: Sept 04, 2002
Subj: Re: Fw: Defense Week Daily Update: EADS: Our Tanker
Offer Cost Less Than Boeing's
Importance: High
No, Sir, save it and blow him away. He admits that they
were not technically qualified! And, we keep their record of
bribes as our trump card! Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Darleen Druyun
To: James Roche
Date: Sept 05, 2002
Subj: Our friend
I read with disgust the article on Airbus tankers from the
new EADS CEO of North America. What BS . . . should not have
been surprised at the slime . . . his day of reckoning will
come hopefully.
From: James Roche
Date: Sept 05, 2002
Subj: Re: Our friend
Oy. I agree. I had hoped you would have stayed and tortured
him slowly over the next few years until EADS got rid of him!
Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Williams Hodges
To: Marvin Sambur
CC: John Corley; Mark Murphy; Mark Beierle; Stephen Gray;
James T. Rivard; Cheryl Allen; Nancy Lively; Allan
Haenisch
Date: 6/20/2003
Subj: FW: KC-767 ``Savings'' for comment & Courtesy Copy of
Memo
Dr. Sambur: I received a call from Dave Trybula, who works
for Rick Burke in
[[Page S11779]]
PA&E. HE stated he had just delivered a memo to Dr. Roche's
office. I asked him if he could share what they had sent and
he attached the memo in two files, below.
This was a total surprise and not ever mentioned in any of
our discussions with Dr. Spruill or Dr. Schroeder. It appears
that they have simply listed all their positions on the
report and none of the accommodations reach with the leasing
working group. Apparently, they no longer want to be part of
the process.
I propose that we provide you with an email containing our
counterpoints on their assertions, followed by a proposed
response from Dr. Roche back to PA&E.
VR,
Wayne.
From: Marvin Sambur
To: James Roche
Date: June 20, 2003
Subj: FW: KC-767 ``Savings'' for comment & Courtesy Copy of
Memo
Boss: This is getting ridiculous!!!!
Marv.
From: James Roche
To: Michael Wynne
CC: Marvin Sambur
Date: June 22, 2003
Subj: FW: KC-767 ``Savings'' for comment & Courtesy copy of
memo
Mike: Ever since Pete left, the bureaucrats who opposed the
767 lease have come out of the woodwork to try to kill it-
yet, once again. Mike, I won't sign a letter that makes the
case that we shouldn't lease the planes. Ken Krieg's memo
attached is a cheap shot, and I'm sure has already been
delivered to the enemies of the lease on the Hill. It was a
process foul. And Ken needs to be made aware of that BY YOU!
I can't control the corporate staff on acquisition issues.
Mike, this is their way of asserting dominance over you. I
know this sounds wild, but animals are animals. Pete had
beaten them down. Now, they are taking you on. I'm sorry.
Expecting professional behavior from them is something I gave
up on a while back. Among other things, they are about to
cause us to embarrass SecDef, who having approved the lease,
will now have to explain why his staff is destroying the case
for it. I'll do whatever I can to help you, Mike, but it's
your job to get the corporate staff under control. If not
now, then they will overrun you whenever you ``don't behave''
according to their desires. This is the same game they have
played for years. They and OMB are trying to set the Air
Force up to be destroyed by Sen McCain WITH OSD AND OMB
ARGUMENTS. As you might imagine, I won't give them the
chance, but I will make it clear who is responsible to Don. I
refuse to wear my flack jacket backwards!
Sorry, Shipmate. Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Michael Wynne
To: James Roche
CC: Marvin Sambur
Date: June 23, 2003
Subj: RE: KC-767 ``Savings'' For comment & Courtesy Copy of
Memo
Jim: Thanks for your note--I see this as an OSD discipline
problem myself. I will be taking it to the Secretary as
well--better he hear it from two sources.
Mike.
From: Michael Wynne
To: Ken Krieg, PA&E
Date: June 23, 2003
Subj: Tankers
Ken: If the purpose of your note is to run acquisition from
PA&E, we have a problem that needs immediate resolution. I
have plenty of problems, but being `fragged' didn't seem to
be one of them, now I worry. If the SecDef wants to kill this
he will, so far not--your note was not helpful to either one
of us. I will continue to make decisions that have the
potential for successful execution of the lease unless SecDef
waves me off.
Best Regards,
Mike.
From: Ken Krieg, PA&E
To: Michael Wynne
Date: June 23, 2003
Subj: RE: Tankers
Mike: That's not what I intended and I may have used the
wrong instrument to communicate my concerns. I just want to
get together with you and Jim to make sure you understand
what we are worried about. That's why I asked for us to get
together this afternoon.
KJK.
From: Ken Krieg, PA&E
To: James Roche
Date: June 23, 2003
Subj: FW: tankers
Jim: Understand from Doc that you are as mad as Mike. I am
not trying to walk back anything. I am trying to get the
strategy to drive the deal; the deal and contract to set the
numbers; the numbers to be reopened in the report without a
lot of hype.
Probably should have called you but I will explain later.
Want to get together with you and Mike to clear air.
KJK.
Ken Krieg,
Director, Program Analysis & Evaluation and Executive
Secretary, Senior Executive Council.
From: James Roche
To: Ken Krieg, PA&E
Date: June 23, 2003
Subj: RE: Tankers
Kenny, I love you, and you know that. I think you have been
had by some members of the famous PA&E staff. You never
should have put what you put in writing. It will now be used
against me and Don Rumsfeld.
Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Paul Weaver
To: James Roche
Date: May 7, 2003
Subj: 767 Lease
Mr. Secretary: Rudy just called me and said that Marv
Sambur was getting beat up by Mike Wynn again concerning the
$125M dollar number per aircraft. Rudy would like to know if
he needs to do anything like calling in the big guns to help
out. I told him I would query you to get your advice.
God bless,
Paul.
From: Jim Roche
To: Paul Weaver
Date: May 07, 2003
Subj: Re: 767 lease
It's time for the big guns to quash Wynne! Boeing won't
accept such a dumb contract form and price, and Wynne needs
to ``pay'' the appropriate price! Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Darleen Druyun
To: James Roche; Marvin Sambur
Date: Oct 9, 2002
Subject: Tanker Leasing
I would like to informally brief Bill Schneider on tanker
leasing when he gets back from Germany. I had briefed him
during the transition about the idea of leasing as a viable
acquisition alternative. He has apparently had a positive
conversation with Wolfowitz on leasing and is interested in
quietly helping us. If you give a nod we will use the same
charts we used to brief Gingrich which was very positively
received by him.
From: James Roche
To: Darleen Druyun
Date: Oct 9, 2002
Subject: Re: Tanker leasing
Please do. Thanks much. Jim.
Dr. James G. Roche.
From: Philip T. Calbis (OMB)
To: John McClelland, Rob Goldberg
Date: Nov 7, 2001
Subj: CBO has questions about your scoring of the tankers.
John-Joanne Vines from CBO called with questions about your
scoring of the tankers. Specifically how did you get to the
18 billion? Her analysis shows the NPV closer to $20 billion.
I called her back after talking it over with Rob and found
out that she had a copy of your spreadsheet from the Senate
budget committee folks. She was meeting with Boeing and the
AF this afternoon. I asked her not to share your table with
them (she said no problem because she wasn't ready to share
her numbers with them either).
She would like for you to call her tomorrow at 202-226-
5707. Apparently, the Senate budget committee is pressuring
her to see things the AF way so Conrad can do Stevens a
favor. So, talk it over with Rob and give her a call right
back.
From: Jim Roche
To: Robin Cleveland
Sent: 9 May 2003 1712
Subj: Peter Cleveland Resume & Cover letter attached for
export
Be well. Smile. Give tankers now (Oops, did I say that? My
new deal is terrific.) :) Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Jim Roche
To: Stephen Dyslas Northrup Grumman
Sent: 9 May 2003 1620
Subj: Peter Cleveland Resume and cover letter attached for
export/import compliance attorney (DC) position-021495
Steve: I know this guy. He is good. His sister (Robin) is
in charge of defense and intel at OMB. We used to work
together in Senate staff. If Peter Cleveland looks good to
you, PLS add my endorsement. Be well. I've let Rummy con me
one more time! Army! Best to Alice.
Jim.
From: Robin Cleveland
To: Jim Roche
Sent: 9 May 2003 1549
Subj: Peter Cleveland resume and cover letter/Import
compliance attorney (DC) position-02 1495
Jim: This is my brother's stuff. I would appreciate
anything you can do to help with NG. He is an incredibly hard
working, disciplined guy--worked full time with two little
kids putting himself through law school at night. I would be
grateful. Thanks very much, Robin.
From: Robin Cleveland
To: Peter Cleveland
Sent: 15 May 2003 1913
Subj: Re: Interview at NG
Great hope it works before the tanker leasing issue get
fouled up.
From: James Roche SAF/OS
To: Peter Teets Civ SAF/US
Date: Friday, November 28, 2003
Subj: RE: Tankers
Thanks, Pete. We can discuss on Monday.
Jim.
[[Page S11780]]
From: Peter Teets SAF/US
To: James Roche SAF/OS
Date: 11/27/2003
Subj: Tankers
Jim: I think it is important for you to know all I know
about the situation surrounding the tankers. I sat in for you
at the SecDef staff meeting last Tuesday. As we went around
the table, Joe Schmitz (IG) mentioned the Boeing dismissal of
Sears and Druyun. The SecDef then asked if in light of that
should we take a second look at her involvement in any tanker
lease related matters in order to deflect possible criticism
from the SASC and unfavorable publicity. I said I thought
that was a good idea, and that we (the Air Force) would do
so. No further discussion on the subject occurred at the
staff meeting. After the staff meeting I scheduled short
separate meetings with Marv Sambur and Mary Walker for
Tuesday afternoon following my return from a meeting at CIA.
When I returned, I learned that Marv could not meet with me
at the scheduled time because he was in Mike Wynne's office
discussing Darlene's involvement with tankers. I then met
with Mary and asked her to think through the Darlene
situation, plus another matter regarding proper packaging of
material on the AFA situation that Schmitz had said was
required to be delivered to the SASC. Late Tuesday afternoon
I then talked to Marv Sambur and got his assurance that a
thorough review of the Darlene situation had been completed
and that there was no way Darlene had any influence on our
current plan for tankers. Furthermore, Marv said that a
letter had been prepared for the DepSecDef to send over to
the SASC indicating same, and notifying them of our intent to
proceed. At that point, I thought the issue was resolved. On
Wednesday morning I read the Wash Post article quoting Sec
Rumsfeld as saying he had asked his staff to do a review of
the tanker deal. I sent Marv and e-mail offering any help I
could provide, and he responded with thanks, but it was clear
that this situation had once again gotten out of control. I
am sorry to report the news to you, but felt you needed the
whole story as it unfolded.
Best Regards,
Pete.
From: Wynne, Michael Mr. OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Tuesday, July 08, 2003
Subj: Re: 767 and DepSecDef
Jim: I am hoping this is about unity of command.
Negotiations with OMB are down to a footnote. I've sent a
stand-off note to Sen McCain and offered a meeting.
Everyone's nervous as Boss testifies to SASC tomorrow.
