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<i>Here is an article from Defense Daily. My comments are in italics.</i>

<b>McCain Takes Aim At C-130J; Accuses Lockheed Martin of "Stonewalling"</b> (Posted: Thursday, April 07, 2005)
[Defense Daily, April 7, 2005]

By Sharon Weinberger

Continuing his battle against what he views as lax Pentagon oversight of big-ticket weapons, Sen. John McCain (R-Ariz.) is singling out another commercial-type acquisition for criticism, saying there is insufficient oversight of the Air Force's C-130J program.

<i>FYI, the commercial-type acquisition system was something that came out of "Reinventing Government" in the Clinton years. It was always controversial to do military procurement like that. The idea was that they would by "Commercial Off-the Shelf" (COTS) so the mickeymouse (read oversight) would be minimal so as to pass the savings on to the government. Many people (inculding me) thought it was a bad idea because government bureaucrats can not stop meddling, and they do not like to give out money with less strings attached. It makes them less important, and opens many doors to corruption that were closed decades ago. I have an excuse for not being able to voice my concerns, since I am a nobody, but where was John McCain then, and why does he bring it up now after almost ten years?</i>

McCain referred to a recent meeting he had with Robert Stevens, the CEO of C-130J manufacturer Lockheed Martin [LMT], saying the company had promised additional cost data on the aircraft.

To date, Lockheed Martin has not provided that information, McCain said yesterday during a hearing of the Senate Armed Services air/land subcommittee, which he chairs.

<i>Part and parcel of the COTS type procurement was an understanding that many things, including cost data, would not be owned by the government, and would be retained by the contractor as proprietary competition sensitive material. He knows that his criticism at this late date is unfair, and his demand for data is not justifiable under the rules of the contracts. So, what is he really up to?</i>

"We may have to ask the committee to subpoena the information, I think," he said. "I don't like to use that, but if Lockheed Martin continues to stonewall us, I don't know if we can carry out our responsibilities."

<i>Insisting that the government live up to the contract terms agreed to is not stonewalling. It was his responsibility to get the contract terms to his liking before the govenment signed on the dotted line, not now. He is admitting to his lazyness or incompetence in the past.</i>

Lockheed Martin acknowledged that Stevens had met with McCain and that the company anticipated "further discussions with the senator about our investments in the airplane and why we believe we have delivered a good product that is performing well, has provided value to our customer and will continue to mature," company spokesman Tom Jurkowsky said.

The C-130J aircraft originated in the mid-1990s as a Lockheed Martin-funded upgrade to the C-130, which was then sold to the Air Force under commercial contracting procedures. But the congressionally popular program has suffered from a number of operational problems.

Most importantly, the new aircraft have not yet received an "operationally suitable" rating from the Pentagon's top tester.

<i>I believe this to be an obsolete statement that may have been technically correct at one time, but never as bad as it sounds. The US government (not the USAF) was saying it was operationally unsuitable even as it was in combat use with foreign air forces. Predictably, some bureaucrat had to have his say.</i>

Following an internal budget drill last December, the Pentagon moved to cancel the Air Force's multiyear contract for the C-130J, effectively terminating the program. But supporters of the aircraft in Congress rallied to the program's defense, and the Pentagon is now expected to amend the fiscal year 2006 budget request to restore funds for the C- 130J.

<i>Yes, and cancellation of a multi-year contract in the middle is obviously mad. The contract provisions have poison pills in them to discourage just this sort of stupidity.</i>

McCain's new focus on the aircraft could spell trouble for those plans, however. Quoting from a previously leaked internal Lockheed Martin memo, McCain said yesterday that the commercial contract used to acquire the C-130J was inappropriate, allowing the company to block the release of cost data.

<i>Bingo, senator. So, where exactly were you when the paper was blank and a better contract could have been negotiated?</i>

A similar drive by McCain against the Boeing [BA] Future Combat Systems led to the Army's decision this week to change that program over to a normal acquisition contract. Testifying at yesterday's hearing, acting Pentagon acquisition chief Michael Wynne said the Pentagon is already taking steps to move the C-130J over to a more traditional procurement contract.