Mike.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael, Mr. OSD-ATL
Date: Tuesday, July 08, 2003
Subj: 767 and DepSecDef
Good friend and fellow prisoner of the Corporate Staff,
please keep in mind, and do tell Paul, that neither you nor I
will sign a stupid letter to the Congress regarding the KC-
767's. Last time I checked, you have an IQ greater than room
temperature--and, so do I. PA&E and OMB can kill the deal and
make Pete Aldridge and Don Rumsfeld look like dopes. But, we
shouldn't help them!
As you can tell, I finally got some time on my boat, and am
feeling like my hero, Bull Halsey: Strike Fast, Strike Hard,
Strike Often! Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael Mr. OSD-ATL
Date: Wednesday, April 16, 2003
Subj: Re: Tankers
Sounds good, Mike. Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Wynne, Michael Mr OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Wed Apr 16, 2003
Subj: Re: Tankers
Jim: Thanks for the input--Ralph was in to see me a few
weeks ago, to touch base. I think I will keep this in that
same vein; about if there is anything EADS can do over the
near future to keep their long term prospects open.
Cancelling would not be as soft.
Mike.
From: Roche, James Dr SAF/OS
To: Wynne, Michael Mr. OSD-ATL
Date: Wednesday, April 16, 2003
Subj: Re: Tankers
Mike: One more thing that I forgot to pass to you on the
phone: Don is rarely pissed at the French. Neither you nor I
can attend the Paris Air Show, we are getting into a possible
flap over inviting the Chief of the FAF to a gathering next
September, and you are inviting them in for lunch? Hello?
Within minutes of the invite, Crosby most likely used your
call to butter this personal croissant in Paris, and EADS
would then inform the Que d'Orsay in seconds. Be careful!
Maybe you should consider postponing your lunch . . . Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Wynne, Michael Mr OSD-ATL
To: Roche, James Dr SAF/OS; Sambur, Marvin Dr SAF/AQ
CC: Aldridge, Pete Hon. OSD-ATL
Date: Wed Apr 16, 2003
Subject: Re: Tankers
Jim: I have not told Ralph of the meeting's purpose, as I
wanted your feedback. But where will the competition come
from?
Mike.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael, Mr. OSD-ATL; Sambur, Marvin Dr. SAF/AQ
CC: Aldridge, Pete Hon. OSD-ATL
Date: Wednesday, April 16, 2003
Subject: Re: Tankers
Mike, you must be out of your mind!!! Crosby has lots of
baggage, as does Airbus. We won't be happy with your doing
this!
JGR.
Dr. James G. Roche,
Secretary, US Air Force.
From: Wynne, Michael, Mr. OSD-ATL
To: Sambur, Marvin Dr. SAF/AQ; Roche, James Dr. SAF/OS
Date: Wednesday, April 16, 2003
Subject: FW: tankers
Jim, Marv; I've invited Ralph Crosby in for lunch. Ralph is
the President EAD's US. I am going to ask him how much a
proposal would cost. They came in a couple of weeks ago and
offered to build the majority here in America. You are
welcome to attend, though, it may be best to let me in my
present position do the probing. I will share with you, as I
have in the other case, any findings. I'd suggest that this
be held quietly, but I did want you to be aware. I am not
sure where this will lead, but the benefits of competition
may be revealing.
Best,
Mike.
From: Wynne, Michael Mr. OSD-ATL
To: Sambur, Marvin Dr. SAF/AQ
Date: Wednesday, April 16, 2003
Subject: Tankers
Marv; Some advance work for FY05 budgeting is in order. I
suggest that you begin to probe whether there's sufficient
funding to start a multi-year late in FY04 and in earnest in
FY05. Not that we are done yet, IDA may surface changes that
make it acceptable, but some of the arguments that were
tabled make the case for tanker re-cap compelling.
If I had some spare change hanging around, I'd give another
supplier enough money to make a proposal for this as well.
I'm not saying to buy anything other than a proposal. But, I
think the leverage from that `spare change' would be
enormous. For Boeing, the risk of losing the US tanker
Franchise, no matter what our final intent is would be too
embarrassing. I know the opposition would be vocal as well,
but with the low probability of success, I think paying to
prepare is fair. If chosen we could deduct it from the final
deal.
While these are idle thoughts for now, the discontent
within the administration for what they perceive Boeing's
response for assistance was is not good, and would support
this contrary approach.
Best,
Mike.
From: James Roche
To: William H Swanson
Date: August 8, 2002
Subject: Re: hello?
Oh, really. Mine is probably at ``station 13'' while the
gang goes on August vacation. When I see it in November, I
hope it's all there--and no empty wine bottles in the doors!
Be well.
Jim.
From: William H Swanson
To: James Roche
Date: August 08, 2002
Subject: Re: Hello?
Jim: Understand. Move explains why you and I had issues in
our previous assignments.
Still no red rocket on west coast. It has sat in DC for
2\1/2\ weeks waiting on transportation. I almost called to
borrow (pay for) one of your transporters. It is finally now
on the road and I will see it next Friday. This has been
torture. Yours will be here before I get to see mine!
Bill.
From: James Roche
To: William H Swanson
Date: August 08, 2002
Subject: Re: Hello?
Right. Privately between us: Go Boeing! The fools in Paris
and Berlin never did their homework. And, Ralphie is the CEO
and Chairman of a marketing firm, for that's all there is to
EADS, North America. The AF has problems with EADS on a
number of levels. The widespread feelings about Crosby in the
Air Staff, Jumper especially, will only make their life more
difficult. Smiles.
JGR.
Dr. James G. Roche,
Secretary of the Air Force.
From: William H Swanson
To: James Roche
Date: August 08, 2002
Subject: Re: Hello?
Jim: Sent out the action will try and have late afternoon
or first thing Friday morning.
Did you see the notice on Ralph and EADS?
Bill.
From: James Roche
To: William H Swanson
Date: August 08, 2002
Subject: Hello?
Bill, BAE and ATFLIR? Hello?
Jim.
[[Page S11781]]
From: Jumper, John, Gen AF/CC
To: Roche, James Dr. SAF/OS
Date: Tuesday, February 25, 2003 8:58pm
Subj: Re: Offsets for tanker lease
Good, thanks.
John.
From: Roche, James Dr. SAF/OS
To: Jumper, John Gen AF/CC
Date: Tuesday, February 25, 2003 8:57pm
Subj: Re: Offsets for Tanker lease
Good idea. I'll be honored to join you.
Jim.
Dr. James Roche,
Secretary of the Air Force.
From: Jumper, John, Gen AF/CC
To: Roche, James Dr. SAF/OS
Date: Tue. Feb 25, 2003
Subj: Re: Offsets for tanker lease
Boss, there may be a trap in letting the corporate staff
diddle us on the margins of what they will or won't allow. We
should consider you and me taking this directly to Pete and
Dov, around the corporate staff.
John.
From: Sambur, Marvin Dr. SAF/AQ
To: Roche, James Dr. SAF/OS; Jumper John Gen AF/CC
Date: Tuesday, February 25, 2003
Subj: Offsets for tanker lease
Boss, Chief: We are getting tremendous pressure to show our
offsets for the Tanker lease. As I explained to you in a
previous email, the offset or affordability issue is not as
big a deal as Dov makes it out to be. The Chief has seen the
details and the full details will be briefed to you on
Wednesday at 4pm. The issue is that Aldridge wants a
briefings by Dr. Spruill (co chair of the leasing committee)
at 8:30 am tomorrow and Zakheim wants a briefing at 3:30 pm.
Since we have a good story to tell, I think it would only
cause unnecessary irritation if we refuse to give them the
details until you are fully briefed. Is it OK to allow BG
Johns with Spruill to give the briefing to Aldridge and
Zakheim before you see the full details. The Chief had no
issues and as I explained to you the OSD hot points are in
the 09 time frame and involve an unknown bomber and funding
for LAIRCM.
Thanks!
Marv.
From: James Roche
To: Pete Aldridge
CC: Gen. John Jumper; Marvin Sambur; Bill Bodie
Date: Nov 19, 2002
Subject: 767 Lease
Pete, old Buddy, you have been our strongest supporter on
the issue of the lease. I now hear that your staff is telling
us that you are weakening. Please don't. Here is some food
for thought:
(1) Regardless of OMB, the deal is a good one for the
taxpayer.
(2) Every time we come forward with something good for the
taxpayer, the bureaucrats (including yours) feel that they
have to fight it (job security?)
(3) To delay for two years to do an AOA is simply silly. It
just means two more years of wasted repair costs on the E
models; a waste of taxpayers' money to some beltway bandit;
more bureaucratic delays by PA&E; and an end which is
predictable.
(4) Since neither ships, trucks, or tiny planes can serve
as tankers, we will be looking at big planes. Guess what?
We're already there. We will waste money and have nothing
to show for it.
(5) Hey, we can extend the life of the E's and re-engine
them! We'll that doesn't pass Grant's lieutenant's test: it
means we will be flying 80 year old planes in a few years!!!!
Average age is now between 42 and 44 years. Re-engining won't
solve the inherent catalytic corrosion problem. More waste of
money.
(6) Gee, why didn't we for 50 or 60 or 70 year old Air
Force Ones? How many of our bureaucrats fly in such old
planes? I'm getting used to some in their late 40s, but I'm
not so picky! But, why don't we make the Navy sail 60 year
old destroyers? Or submarines? Because it's dumb.
(7) If we wait, there may not be a 767 line! Hey, can we
covert used ones. Here we go again. We can waste money with
half measurers that are penny wise and pound foolish. Why not
do the same for ships? OK, so we'll be forced to buy French
airplanes.
(8) To kill this idea in OSD is proof that there may be
words like ``acquisition reform,'' but they are hollow. The
bureaucrats want to keep doing things the same old way,
adding little value but lots of costs.
I can only keep my sanity by remembering Andy's advice to
me years ago: ``there are limits to the stupidity any one man
can prevent.'' Off to Okinawa! Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Bill Bodie
To: Jim Roche
Date: Nov 20, 2002
Subject: Re: 767 Lease
Good for you, boss. Aldridge may deny he's been weakening,
but the smoke signals are thick. Aldridge interviewed with
Anne Marie yesterday, and although he wouldn't comment on
specifics of any deal and was keeping an open mind, he
indicated that in general terms he would have concerns about
leasing when/if buying was cheaper. That doesn't jibe with
his previous support for the lease from a NPV/cash flow
management perspective. In addition, the spores seem to be
pushing a ``what's the rush?'' line: buying is cheaper (we
``exaggerate'' the purchase cost of a green 767), therefore
better; such a large expenditure requires more ``rigorous
analysis'' than the back-of-the-envelope assertions by the
AF, hence an AOA; the AF hasn't POM'ed for the lease, so how
serious can we be? There is no ``urgent'' need, because the
AF is starting to retire the E's next year even without an
immediate replacement, so why can't we be more deliberative?
Boeing will still be there, making airplanes, so what's the
rush? Anyway, Airbus could make planes with enough American
content if need be. I rebutted all these arguments with
Jaymie (as you did with Pete), but we might be in the `power'
phase with OSD on this issue. If anyone can talk sense to
Aldridge, however, it's you.
From: James Roche
To: Bill Bodie
Date: Nov 20, 2003
Subj: Re: 767 lease
Importance: high
Right. I'm relaxed on this one. They have to take the
bureaucratic position. Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Roche, James Dr. SAF/OS
To: Druyun, Darleen, SAF/AQ
Date: Monday, December 17, 2001 7:24pm
Subj: Re: 767 Leasing
Darleen, thanks much. I'd like for us not to be embarrassed
on the Third Floor. Also, we will have to see what the final
language looks like. I'll be interested in the numbers, and
whether our resident DeLoitte partner (Nelson) agrees. Jim.
Dr. James G. Roche,
SECAF.
From: Wynne, Michael Mr. OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Wednesday, June 25, 2003
Subject: RE: OSD(C) AND 767 LEASE
Usually opposition is loudest away from the decision
maker--I think progress towards the door will crisp up the
arguments, and allow the release. Keep the team MOOSHHING
forward.
Best,
Mike.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael, MR. OSD-ATL
Date: Wednesday, June 25, 2003
Subject: FW: OSD(C) and 767 Lease
Mike: And, here I thought Stan and the Boys were under
control!
You have more work to do.
Jim.
James G. Roche,
Secretary of the Air Force.
From: Lemkin, Bruce S, SES, SAF/FM
To: Roche, James Dr. SAF/OS; Sambur, Marvin Dr. SAF/AQ
CC: Montelongo, Michael, Civ, SAF/FM
Date: Wednesday, June 25, 2003
Subject: OSD(C) and 767 Lease
Mr. Secretary and Marv: At this morning's Dov Zakheim
meeting with Service FMs, Dov stated that he will not agree
to including an AF position in the Report to Congress that is
different from the OSD position. He directed me to ``tell Jim
and Marv'' that he intends to send SECDEF a memo stating
this. Szemborski piped up that PA&E has ``formally non-
concurred'' to SECDEF.
After the meeting, I got hold of the Leasing Panel co-
chair, Wayne Schroeder, and told him that our position is
that SECDEF has approved the lease-how can one or more of his
staff ``non-concur?''--so, now, it is our obligation to work
together to submit a Report to Congress that uncategorically
supports the lease.
Marv--We in FM are standing by to continue to assist to
break this free. Let me know how else we can help.
VR,
Bruce.
From: Bruce Lemkin [Principal Deputy Assistant Secretary AF,
Financial Management]
To: James Roche; Marvin Sambur
CC: Michael Montelongo
Date: June 25, 2003
Subj: OSD(C) and 767 Lease
Mr. Secretary and Marv: At this morning's Dov Zakheim
meeting with Service FMs, Dov stated that he will not agree
to including and AF position in the Report to Congress that
is different from the OSD position. He directed me to ``tell
Jim and Marv'' that he intends to send SECDEF a memo stating
this. Szemborski piped up that PA&E has ``formally non-
concurred'' to SECDEF.
After the meeting, I got hold of the Leasing Panel co-
chair,
Wayne Schroeder, and told him that our position is that
SECDEF has approved the lease-how can one or more of his
staff ``non- concur?''--so, now it is our obligation to work
together to submit a report that uncategorically supports the
lease.
Marv--We in FM are standing by to continue to assist to
break this free. Let me know how else we can help.
VR,
Bruce.
From: Marvin Sambur
To: Bruce Lemkin; James Roche
CC: Michael Montelongo
Date: June 25, 2003
Subj: RE: OSD(C) and 767 Lease
Bruce: We have made every compromise possible. I do not
understand Szembroski's position. I spoke to his boss this
morning and I thought they were rewriting the non-concur. In
any event, we are submitting the report this afternoon. I
added a line the OMB wanted (lease decision was predominantly
made due to schedule). However, I am not moving off the
position that the fair market
[[Page S11782]]
purchase price is $138.4 (not $131M which requires that we
give them the money 4 years ahead of delivery) and that the
lease is a wash art purchasing from a financial point of
view. I will not give your enemies the tools to bury us!
Marv.
From: Roche, James Dr SAF/OS
To: Sambur, Marvin DR SAF/AQ
Date: Tuesday, July 08, 2003 9:44pm
Subj: Re: Footnote
Marv, what about my just adding my language? Why not? It's
my letter. Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Sambur Marvin Dr SAF/AQ
To: Roche James Dr SAF/OS
Date: Tue Jul 08 2003
Subj: Re: Footnote
Boss: Our introduction makes that point that the lease is
the fastest way to get tankers given our funding constraints.
What they are forcing us to say is that IF congress gave us
permission to PURCHASE under the same MYP terms as the lease,
then the lease is DUMB financially.
Robin wanted it in the text and Mike got her to accept it
as a footnote. Wynne is not willing to go further. My point
is that Mike has tossed the bomb back to us in a take it or
leave it terms. He claims that we will still win and our
enemies know about this already. I spoke to Dicks last week
and he told me to hold firm and not to go along with Robin. I
want to check again.
Marv.
From: Roche, James Dr. SAF/OS
To: Durnan, Jaymie CIV OSD
Date: Tuesday, July 08, 2003
CC: Bodie William C Civ SAF/OS
Subj: Lease
Jaymie, Mike Wynne has fallen for Cleveland's line that our
letter must show the bogus calculation which is NPV negative
by $1.9 billion.
Why bogus? If we had the budget, we wouldn't need to turn
to a lease. But, we don't. Thus, to assume that it exists
(wrong premise), and then to assume the Congress passed
legislation which it didn't, and then to condemn ourselves in
writing by stating the calculation based on a fantasy simply
is crazy. It is a bureaucratic trick to make a fool out of
Don as well as the Air Force. All this was ``resolved'' by
Pete Aldridge before he left. To quote him: ``We need to go
forward with DoD's position. If OMB wants to comment, let
them.''
Point: we are running aground because PA&E and OMB want me
to sign a suicide note. BUT I WILL NOT. This whole drill has
gotten out of hand! Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Roche, James Dr SAF/OS
To: Wynne, Michael Mr. OSD-ATL
Date: Wednesday, September 03, 2003
Subj: Re: Ken Kreig ltr
Keep the faith, Baby, we'll need it tomorrow. Please be
prepared to tell the SASC that we did discuss whether or not
to do an AOA, and that one isn't required. Further, Sen
McCain thinks Schmitz is an authority on the subject! Jim.
Dr. James G Roche,
Secretary of the Air Force.
From: Wynne, Michael Mr. OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Wed Sep 03, 2003
Subj: Re: Ken Kreig Ltr
James, You are nearing sainthood, inspite of your youth. I
think your sidebar with Tony C. Made a difference.
Best Regards,
Mike.
From: Wynne, Michael, Mr. OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Wednesday, July 09, 2003
Subj: RE: FW: Footnote
I can only repeat that you are actually winning. To change
subjects, the F-22 DAB went reasonably well, and will lead to
a second IPR and decision DAB in September. I complimented
Rick Lewis, and Tom Owen, but told them not to let up.
September will come quickly.
Best,
Mike.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael Mr. OSD-ATL
Date: Wednesday, July 09, 2003
Subject: RE: FW: Footnote
Mike, thanks for your candor. I will only add to the
footnote of the letter I sign that ``the funds to execute
such an alternative could not be made available without
harming combat capability.'' Then, no one can accuse Don of
``wasting'' $1.9B of taxpayer money. Stan Crock's article is
another in a long series on varying issues where my friend
missed the point. Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Wynne, Michael, Mr. OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Wednesday, July 09, 2003
Subj: RE: FW: Footnote
Jim--Good on Pete--he left before the fight--I believe that
this is a fair display. This is a footnote to a lengthy text,
and offers a bone to the critics recently in Business Week
who say that you and we tortured the economic argument to get
what we want. I believe that addressing this point in this
fashion takes the teeth out of their criticism. This will not
embarrass at all the Secretary, as I would not even have
considered it otherwise. This followed one full week of
negotiation to remove it from the text and get it to only
footnote status.
My advice to you is to take the deal as written, sign it
out of this Building--get the term waiver, and let the House
and Senate proponents, do their magic. I think you have a
major victory, and are letting a minor math point get in
front of a major policy win.
Best,
Mike.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael, Mr. OSD-ATL
Date: Tuesday, July 08, 2003
Subject: RE: FW: Footnote
Mike, it's not that easy for you. Pete resolved these. You
don't want to be put in a position of embarrassing Don; nor
do I. If I refuse to sign, you will have to explain it
anyhow! We should present DoD's position and let OMB add the
bogus point not us. Bogus because we DON'T HAVE THE $$$ NOW
WITHOUT GIVING UP COMBAT CAPABILITY! This was Pete's
argument. We turned to a lease because of this reality. The
footnote to which you agreed? NEVER mentions this point!
That's just not wise. Don't you agree? Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Wynne, Michael, Mr. OSD-ATL
To: Roche, James, Dr. SAF/OS
Date: Wednesday, July 08, 2003
Subj: RE: FW: Footnote
Jim: I am out of this now--though I will front what you
want. As a footnote, this could be any number, not one that
either you and I must defend. At this juncture, it's up to
you to sign or not. I hope you think it over and get it out
of the building.
Best,
Mike.
From: Roche, James Dr. SAF/OS
To: Wynne, Michael Mr OSD-ATL
Date: Tuesday, July 08, 2003
CC: Sambur Marvin Dr. SAF/AQ
Subj: Re: FW: Footnote
Mike, I don't like it. Why? Because we don't agree with the
calculation! As important, it fails to give an alternative,
lease supportive case where the NPV is positive! If the
addition to the footnote added: ``. . . Similarly, if blah
blah, then the NPV would favor a lease by $$$.'' As this
stands, it is embarrassing to you, me, and the Sec Def.
Senator McCain and others who oppose the lease will leap to
this number! Why is this so hard for you to see, Mike?
Further, the footnote missed Pete Aldridge's point that this
is a hypothetical since the Air Force doesn't have the BA to
enter into such a multi year contract, even if the Congress
bent its rules to do so without limited production!
Marv, what do you think? Please get together with Mike to
come up with a more palatable and balanced version of the
footnote.
Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Wynne, Michael Mr OSD-ATL
To: Roche, James Dr. SAF/OS
Date: Tue Jul 08, 2003
Subject: FW: Footnote
Jim: I've gotten the 1.9B relegated to a footnote and I've
made an agreement with OMB so that we can proceed. You can
sign it in the morning if you agree if not I'm not sure what
to do. Meeting with DSD went fine. Most are hoping that you
refuse to sign. I told them not so fast.
Best,
Mike.
From: Spruill, Nancy Dr. OSD-ATL
To: Wynne, Michael Mr. OSD-ATL
Date: Tuesday, July 08, 2003
CC: Spruill, Nancy, Dr. OSD-ATL
Subject: Footnote.
Mike: This is what I've copied for your convenience.
Thanks,
Nancy.
The Footnote is to the sentence that says: Applying the A-
94 test, it was determined that the net present value of the
multi-year lease option and a traditional purchase option
results in a NPV favoring a purchase of $150 million, as
shown in Table 1[1].
Footnote: [1] In evaluating the net present value of the
lease and purchase options as required by OMB Circular A-94,
the Air Force relied on the availability of multi-year lease
authority granted by Congress in 2002 Defense Appropriations
Act. Had the Congress chosen instead to provide multi-year
procurement authority the NPV could favor purchase by up to
$1.9 billion. While this information affords a measure of
clarity in an equitable comparison of terms and NPV, it is
provided with the understanding that multiyear procurement
authority was not available and therefore not a viable option
for the Administration's analytical consideration.