<i>I think McCain is up to something. I just can't put my finger on it.</i>

But McCain expressed dissatisfaction with the entire program, citing costs per aircraft that have risen from $33 million to $67 million.

<i>Again, this is misleading information. I believe the $33 million mumber is the fly away cost of a C-130H in 1990 dollars and the $67 million number is the C-130J value in 2005 dollars, but I don't know. He is in a position to know, and quotes deliberately misleading values, and giving no credit for incresed performance of the J over the H (The updated aircraft provides 40-percent more range and flies 24-percent faster than older models. It can also take off on shorter runways, and its avionics allow for better data capability and control.) What is he really after?</i>

"This is basically a cargo aircraft," McCain said. "You get into one heck of an expensive airplane at $67 million a copy."

<i>On a dollars per pound basis for a military airlifter that shares no economies of scale to a commercial airliner, it is right in there. He knows this. Is he on the payroll of EADS and Airbus? It looks like his recent activities tend to allow European products an inroad where none existed before (A400M and A-320 tankers to name two). That may be a stretch, but WTF is he doing and why? Don't tell me he is the taxpayer's watchdog, he's got his own history of spending other people's money on projects that will get him reelected. Maybe he is just miffed that the tanker project and the C-130J took money, and therefore power/influence, away from his commitee, and he is settling old scores with other members of Congress. Maybe he is just doing the heavy lifting for the Bush Administration for some special consideration later, while they stay out of it. Hey Senator, (_x_) kiss my ass you phoney.</i>



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Edited by - a10stress on Apr 07 2005 10:57 AM

Edited by - a10stress on Apr 07 2005 11:11 AM

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Couldn't a subpoena of proprietary info be construed as a breech of contract on the part of the gov't?

"Duct tape is like the Force. It has a light side, a dark side, and it holds the universe together...." - Carl Zwanzig

_________________
\"Those who hammer their guns into plows
will plow for those who do not.\"
- Thomas Jefferson

The Congress can do what it wants, and McCain is a 600 lb gorilla in Congress right now. He does not expect to need a subpoena. He knows that if the contractor refuses to do it voluntarily, he can easily make them look like crooks that are hiding something.(As a member of the Keating Five gang, he ought to know a thing or two about crooks and hiding something.)Of course, when Lockheed does give cost data, even though they don't have too, they will be betraying all their suppliers, whom they promised to keep the numbers confidential "It's good to be the king" isn't it?.

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Stress...

You know I wasnt going to be posting on the boards, but I had to break that decision and say you just earned alot of respect from me with this post.

I have always thought McCain had a hidden agenda and to see it pointed out so specificially really made me sit up and take notice...


CAG out...



Edited by - CAG Hotshot on Apr 09 2005 2:52 PM

Glad to see you back CAG.

<i><b>porn, lot's of porn ;P</b></i>
<img src="http://www.creedmoorsports.com/images/SA9121-M21.JPG" border=0>

Thanks Sniper...


CAG out...

U.S. TO IMPOSE MORE OVERSIGHT ON LOCKHEED CONTRACT: The Pentagon has decided to restructure another multibillion-dollar weapons program -- the second one in two weeks -- after Sen. John McCain criticized the contract as lacking transparency and safeguards against cost increases. The Air Force yesterday said it will convert Lockheed Martin's contract for the C-130J cargo plane into a traditional Pentagon procurement, meaning that Air Force officials will have access to financial and pricing data that Lockheed was exempted from disclosing. The restructurings underscore mounting scrutiny of weapons development after years of Pentagon efforts to streamline the process by introducing more flexible, commercial practices. The contract changes also highlight Sen. McCain's growing clout in defense affairs. The C-130J, the latest version of a cargo plane that has been a workhorse since the 1950s, has faced criticism from the Pentagon IG and the GAO over rising costs and performance shortfalls. "We understand and support the DoD decision to convert the C-130J acquisition process," Lockheed spokesman Tom Jurkowsky said. "We recognize that the acquisition climate has changed since the government asked Lockheed Martin to assume the development risk and modernize the C-130 about 15 years ago. There is a current desire for more transparency and insight." He said the company has properly executed the existing contract. (Wall Street Journal)