From: John Jumper AF/CC
To: William Bodie SAF/OS; James Roche SAF/OS
Date: June 22, 2002
Subj: RE: CNBC Interview--Tanker Recapitalization
Great themes, thanks. JJ.
[[Page S11783]]
From: William Bodie SAF/OS
To: James Roche SAF/OS; John Jumper AF/CC
Date: June 21, 2002
Subj: FW: CNBC Interview--Tanker Recapitalization
We've got Loren doing the Lord's work again. ``3rd Party''
support at its best.
From: T124C41
Sent: Friday, June 21, 2002 10:55 AM
To: carey
Cc: william.bodie
Subject: CNBC Interview--Tanker Recapitalization
To: Mac Carey
From: Loren Thompson
Date: June 21, 2002
Subj: CNBC Interview--Tanker Recapitalization
Last Monday I was interviewed by CNBC for an upcoming
segment on the Air Force tanker leasing controversy. I talked
to CNBC anchor Marsha McCallum yesterday, and she said the
segment is due to air at 3:15 pm on Monday. Senator McCain
will also be on the segment.
CNBC will only use a small portion of what I said. For the
record, though, here are the ten themes I told her, in some
cases several times:
(1) Tankers are essential enablers of American military
power, and will become more so as our network of overseas
bases continues to shrink.
(2) Every bullet and bean America delivered to Afghanistan,
not to mention every soldier and fighting system, got there
on an airplane that had to be refueled in flight by a tanker.
(3) This month marks the 45th anniversary of the first
delivery of a KC-135 tanker to the Air Force, reflecting the
fact that 90% of the tanker fleet has grown quite aged.
(4) The fleet is so old that a third of airframes are in
repair shops or waiting to go there on any given day.
(5) The planes must be replaced, and the Air Force has
determined that the Boeing 767 is the best aircraft to use.
(6) Replacement of over 500 tankers may prove to be the
biggest defense procurement program of this generation.
(7) But even if we begin buying planes at the rate of two
dozen per year, it will take the Air Force 20 years to
replace the fleet--by which time some of the KC-135s will be
at twice their design lives.
(8) Flight hours is a useful indicator of airframe fatigue,
but it tells you very little about the toll corrosion may be
taking on the planes.
(9) Leasing is a common practice among commercial airlines
to mitigate the cost impact of acquiring large aircraft.
(10) Senator McCain--the only critic of leasing in
Congress--will not succeed in blocking a 767 lease because
tanker replacement is critical and he has offered no
alternative to leasing.
Martha and I have actually had a number of conversations
outside the taping, allowing me to repeat some core themes.
She seems thoughtful and open-minded, with no axe to grind.
Incidentally, I told her the lease was the exact opposite of
a Boeing ``bailout''--it's a government attempt to get good
terms from the company by taking advantage of a downturn in
demand for commercial transports.
2004 Defense Planning Guidance directs a review of tanker
replacement options, indicating the issue is now on OSD's
radar screen.
From: Bodie, William C., Mr, SAF/OS
Sent: Friday, June 21, 2002 11:26 AM
To: Roche, James, Dr., SAF/OS
Subject : RE: CNBC Interview--Tanker Recapitalization
We'll track it to see if CNBC gives us a fair shot. Glad
we're doing 737 stuff Monday.
From: James Roche
To: William Bodie
Date: June 21, 2002
Subj: RE: CNBC Interview--Tanker Recapitalization
Good work!
Jim.
James G. Roche,
Secretary of the Air Force.
From: Bodie, William C., Mr, SAF/OS
Sent: Friday, June 21, 2002 11:08 AM
To: Roche, James, Dr., SAF/OS; Jumper, John, Gen, AF/CO
Subject: FW: CNBC Interview--Tanker Recapitalization
We've got Loren doing the Lord's work again. ``3rd Party''
support at its best.
From: T124C41
Sent: Friday, June 21, 2002 10:55 AM
To: carey
Cc: william.bodie
Subject: CNBC Interview--Tanker Recapitalization
TO: Mac Carey
FROM: Loren, Thompson
DATE: June 21, 2002
RE: CNBC Interview--Tanker Replacement
Last Monday I was interviewed by CNBC for an upcoming
segment on the Air Force tanker leasing controversy. I talked
to CNBC anchor Marsha McCallum yesterday, and she said the
segment is due to air at 3:15 PM on Monday. Senator McCain
will also be in the same segment.
CNBC will only use a small portion of what I said. For the
record, though, here are the ten themes I told her, in some
cases several times:
(1) Tankers are essential enablers of American military
power, and will become more so as our network of overseas
bases continues to shrink.
(2) Every bullet and bean America delivered to Afghanistan,
not to mention every solider and fighting system, got there
on an airplane that had to be refueled in flight by a tanker.
(3) This month marks the 45th anniversary of the delivery
of a KC-135 tanker to the Air Force, reflecting the fact that
90% of the tanker fleet has grown quite aged.
(4) The fleet is so old that a third of airframes are in
repair shops or waiting to go there on any given day.
(5) The planes must be replaced, and the Air Force has
determined that the Boeing 767 is the best aircraft to use.
(6) Replacement of over 500 tankers may prove to be the
biggest defense procurement program of this generation.
(7) But even if we begin buying planes at the rate of two
dozen per year, it will take the Air Force 20 years to
replace the fleet--by which time some of the KC-135s will be
at twice their design lives.
(8) Flight hours is a useful indicator of airframe fatigue,
but it tells you very little about the toll corrosion may be
taking on the plane.
(9) Leasing is a common practice among commercial airlines
to mitigate the cost of acquiring large aircraft.
(10) Senator McCain--the only critic of leasing in
Congress--will not succeed in blocking a 767 lease because
tanker replacement is critical and he has offered no
alternative to leasing.
Martha and I have actually had a number of conversations
outside the taping, allowing me to repeat some core themes.
She seems thoughtful and open-minded, with no axe to grind.
Incidentally, I told her the lease was the exact opposite of
a Boeing ``bailout''--it's a government attempt to get good
terms from the company by taking advantage of a downturn in
demand for commercial transports.
2004 Defense Planning Guidance directs a review of tanker
replacement options, indicating the issue is now on the OSD's
screen.
From: Marvin Sambur SAF/AQ
To: Jim Albaugh
Date: June 17, 2003
Subj: FW: USAF Green Aircraft Pricing
Jim: I have been working with Bob to answer a question from
McCain concerning his claim that Continental received a
better deal than the USAF. I asked Bob for a simple statement
that, accounting for inflation and airworthiness directives,
we received a better deal than anyone else. Given the assault
that McCain is mounting on this deal (see attached) and our
claims that we received the best deal, we need such a
statement. Thanks!
Marv.
From: Bob Gower
To: Marvin Sambur SAF/AQ
Date: June 16, 2003
Subj: RE: USAF Green Aircraft Pricing
We have the McCain request. I am traveling to DC in the
morning for Hill visits the next few days. I will take your
response up the chain.
From: Marvin Sambur SAF/AQ
To: Bob Gower
CC: Arlene Marvin
Date: June 16, 2003
Subj: Re: USAF Green Aircraft Pricing
Bob: This is unacceptable. McCain will eat us for lunch.
See attached.
From: Bob Gower
To: Sambur SAF/AQ
Date: 6/16/2003
Subj: USAF Green Aircraft Pricing
Marv: We looked at providing some type of certification for
the ``green'' aircraft pricing and would prefer not to do
this for two primary reasons.
First, we have hurt our commercial airline market enough
through the concessions, profit cap, and most favored
customer clause. To provide an additional measure of
certainty would set a new standard for the Boeing company
that we prefer not to set. All elements of this deal are very
visible and this would not be good for our other markets. Our
best customers have understood the Most Favored Customer
clause because some of them have seen these in the past but
these have been forward looking with no commitment to
historical pricing.
Second, we believe Boeing providing additional commitments
has little or no additional political benefit. I believe that
if the USAF attempted to stand behind a Boeing statement that
our enemies would unjustly attack Boeing's credibility.
Therefore, my proposed solution is for the USAF to stand
behind the facts which I see as:
The USAF is confident we have received a most competitive
price on the basic 767 aircraft. The USAF has ensured this
through multiple means:
(1) We obtained confidential information directly from a
major airline that validates we obtained a very competitive
price from a historical position,
(2) We obtained a Most Favored Customer clause that
protects the USAF on a going forward basis since it requires
Boeing to refund the USAF should they ever sell a 767 for
less than what the USAF paid, and
(3) The USAF has capped Boeing's earnings to ensure the
maximum profits they could
[[Page S11784]]
make are in line with DoD profit guidelines, insuring the
USAF would benefit in the future should cost come in lower
than predicted. Should cost be higher, Boeing bares the risk.
With this firm, fixed price contract and Boeing responsible
for all development costs, we believe this agreement is
unprecedented in its protection for the taxpayer, and insure
not only have we received the best pricing possible, but we
will continue to obtain the best pricing from Boeing in the
future.
Regards,
Bob.
From: Marvin Sambur SAF/AQ
To: Darleen Druyun SAF/AQ; James Roche SAF/OS
Date: October 10, 2002
Subj: RE: Tanker Leasing
Jamie Durnan stopped me this morning to tell me that OMB
``will fight us to the death on the lease.'' I asked why and
he told me that they do not believe our numbers and their
analysis shows that it is better to purchase. (At the leasing
meeting the OMB number was about $50M favorable to purchase
out of about $18B fly away cost.) I told him that we admit
that the deal is probably a push but if we buy according to
the same funding stream as leasing, we only get 6 tankers by
2009 versus 67 by leasing. The quicker delivery acts as an
insurance policy against the unknown effects of aging and
accelerating usage. He thought that was a compelling
argument.
Marv.
From: Bill Essex SAF/AQQ
To: Marvin Sambur SAF/AQ
Date: August 03, 2002
Subj: FW: Potential OMB Problems with 767 Lease
Sir: Our take on the OMB letter to Sen. McCain is below.
Mr. Daniels went out of his way to slam 767 lease even though
he does not really know much about it yet. Looks like an
interesting fight shaping up.
VR,
Bill.
From: Marvin Sambur
To: James Roche
Date: October 21, 2002
Subj: 767 meeting with OMB
Boss: We spent three hours with Robin this AM going over
the issues they highlighted for discussion and additional
data. These topics were: Requirements justification, price of
the green a/c, why our proposal meets the requirements of an
operating lease and a better understanding of the legal
ramifications of a Special Purpose Entity that would hold
title to the tanker a/c. She was quite upset when she learned
from the introductions that Boeing was present to answer any
questions. When we saw her ``angst'' we told her they would
leave or we could have an executive session with government
only participants. She told us the damage was done and did
not take up the options we outlined to her. We invited Boeing
in to respond to questions she and her staff had and frankly
they were very helpful in filling in some details and adding
credibility. This was not a negotiation meeting and Boeing
was only to provide answers on the pricing. I expect she will
express to you her anger over Boeings presence.
Robin and her staff asked for additional data which we are
preparing to send over in the following read: What would the
AF budget look like per FY to purchase the same number of
aircraft being built and delivered under the lease? (The
insurance argument of getting the lease tankers 5 years
earlier with about the same net present value resonated with
her. In addition, the point that Boeing will stop producing
the 767 and if we delay, the price will rise considerable was
also a strong argument to her.) However, they believe our
price for the green a/c is too high and have asked for other
large airline purchases, config and what the discount was
from the list price. Apparently her staff made a bunch of
phone calls and claim their number is lower than ours but she
is the first to admit that she does not know the real
validity behind them. We need to give them the maintenance
costs of the 135s vs. The proposed 767 tankers. She will want
a separate session on tanker termination liability issues. I
believe we probably talked passed each other on this and I
have directed my staff to prepare very clear charts on this
to set the record straight. He also wants a copy of the draft
contract T's and C's. In addition, she directed we rerun the
numbers using a 6 years OMB discount rate in addition to the
15 year period. We have this and will give to them to OMB.
I expect she will call you. We firmly believe the
contractors attendance at the meeting was very helpful but
she will probably blast us for it. We will keep you posted on
our progress.
From: Marvin Sambur
To: James Roche
Date: September 11, 2002
Subj: 767 Tanker justification
Boss: I kicked off the effort to establish a ``need''
justification for the tankers. Hope to have a conceptual
framework ready by the end of the week.
Spoke to Robin after the meeting to tell her that the
economic justification is not a slam dunk for either position
(purchase or lease.) It is more a push and a slight change in
the interest rates can flip the analysis. At the end of the
day, we have to prove that there is a TRUE need and that
there are other advantages to leasing (earlier delivery,
affordability, etc) that make it a good business deal. It is
going to be a tough sell given the other factors such as
liability and indemnification.
Marv.
From: Marvin Sambur
To: James Roche; Scott Custer
CC: Peter Teets; John Jumper; Robert Foglesong; Joseph
Wehrle, William Bodie; John Corley; Janet Therlanos;
Debra Henderson; Warren Henderson; Judy Fedder; David
Rue; Robert Pavelko; Bob Edmonds; Skip Daly; Christopher
Bowman; Gregory Christ; John Handy; Paul Essex; William
Hodges; Michael Zettler; Michael Montelongo; Stephen
Lorenz; Duncan McNabb; Gary Heckman; Kevin Chilton;
Raymond Johns; Ronald Rand
Date: July 25, 2003
Subj: Re: SASC Tanker Lease Hearing
But remember, they can not play the game without the
football and where the football goes determines the end
result!
Marv.
From: James Roche
To: Marvin Sambur
CC: Peter Teets; John Jumper; Robert Foglesong; Joseph
Wehrle, William Bodie; John Corley; Janet Therlanos;
Debra Henderson; Warren Henderson; Judy Fedder; David
Rue; Robert Pavelko; Bob Edmonds; Skip Daly; Christopher
Bowman; Gregory Christ; John Handy; Paul Essex; William
Hodges; Michael Zettler; Michael Montelongo; Stephen
Lorenz; Duncan McNabb; Gary Heckman; Kevin Chilton;
Raymond Johns; Ronald Rand
Date: July 25, 2003
Subj: RE: SASC Tanker Lease Hearing
Yes, but for whom? I always wondered what it would feel
like to be the football! Jim.
Dr. James G. Roche,
Secretary of the Air Force.
From: Marvin Sambur
To: James Roche
CC: Peter Teets; John Jumper; Robert Foglesong; Joseph
Wehrle, William Bodie; John Corley; Janet Therlanos;
Debra Henderson; Warren Henderson; Judy Fedder; David
Rue; Robert Pavelko; Bob Edmonds; Skip Daly; Christopher
Bowman; Gregory Christ; John Handy; Paul Essex; William
Hodges; Michael Zettler; Michael Montelongo; Stephen
Lorenz; Duncan McNabb; Gary Heckman; Kevin Chilton;
Raymond Johns; Ronald Rand
Date: July 25, 2003
Subj: RE: SASC Tanker Lease Hearing
And they are playing the Jets. This is a good omen.
From: James Roche
To: Scott Custer
CC: Peter Teets; John Jumper; Robert Foglesong; Joseph
Wehrle, William Bodie; John Corley; Janet Therlanos;
Debra Henderson; Warren Henderson; Judy Fedder; David
Rue; Robert Pavelko; Bob Edmonds; Skip Daly; Christopher
Bowman; Gregory Christ; John Handy; Paul Essex; William
Hodges; Michael Zettler; Michael Montelongo; Stephen
Lorenz; Duncan McNabb; Gary Heckman; Kevin Chilton;
Raymond Johns; Ronald Rand
Date: July 25, 2003
Subj: Re: SASC Tanker Leasing Hearing
Goodie! The same day as the opening day of Redskins
football! JGR.
Dr. James G. Roche,
Secretary of the Air Force.
From: Scott Custer
To: James Roche
CC: Peter Teets; John Jumper; Robert Foglesong; Joseph
Wehrle, William Bodie; John Corley; Janet Therlanos;
Debra Henderson; Warren Henderson; Judy Fedder; David
Rue; Robert Pavelko; Bob Edmonds; Skip Daly; Christopher
Bowman; Gregory Christ; John Handy; Paul Essex; William
Hodges; Michael Zettler; Michael Montelongo; Stephen
Lorenz; Duncan McNabb; Gary Heckman; Kevin Chilton;
Raymond Johns; Ronald Rand
Date: July 25, 2003
Subj: SASC Tanker Lease Hearing
Sir, looks like 4 Sep for the SASC tanker hearing . . .
with you as the AF witness.
V/R Scott.
From: Robert Pavelko
Date: July 24, 2003
Subj: SASC Tanker Lease Hearing
Just received a telephone call from Mr. Tom McKenzie, SASC
[202-224-9347]. He wanted to give us a heads up the SASC will
be calling a hearing on the AF Tanker Lease.
[[Page S11785]]
Projected date is 4 September in the morning. Witness
invites: SECAF, Director of OMB, and Sec Wynne. His POC is
Bill Greenwalt. 202-224-6778.
V/R,
Robert J. Pavelko.
From: Marvin Sambur
To: James Roche
Date: November 19, 2003
Subj: FW: Tankers
FYI.
From: Scott Custer
To: Marvin Sambur
Date: November 19, 2003
Subj: Tankers
Sir: Mr. Wynne is quoted as saying we would pay up front
not purchase on delivery, that it will probably be 2
contracts, and that the price would likely need to be
renegotiated . . . not helpful. I don't know how this got so
messed up but I think we still need to proceed with the deal
we want . . . and take it to the SASC for their views. And,
we must do it quickly as the pending omnibus may be the only
vehicle left to get any language changes we'll need to make
it work.
V/R,
Scott.
From: Dov Zakheim
To: Marvin Sambur
Date: November 25, 2002
Subj: RE: KC-767 Lease Delay.
I have a simple question? Where is the USAF money to fund
this lease?
From: Marvin Sambur
To: Pete Aldridge; Dov Zakheim
Date: November 22, 2003
Subj: KC-767 Lease Delay
Pete and Dov: I understand the suggestion we delay the KC-
767 lease two years has come up again at high levels within
OSD (though this time without necessarily paying to re-engine
KC-135Es) in order to do a format AoA. As a follow-up to my
recent e-mail on this subject:
A formal AoA will cost money, delay the program two years,
and still come up with the same answer we have today. There
are only a few aircraft that can serve as tankers, they are
already in production, and so analyzing their respective
capabilities and costs won't take long--in fact, it's already
been done and the results passed to OSD. What's left to
study?
For the last 45 days, OSD has had enough data to support a
decision analysis--all they really need is the A-11/A-94
model we provided to determine that the deal is a good one.
A complete contract is not required for OSD to analyze the
lease; contracts are written to match the programs approved
and justified through analysis; our A-11/A-94 model is the
primary analytical tool upon which we are building our
contract; if OSD analyzes the model (which we believe they
have not done), they will be analyzing the proposed program.
If restarted negotiations in 2005 resulted in a real price
increase of just 5%, we will have to drop one aircraft per
year to live within our budget. This will add further cost
and stretch-out the KC-135 recapitalization effort two more
years in addition to the two-year late start.
A 5% price increase due to loss of negotiation leverage
will add more than $700M to the cost of the first 100 KC-
767s.
Bottom line: the penalty for delaying the lease we've
negotiated today could be substantial even without the added
burden of paying for maintaining KC-135Es. Please keep in
mind that the low-cost deal we have today is the result of
negotiating with a manufacturer suffering the impacts of an
industry-wide downturn. That downturn is not expected to
continue for another two years. As the facts show, our
negotiating team got a better deal on these 767s than a major
airline did with theirs with a 20-yr exclusive contract--we
likely won't do as well when the industry recovers. How,
then, would we explain this two-year delay to Congress?
Marv.
From: Michael Wynne
To: Marvin Sambur
Date: July 08, 2003
Subj: RE: Footnote
Marv: At long last, this is the best that I could get--
relegating the non-available comparison to a footnote. I have
been to the speakers office, and they don't care how it
reads, just get it over to congress and let them get it done.
At this point, it is up to Jim to sign or not.
Best,
Mike.
From: Marvin Sambur
To: James Roche; Michael Wynne
Date: July 08, 2003
Subj: Re: Footnote
The primary reason for the lease is because it affords us
the ability to recapitalize faster. By putting in the
footnote, we allow our enemies to stall with the excuse that
the AF should go to Congress and ask for a MYP. The OSD
position is that the financials are a wash, so way cloud the
issue and cause problems. Submit without the footnote and we
will prevail. Submit with the footnote and we have a battle
on the wrong issue that will cause big time delays.
Marv.
From: Mary Walker
To: James Roche
Date: August 21, 2003
Subj: Re: Revised OMB Circular A-11
Boss: I had the same question. It would be nice to say we
comply either way. Will see. Moreover in my opinion, now in
preparation, I could speak to this. You may be asked.
Mary.
From: James Roche
TO: Daniel Ramos
CC: Marvin Sambur, William Hodges, Ty Hughes, Mary Walker,
Janet Therianos, John Jumper
Date: Aug 21, 2003
Subj: Re: Revised OMB Circular A-11
Dan, thanks much. Good work. How does our lease fare under
the new circular? If it fails, then OMB may be in for an
attack from Sen McCain. What dumb time to change the rules!!!
JGR.
Dr. James G. Roche,
Secretary of the Air Force.
From: Daniel Ramos
To: James Roche
CC: Marvin Sambur, William Hodges, Ty Hughes, Mary Walker,
Janet Therianos
Date: Aug 21, 2003
Subj: Revised OMB Circular A-11
Sir: Earlier this week Ms. Walker provided you with a copy
of a revised version of OMB Circular A-11 issued on July 25,
2003. Among other things, the revised A-11 adds new
guidelines for distinguishing between operating leases,
capital lease the KC-767s requires that it be an operating
lease based on the definition provided by OMB ``at the time
of the lease.'' The statute does not state whether ``at the
time of the lease'' means when the lease is signed or when it
was first submitted to OMB for review, so it is possible that
the revised A-11 could apply to the KC-767 transaction. We
immediately engaged with OMB on this issue, and as of this
afternoon OMB has verbally agreed to the following: OMB will
issue a clarifying letter stating that the revised A-11
applies only to transactions approved by OMB after July 25,
2003. At our request, OMB will then issue a letter addressed
to you stating that OMB approved the Air Force KC-767
transaction prior to July 25, 2003, and therefore the revised
A-11 does not apply. OMB plans to issue the clarification
early next week and the letter to the Air Force by the end of
next week. If there is any change to this plan, we will let
you know.
From: Marvin Sambur
To: James Roche
Date: November 21, 2003
Subj: FW:767 Update
FYI.
From: Ty Hughes
TO: Marvin Sambur
CC: Scott Custer, Mary Walker, Daniel Ramos, Ted Bowlds
Date: Nov 21, 2003
Subj: 767 Update
Dr. Sambur: OMB General Counsel called DoD GC this
afternoon and asked for a legislative proposal to address the
obligation of funds for the tanker. OMB also asked what the
Air Force can with respect to obligation of funds if there is
no new legislation.
DoD has prepared language that would allow obligation of
funds upon delivery of the aircraft. The draft language would
solve the problem. It should go over this evening. OMB is
considering offering the language for inclusion in the
Omnibus Appropriations Act.
Without legislation, the DoD fiscal lawyer is still of the
view that the Air Force must obligate all of the funds for
purchase when the aircraft are ordered. We have scheduled
meeting for 0900 on Monday with the DoD lawyers to discuss
this.
Ty Hughes.
From: Mary Walker
To: James Roche
CC: John Jumper, Peter Teets, William Bodie, Janet Therlanos
Date: Nov. 26, 2002
Subj: More Updates from GC
Boss: Welcome back! (With the thought you are reading this
after Thanksgiving . . .) Since I won't be here when you get
in on Monday the 2nd (I'll be on my way to give a speech at
the USAFE JAG conference . . .), I wanted you to have my long
list of accumulated updates so you can be current with the
issues we are working that are of known or suspected
importance to you. Don Fox will be covering for me until I
get back on Dec. 6th. This will fill you in.
767 Tanker Lease (legal issues):
While most of the lease terms have been agreed upon, a
number of terms have been elevated to SAF. The most important
ones include the following:
(1) A very significant issue just surfaced and may require
us to obtain additional legislation. Boeing representatives
told us the investors need assurance that the Air Force will
not terminate the lease agreement while the aircraft are
under the 3-year construction. We are concerned about the
fiscal consequences of such an assurance since 40+ aircraft
may be in various stages of construction at any one time. We
are analyzing this issue under the limited statutory guidance
for this program and past precedent, which is also limited
because leasing of major systems has been so rare. FI we are
unable to resolve this issue with the staff in DoD GC, we may
need to seek another provision in law to provide adequate
authority to meet our needs.
(2) Boeing wants a clause advising the government of the
tax treatment it wants reflected in the transaction. We have
told them that the tax treatment is a matter between Boeing
and the IRS, not the Air Force.
[[Page S11786]]
Boeing is considering whether to seek a Revenue Ruling or
informal advice form the IRS. If they decide to go that
route, we may want to ask the IRS to expedite consideration
of their request.
(3) The bond rating agency wants the government to agree
not to initiate a bankruptcy petition against the lessor
until one year and a day after the final lease payment. While
we understand this is a standard provision in commercial
aircraft lease, DOJ, not the Air Force, decides when to file
documents (such as bankruptcy petitions). We will ask Boeing
to discuss this matter with the bond rating agency to see if
they can make an exception for a government lessee or lese
tailor the clause in a way that would not bind DOJ. If not,
we will work the issue with Justice.
(4) Boeing also wants indemnification under Public Law 85-
804 for ``unusually hazardous risks.'' You approved such
indemnification in the case of the 737 lease. However,
Boeing's request is now broader and the company seeks
indemnification for the lender and officers of the various
entities involved. The Air Force has not provided such broad
indemnification in the past. We are currently reviewing
whether we have the legal authority to do this and then there
is the policy issue of whether this is something we want to
consider. We also are working on the definition of unusually
hazardous risk in this case.
From: Michael Wynne
To: James Roche
Date: June 24, 2003
Subj: Meeting
Jim: Thanks for hosting on Tankers--flavor just right, but
I may need to borrow that reverse flak jacket yet.
Best,
Mike.
From: Michael Wynne
To: James Roche
Date: July 17, 2003
Subj: Good Luck
Jim: I wanted to say again congrats to get to the next
phase fight on Tankers, likely less than the fight so far.
Good Luck as well on the nom and confirm process. I'll be
somewhere behind you. President willing.
Best,
Mike.
From: Michael Wynne
TO: Nancy Spruill, Ronald Sega, William Porter
CC: Richard Wiersema; Raymond Jones; Robert Nemetz
Date: November 01, 2003
Subj: RE: Two Issues--Tankers and Ship Funding
I think I responded but if not--I thought we could support
two R&D ships if in different yards, and so stretch R&D a
little. Incremental for production would be a stretch.
Tankers--aaaaarrrrgggghhh!!! enough said.
Best,
Mike.
From: Nancy Spruill
To: Michael Wynne; Ronald Sega; William Porter
CC: Richard Wiersema; Raymond Jones; Robert Nemetz
Date: November 1, 2003
Subj: RE: Two Issues--Tankers and Ship Funding
Mike: This evening Deputy Secretary Wolfowitz, Dr. Sega,
Marv Sambur, Dave Patterson, Dan Stanley and I met with Joel
Kaplan and others from OMB/WH/VP's office.
The issue was a legislative strategy for the way ahead on
the tanker lease, in light of the proposed Warner amendment/
press articles/interactions with Congress/etc.
There was a lot of support to go with the amendment but AF
argued that there were other players--HASC and
appropriators--so we should let the process work its way out.
Dr. Wolfowitz raised the issue of a compromise and asked for
an additional 28 hours to get a Department position to Joel
Kaplan.
Dave Patterson will have the lead and Ron Sega and I will
work w/him.
They are aware of your recommendation about where to get
offsets, if we went with 20/80.
From: James Roche
To: Paul Weaver
Sent: May 21, 2002
Subject: (No subject)
Thanks, Paul. You are correct re KC-767's. Let's wait until
we have a deal. We just completed negotiations on the four
737's for Congressional travel. Re F-22's, the ANG is welcome
to make the following points:
(1) The F-22 is needed, and will be a formidable weapon
system.
(2) It will be important for the ANG to be part of this
program.
(3) If the program is cut, the chance to put F-22's in the
Guard effectively will evaporate.
Be well.
Jim.
From: Paul Weaver
To: James Roche
Sent: May 21, 2002
Subject: (No subject)
Mr. Secretary: I just returned on Monday from the Adjutants
General's conference in Boise. Great turnout and great
support for our Air Force. Gen Kane and Killey briefed them
on their meeting with you and all voiced overwhelming
approval to help out in AF modernization where ever they can.
Led by the TAG from Arizona, who's Phoenix unit flies the
oldest KC-135E's, want to start working the Hill for support
for the KC-767. They do not want Sen. McCain to hurt the
proposal. They want to get out the straight facts on the old
E's. I advised them to hold off until a deal is finally cut
between the AF and Boeing. I want to make sure that that is
still your position. They will all respect your wishes and
will move out when you give the signal to do so.
They also want to do whatever it takes to keep the F-22's
in production and have the ANG as part of it.
Danny did a great job and I'm sure he will do well in the
future as the Director.
God Bless,
Paul.
From: Burkhardt & Associates
To: James Roche
Sent: May 3, 2002
Subject: WSJ
Not very helpful article this morning. Here's the short
outside the beltway reaction. (If you want the long version,
give me a call)--
(1) Why the secrecy of your Wall street advisors? I think
you got lousy legal advice on that memo. (If the article is
accurate and you're using Wall Street advisors). You're the
client. I can't envision a circumstance under which whoever
is structuring this deal for you wants the fact that their
doing so is kept quiet. It's red meat to Congress to tell
them they can't know something.
(2) Claiming confidentiality is like claiming executive
privilege. Even if it's correct in a narrow technical sense
(and I'm not at all convinced it is) it only hurts you--
larger public case. You can't defeat the claims that you're
not disclosing something (by implication--something bad) (esp
from someone as visible as McCain) without real information.
I'd distribute a one page memo saying the per plane cost of
the lease will not be greater than x and have x be less than
the last lease Boeing did for some commercial entity--or that
x is y dollars less than the cost of a new tanker.
From: James Roche
To: Dr. Marvin Sambur
Sent: May 14, 2002
Subject: RE: Call from Boeing
I love Ya, Big Guy. Give it to the Blue Eyed Arabs of the
North (the expression we used for Boeing).
Jim.
From: Dr. Marvin Sambur
To: James Roche
Sent: April 9, 2002
Subject: RE: Call from Boeing
Boss: Gerry Daniels called to discuss the tankers. He
started the conversation by reminding me that McCain was a
minority view and if the AF brought the deal forward it would
easily pass. I stated that the AF would not bring this
forward unless it was a good deal. Apparently, he never took
this message seriously as he was surprised at this response.
I explained our business model and indicated that if Boeing
could not fir into this model we would shake hands and
disengage. I arranged to have him and his team share our
model. I ended the conversation by telling him that the AF's
reputation was at stake and we are committed to getting a
good deal or else there would be no deal. Boeing must take
some risks given the future value of this initial contract.
We are pointed towards an end of May conclusion as to whether
to disengage.
Marv.
From: William Bodie
To: James Roche
Sent: April 25, 2002
Subject: RE: US News
Don't worry, I was never ``good'' enough to be an altar
boy. I liked girls too much.
From: James Roche
To: William Brodie
Sent: April 25, 2002
Subject: RE: US News
God love you, my Son. Oops. I sound like one of those
dangerous clerics!!
Jim.
From: William Brodie
To: James Roche
Sent: April 25, 2002
Subject: RE: US News
Yes, Camelot is always a `brief, shining moment.' Iorizzo
is no King Arthur, or even a Lancelot. If we can get through
this goddam fight about tankers, we'll have another Camelot
in the AF.
From: James Roche
To: William Brodie
Sent: April 25, 2002
Subject: RE: US News
I hope I didn't spoil the opera for you. I think Wally is
still talking. We left. It was very much of a Westinghouse
affair.
Jim.
From: William Brodie
To: James Roche
Sent: April 25, 2002
Subject: RE: US News
Okay, I've gone to battle stations. Leroy knows and will
call friendly staffers like Cortese to give them a heads up,
and perhaps to do something. I saw Rudy DeLeon at the Kennedy
Ctr and politely asked the Great White Arab Tribe of the
North to unleash their falcons on out behalf for once. And, I
talked to Loren, who is standing by to comment to this
reporter about the national security imperatives of tanker
modernization. Vago is also standing by. I will get with
Sambur first thing to rehearse talking
[[Page S11787]]
points. Will get with you before we talk to the reporter.
Say hi to Wally.
From: James Roche
To: William Brodie
Sent: April 25, 2002
Subject: RE: US News
The call was from a very senior guy at the rag. I've talked
to Marv and told him to hook me in sometime between 10:00 and
10:30 tomorrow. Thanks much.
Jim.
From: William Brodie
To: James Roche
Sent: April 25, 2002
Subject: RE: US News
I think your original guidance was right. Secaf takes first
Q on when did we know, and you both take the second. We can
do by phone tomorrow. We shouldn't get too excited, there is
no expose. Just certain scare mongers.
From: James Roche
To: William Bodie
Sent: December 13, 2001
Subject Fw: 767 lease
Damn it! JGR.
From: Marvin Sambur
To: James Roche
Sent: December 13, 2001
Subject Fw: 767 lease
Yesterday, I was asked to prepare an enhanced point paper
on the 767 lease for the Vice. The number that was given to
me from AQ on this enhanced paper were different from those
developed for the point paper prepared for you. I questioned
these numbers and received fuzzy answers in return. I decided
to do the calculation myself using an excel spreadsheet. I
found to my dismay that the numbers were correct according to
the OMB definitions but very misleading in a true financial
sense. The deal was not good from a true financial basis and
I briefed the Vice at 7:30PM of the misleading nature of the
numbers and advised my people that we needed to get a better
deal from Boeing to make this financially attractive.
Nelson Gibbs reached the same conclusions.
I need to make sure that in the future our financial
calculations are both accurate and business based. I am sorry
for not catching this sooner!
Marv.
From: James Roche
To: William Bodie
Sent: December 13, 2001
Subject: RE: Several items
Bill, thanks much. I like the ROE charts a lot. Well done.
I want to brief the one with XI, and I've sent John a msg
asking whether or not we should refer specifically to the
C2ISR Center being double-hatted. Re 767, I am hearing of
some weakness in our numbers, damn it. I'll forward Marv's
msg to you. We may want to have Rand be ``more circumspect''
in a reply. Re Chip, he is wonderful, but would have the same
problem with the PA&E spores that Barry has.
Jim.
From: William Bodie
To: James Roche
Sent: December 13, 2001
Subject: RE: Several items
Boss: Hope the trip is going well, and we'll save some
eggnog for you. Bill Davidson's gang is faxing you a couple
of charts and ``ROE'' on headquarters reorg that we are set
to announce along with the Army next week. Reason for the fax
is to get your input prior to briefing Hill folks in time to
make the announcement. The charts are fine for the Hill and
they satisfy all Title 10 concerns. I worry that folks
internally will get the impression that we're tinkering at
the edges, not transforming. One battle at a time, I guess.
Oh, I'm polishing up a draft article for your signature on
``AF transformation'' that is set to appear in the next issue
of Joint Force Quarterly (I got them to commit to putting the
F22 on the cover). Will send you electrons and also have hard
copy for you when you return.
Rand working on a response for Novak on 767--we still might
want to think about a 5 minute conversation between you and
Novak on it.
Had dinner with Chip last night. He wanted me to pass on
his best to you, and is proud you're doing Bob Anthony's
event. He seems to have made peace with the idea of doing
strategic planning, NCTA, etc., ceding marketing to
Carpenter. I would put in him charge of the DC Office if I
were Sugar, or at least a major supporting role in govt.
relations. Maybe he should fo PA&E!
Bill.
From: James Roche
To: William Bodie
Sent: March 30, 2002
Subject: RE: Tanker story
Fine story. EADS is quoted. And Loren's comment basically
is fine.
Jim.
From: William Bodie
To: James Roche
Sent: March 30, 2002
Subject: RE: Tanker story
Vernon Loeb's piece is in the back of the sports section in
today's WP. The ``statement'' he refers to is the RTQ which
the LL guys made available to staffers on request. Not a bad
story, no errors, but not as good as Vago's. Loren apologizes
for saying you told him that all KC135s need to be replaced
on a 1 for 1 basis. He didn't think it would be in the piece.
From: Custer Scott MajGen
To: James Roche
Sent: March 30, 2002
CC: Jumper John Gen AF/CC; Moseley Michael Gen AF/CV
Subject: NDAA
Sir, it looks like the Auth bill will go to the floor
today. As suspected, the bill language may not be what the
lawyers and acquisition folks think we need to sign the
lease. However, the early conference report language looked
to me like it contains all we need to proceed. We are just
going to have to wait until later today to see how this turns
out. My gut feel is that each document was written for
precise reasons (to pacify certain factions) and that
ultimately we will be able to execute the lease/buy as we
want it done. It also looks like we are only going to be able
to retire 12 vs 44 135E's in FY)$ . . . even after all of our
attempts to engage the Hill on this I'm not surprised as this
is really a BRAC optics issue. As we get more visibility into
the NDAA, we will provide you with a summary of other major
issues affecting the AF.
From: John Jumper
To: James Roche
Sent: April 9, 2002
Subject: RE: Tanker Article
Agree, I don't think there was malice, but the wording of
his statement could be used as evidence against out efforts.
As you said this morning, we just have to articulate the
problem we are trying to fix.
John.
From: James Roche
To: John Jumper
Sent: April 9, 2002
Subject: RE: Tanker Article
John, even Dick would want us to begin to retire 43 plus
year tankers which will be about 47 to 50 years by the time
we actually replace them. At least, I think he would!
Jim.
From: John Jumper
To: James Roche
Sent: April 9, 2002
Subject: RE: Tanker Article
Boss: you'll see this morning's EB has a statement from
Dick Myers that says the tanker fleet we have can fully meet
requirements now and out into the future, suggesting we don't
have the problem with tankers we claim to have. We are bound
to be asked this and I have our people working on a response.
John.
From: James Roche
To: Robin Cleveland
Sent: April 28, 2003
Subject: RE:
Ok, I'll speak with Paul on Wednesday (I'm off to speak yet
again with my Little Darlings at the Academy). Let's see if
we can put together a Gov't Team for Best and Final. Re IDA,
I'd never go to them for investment banking advice! And Larry
has been altogether too detached. When all is said and done,
it's still a negotiation between the Monopsonist (the USG)
and the Monopoly (add the French, and it's the Duopoly).
Jim.
From: William Bodie
To: James Roche
Sent: January 2, 2002
Subject: RE: Dear Bob
Boss: here's a cut at a letter to Novak (remember, this is
not for him to publish, but hopefully to shut him up). Still
waiting for Rand to give details on name of Novak's person
who called PA and when.
Bill.
From: Pete Aldridge
To: James Roche
Sent: May 16, 2003
Subject: RE: Boeing
I agree.
From: James Roche
To: Pete Aldridge
Sent: May 16, 2003
Subject: RE: Boeing
Thanks, Pete. I cannot bring myself to speak to That
Person, so I'll only forward a copy of whatever Boeing sends
us on Monday.
It's time DoD made a decision as to what is right for our
Combat Air Forces.
Jim.
From: Pete Aldridge
To: James Roche
CC: Dr. Marvin Sambur
Sent: May 16, 2003
Subject: RE: Boeing
Great. According to Paul's schedule he will not be back
until Tuesday. I will set it up for then.
From: James Roche
To: Pete Aldridge
Sent: May 16, 2003
Subject: RE: Boeing
Pete/Marv. Boeing will provide us a 15% max profit
certification with audit on the green plane. Phil is fighting
off attempts by his commercial guys to add economic clauses
(with our help). We should have something on Monday morning.
Pete, do you want to make the appointment with DepSecDef? We
now have a fixed price deal with taxpayer
[[Page S11788]]
protection against overruns or windfall profits from the
plane and/or the mods. Enough already.
Jim.
From: James Roche
To: Marvin Sambur
Sent: May 13, 2001
Subject: RE: 767 lease
Oh shit! PLS fix ASAP. How did Darleen miss this?
Jim.
From: Marvin Sambur
To: James Roche
Sent: May 13, 2003
Subject: RE: 767 lease
Yesterday, I was asked to prepare an enhanced point paper
on the 767 lease for the Vice. The number that were given to
me from AQ on this enhanced paper were different from those
developed for the point paper prepared for you. I questioned
these numbers and received fuzzy answers in return. I decided
to do the calculation myself using an excel spreadsheet. I
found to my dismay that the numbers were correct according to
the OMB definitions but very misleading in a true financial
sense. The deal was not good from a true financial basis and
I briefed the Vice at 7:30PM of the misleading nature of the
numbers and advised my people that we needed to get a better
deal from Boeing to make this financially attractive.
Nelson Gibbs reached the same conclusions.
I need to make sure that in the future our financial
calculations are both accurate and business based. I am sorry
for not catching this sooner!
Marv.
From: Druyun, Darleen., SAF/AQ
Sent: Wednesday, October 09, 2002 8:17 AM
To: Roche, James, Dr., SAF/OS; Jumper, John, Gen, AF/CC;
Sambur, Marvin, Dr., SAF/AQ; Foglesong, Robert, Gen, AF/
CV; Wehrle, Joseph H. Jr., Lt Gen, AF/CVA; Plummer,
Stephen B., LtGen, SAF/AQ; Gibbs, Nelson, Mr, SAF/IE
Subject: OSD BRIEF TO LEASING WORK GROUP
We were asked if we thought the Congress would give us;
language on the termination liability coverage. We told them
we did not know and would have wait for the FY 03
appropriations to be passed by the Congress. Privately I
would tell you that the language we asked for is supposed to
be in the bill per several telecons from the hill. This is
still fairly ``close hold''. Once they digest this material
they will reconvene a follow on meeting. Meanwhile we will
continue to work this subject with OSD and try to win them
over, including OMB. Col DeWillis from SAF/AQQ has an
excellent working relationship with the OMB and continues to
work closely with them. Will keep you posted.
To: Wynne, Michael, Mr, OSD-ATL
Cc: Sambur Marvin Dr SAF/AQ
Sent: Tuesday, Jul 08, 2003
Subject: Re: FW: Footnote
Mike I don't like it. Why? Because we don't agree with the
calculation! As important, it fails to give an alternative,
lease supportive case where the NPV is positive! If the
addition to the footnote added: ``. . . Similarly, if blah
blah, then the NPV would favor a lease by $$$.'' As this
stands, it is embarrassing to you, me, and the SecDef. Sen
McCain and others who oppose the lease will leap to this
number! Why is this so hard for you to see, Mike? Further,
the footnote misses Pete Aldridge's point that this is a
hypothetical since the Air Force doesn't have the BA to enter
into such a multiyear contact, even if the Congress bent its
rules to do so without limited production!
Marv, what do you think? Pls get together with Mike to come
up with a more palatable and balanced version of the
footnote. Jim.
Dr. James R. Roche,
Secretary of The Air Force.
From: Wynne, Michael, Mr, OSD-ATL
To: Roche, James Dr SAF/OS
Sent: Tue Jul 08 17:04:31 2003
Subject: FW: Footnote
Jim, I've gotten the 1.9B relegated to a footnote and I've
made an agreement with OMB so that we can proceed. You can
sign it in the morning if you agree if not I'm not sure what
to do. Meeting with DSD went fine. Most are hoping that you
refuse to sign. I told them not so fast.
Best Mike.
From: Spruill, Nancy, Dr, OSD-ATL
Sent: Tuesday, July 08, 2003 4:19 PM
Cc: Spruill, Nancy, Dr, OSD-ATL
Subject: Footnote
Mike. This is what I have copied for your convenience.
Thanks.
Nancy.
The footnote is to the sentence that says:
Applying the A-94 test, it was determined that the net
present value of the multiyear lease option and a traditional
purchase option results in a NPV favoring a purchase of $150
million, as shown in Table 1(1).
FOOTNOTE: [1] In evaluating the net present value of the
lease and purchase options as required by OMB Circular A-94,
the Air Force relied on the availability of mulityear lease
authority granted by Congress in 2002 Defense Appropriations
Act. Had the Congress chosen instead to provide mulityear
procurement authority the NPV could favor purchase by up to
$1.9 billion. While this information affords a measure of
clarity in an equitable comparison of terms and NPV, it is
provided with the understanding that multiyear procurement
authority was not available and therefore not a viable option
for the Administration's analytical consideration.
From: Sambur Marvin Dr SAF/AQ
Sent: Tuesday, July 08, 2003 9:58 PM
To: Roche James Dr SAF/AQ
Subject: Fw: Tanker Leasing Report to the Congress
Boss. Just received this from Nancy. It is worth a shot
speaking to Robin or are you like me in that you would rather
take poison.
Marv.
From: Spruill, Nancy, Dr, OSD-ATL
To: Hodges William Maj Gen (S) SAF/AQQ
CC: Spruill, Nancy, Dr, OSD-ATL; Schroeder, Wayne, OUSDC
Sent: Tue Jul 08 21:49;50 2003
Subject: Tanker Leasing Report to the Congress
Marv/ Wayne H.
I believe Dr. Roche is not happy with the compromise. So I
believe it is now between Dr. Roche and Ms. Cleveland. As far
as I know. we're in limbo. I'm sure something will change
tomorrow. But I'm optimist.
Thanks.
Nancy.
From: Hodges William Maj Gen (S) SAF/AQ
Sent: Tuesday, July 08, 2003 4:51 PM
To: Sambur Marvin Dr SAF/AQ
Cc: Spruill, Nancy, Dr , OSD-ATL; Buhrkuhl, Robert, Dr, OSD-
ATL; Schroder, Wayne, OUSDC: Schoonover, Joanne, Col.
OSD-ATL; Jones, Raymond, LTC, OSD-ATL; Nemetz, Robert,
Mr, OSD-ATL; Custer Scott MajGen SAF/LL; Christ Gregory M
Lt. Col SAF/LLW; Bunce Pete Col SAF/FML; Ryan Jim Lt. Col
SAF/FML; Barefield James Lt. Col SAF/AQ; Beierle Mark T
Lt. Col SAF/AQ; Corley John Lt. Gen SAF/AQ; Gray Stephen
Col SAF/AQ; John Lt Col SAF/AQ Fisher (Email); Murphy
Mark Lt. Col SAF/AQ; Canavan Michael F Maj AFPEO/AT; Ted
Bowlds (Email); Allen Cheryl Lt. Col SAF/AQQM; Cloud
Patricia Lt. Col SAF/AQ; Haenisch Allan Civ SAF/AQQM;
Leister William Maj SAF/AQQM; Lively Nancy LtCol. SAF/
AQQ; Rivard James T Col SAF/AQQM; Stipe Paul Col SAF/AQQ
Subject: FW: Waiver of Termination Liability
Dr. Sambur: As you will see below, OMB will support the
language OSD proposed if we support adding the OMB text as a
footnote. I clipped it from previous emails so you can see it
all together here. Mr. Wynne approved.
Request your approval. (We're ready to go final and send
the package to SAF/LL for Dr. Roche's signature.)
From: Spurill, Nancy, Dr , OSD-ATL
Sent: Tuesday, July 08 , 2003 4:05 PM
To: Hodges William Maj Gen (S) SAF/AQQ; Sambur Marvin DR SAF/
AQ
Cc: Leister William Maj SAF/AQQM; Buhrkuhl, Robert, Dr, OSD-
ATL; Schroeder, Wayne, , OUSDC; Schoonover, Joanne, Col,
OSD-ATL; Spurill, Nancy, Dr, OSD-ATL; Jones, Raymond LTC,
OSD-ATL; Nemetz, Robert, Mr, OSD-ATL
Subject: FW: Waiver of Termination Liability
Marv/ Wayne
Over to you.
I'm sure Mr. Wynne is willing to talk w/ you.
I hope you come onboard.
If you do, I need a clean copy of the report, OMB has asked
for one--for their internal use only.
Thanks.
Nancy.
From: Wynne, Michael, Mr, OSD-ATL
Sent: Tuesday, July 08, 2003 3:55 PM
To: Spurill, Nancy, Dr, OSD-ATL
Subject: Re: Waiver of Termination Liability
From: Robin-Cleveland
Sent: Tuesday, July 08, 2003 3:33 PM
To: Michael, Wynne
Subject: Re: Waiver of Termination Liability
Yes make it a footnote and we got a deal.
From: Sambur Marvin Dr SAF/AQ
Sent: Tuesday, August 26, 2003 7:59 AM
To: Szemborski, Stanley R., VADM, OSD-PA&E
Cc: Krieg, Ken, CIV, OSD-PA&E; Zakheim, Dov Hon, OSD-COMPT:
Roche James Dr SAF/OS; Wynne Michael, Mr, OSD-ATL, McNabb
Duncan Lt. Gen AF/XP
Subject: $2B Issue with PA&E
Stan: At my staff meeting this morning, my folks again (see
email below) reported that PA&E was pushing our folks for
sources for the $2B upfront payment for the lease. As I
mentioned at our previous meeting on this subject, the AF was
told by Mr. Aldridge that this payment would come from DOD
``reserves'' and Aldridge still reiterates that position. In
an event it is too early to start the process. In addition,
Mr Zakhiem stated at the earlier meeting that he has no
``reserves'' but will seek sources for the $2B from ALL the
Services. We can call another
[[Page S11789]]
meeting (with Aldridge) to addresses the issue if that is not
your understanding
Marv.
From: Stipe Paul Col SAF/AQ
Sent: Monday, August 11, 2003 3:54 PM
To: Sambur Marvin Dr SAF/AQ
Cc: Corley John Lt. Gen SAF/AQ; Gray Stephen Col SAF/AQ;
Barfield James Lt. Col SAF/AQ; Fisher John Lt. Col SAF/
AQ; Rivard James T Col SAF/AQQM; Hodges William Maj Gen
SAF/AQQ; Marzo David Maj SAF/FMCE; Louden Philip LtCol
with PA&E
Subject: Head's Up on Tanker 42B Issue with PA&E
Sir: Just to keep you in the loop, PA&E is still trying
strong-arm tactics with our programmers concerning the $2B
funding excursion mentioned in the 767 Congressional Report
as an out year option for shaping the budget bow-wave. As you
may recall Mr. Wynne told us that the AF should consider this
new money. That aside, it is premature (in FY03) to be
working a program budgetary change on a program that has not
yet been approved. Further, decisions on FY08 actions can be
addressed in 2006. Finally, as an operating lease, we would
need some indication from Congress that they intend for us to
buy these aircraft for a buy-down scenario to become a
reality. The report did not commit us to the path, but
rather, committed the Department of Defense to exploring
options like these in the future if it becomes necessary, The
$2B excursion was one such option. We expect AF/XP to bring
this issue to your attention. We have already been working
with their actions to provide background, and to indicate
that this appears to be an initiative from PA&E, not from OSD
as a whole, or from AT&L.
V/R,
Paul M. Stipe, Col, USAF,
Deputy Director, Global Reach Programs.
From: Aldridge, Pete, Hon, OSD-ATL
Sent: Monday, November, 04, 2002 1:22 PM
To: Wynne, Michael, Mr, OSD-ATL: Lamartin, Glenn, Dr, OSD-
ATL: Diane, Ms, OSD-ATL
Subject: Tankers and B-52's
Steve Cambone tells me that PA&E is coming out against the
tanker lease. Their problem seems to be the infrastructure
costs modifying and maintenance facilities to bed-down the
767, vice 135s. I do not recall that the KC-10s caused that
much problem.
Also, I need a short paper on the B-52 re-engining study
done by the DSB. Apparently, they are coming out in favor of
doing this primarily because of the positive impact on the
tanker fleet. I understand that the study is in a draft form
now.
From: Aldridge, Pete, Hon, OSD-ATL
Sent: Tuesday, November 12, 2002 5:11 PM
To: Cambone, Stephen, CIV, OSD-PA&E; Szemborski, Stanley R.,
RADM, OSD-PA&E
Cc: Spurill, Nancy, Dr, OSD-ATL; Lamartin, Glenn, Dr, OSD-ATL
Subject: KC-135 Recap Issue Paper
Steve/Stan; I just reviewed the KC-135 Recap paper. It is a
very good and convincing. Based on the analysis I would
support Option 3--Convert the E's to R's, and defer new
tanker procurement (or lease).
In a related issue, the DSB just completed a study on the
re-engineering the B-52. Unlike past studies, which showed
that this was not cost-effective, this new study took into
account the impact on tankers. The result is a much more
favorable analysis supporting such a plan. This would further
increase tanker availability for other uses. I am to receive
a paper and briefing and may have a more definite position
soon.
From: Spurill, Nancy, Dr, OSD-ATL
Sent: Tuesday, November 12, 2002 9:22 PM
To: Aldridge, Pete, Hon, OSD-ATL; Link, Jon, Col, OSD-ATL;
Wilson, Charles, CAPT, OSD-ATL; Lamartin, Glenn, Dr, OSD-
ATL; Buhrkuhl, Robert, Dr, OSD-ATL; Aucoin, Cassandra,
Ms, OSD-ATL
Subject: RE: Tanker Leasing
Sir: Re: tanker leasing, in addition to PA&E, CAIG, OMB,
and Comptroller are trying to decide whether to support
leasing or not but have not gotten all the information they
need yet from AF. AF is suppose to give it to the leasing
review panel working group this week.
Once we get the information from AF it will take several
more weeks-the CAIG is the long pole in the tent.
If we go with the reengining of KC-135Es/converting them to
Rs, as you suggest, the purchase vs. lease issue could be
addressed much more deliberately in POM 05.
You can give us further guidance when we see you at 0800
Wednesday am.
V/R,
Nancy.
From: Glenn Lamartin OSD-ATL
To: Pete Aldridge OSD-ATL
CC: Nancy Spruill; Diane Wright; Jon Link; Charles Wilson
Date: November 12, 2002
Subj: B-52 Re-engining
We are preparing the paper you requested and the short
briefing that will make the case. We just got a copy of the
DSB task force's executive summary and will work with them to
make sure that we get the details right.
Glenn.
From: Pete Aldridge
To: Michael Wynne, Glenn Lamartin, Diane Wright
Date: November 04, 2002
Subj: Tankers and B-52s
Steve Cambone tells me that PA&E is coming out against the
tanker lease. Their problem seems to be the infrastructure
cost of modifying hangers and maintenance facilities to bed-
down the 767, vice 135s. I do not recall that the KC-10s
caused that much problem.
Also, I need a short paper on the B-52 re-engining study
done by the DSB. Apparently they are coming out in favor of
doing this primarily because of the positive impact on the
tanker fleet. I understand that the study is in a draft form
now.
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