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BOEING CHAIRMAN D.C. REPAIRMAN: Boeing Chairman Lewis Platt came to Capitol Hill this week to mend the fences that former Boeing CEO Harry Stonecipher did not fix before his ouster last month. It is unusual for a board chairman to do political lobbying personally, but these are unusual times for Boeing. While the board searches for a new CEO, Boeing projects such as the multibillion-dollar FCS contract are being batted about by critics in Congress. Lacking a CEO who can address their concerns, Platt evidently decided to engage key lawmakers himself. The itinerary included Platt's first meeting with Rep. Norm Dicks and with Rep. Curt Weldon, who chairs the subcommittee of the HASC that oversees defense contracts. Platt also saw Sen. Maria Cantwell Tuesday and yesterday attended a lunchtime fund-raiser for her. His schedule also included Washington's other senator, Patty Murray; Missouri's two senators, Jim Talent and Kit Bond; and other politicians whom Boeing declined to name. Yesterday morning, Platt and Boeing's top D.C. lobbyist, Rudy deLeon, met with Dicks and emerged smiling, though they declined to comment on the meeting or Platt's D.C. visit. Afterward, Dicks said he was pleased Platt "understands quite well how soon his board needs to move on naming a new CEO." One of Dicks' main concerns is that Boeing continue to support the government's attempt to stop the EU from subsidizing Airbus, an effort he termed crucial to continued commercial-aircraft production in the Puget Sound area. He and Platt also discussed whether the Air Force will finally begin a bidding process for new refueling tankers later this year. Boeing's executive tour group also stopped in to meet Weldon, who last month raised potential problems with Boeing's largest defense contract, the FCS projects, worth about $15B to the company. But the politician Platt most needs to win over, Sen. John McCain, was not on his schedule. Boeing spokespersons declined to say whether Platt plans to meet the company's most vocal critic anytime soon. (Seattle Times)



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NEW U.S. DEFENSE FRAUD TASK FORCE EYES MORE CASES: Government investigators made progress on three to six cases of possible defense procurement fraud simply by sharing data at the first meeting of a new task force, U.S. Attorney Paul McNulty said on Tuesday. "It went even better than I had expected," McNulty told Reuters. "I saw three to six subject matters advance before my eyes," McNulty said of the March 30 meeting, which brought together about 50 people from 40 agencies. The group meets again in June. McNulty gave no details of the cases in question but said investigators throughout the military and the government were enthusiastic about better coordinating efforts to crack down on ethics violations, conflicts of interest and other cases of fraud in defense procurement. "Anybody who would execute a fraudulent scheme or wish to enrich themselves at the expense of the taxpayer should know we are working harder, and putting more resources into discovering those frauds and bringing the individuals to justice," he said, heralding an era of increased scrutiny of defense contracts. Richard Aboulafia, an analyst with the Teal Group, said the increased focus on defense procurement fraud was sparked partly by the [Darleen] Druyun case, the flat budget environment and the "wearing off of the post 9/11 pro-defense magic. After 9/11, defense was sacrosanct. That's no longer the case," he said. The Pentagon said on Monday it had begun investigating two additional contracts handled by Druyun and could add three more deals to its list of possibly tainted procurements -- the value of which already exceeds $4B. One source familiar with the Druyun case said investigators were also examining her possible involvement in the pricing of the C-130J cargo plane built by Lockheed Martin, a commercial contract "experiment" done as part of Air Force acquisition reforms championed by Druyun. (Reuters)



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<BLOCKQUOTE id=quote><font size=1 face="Verdana, Arial, Helvetica" id=quote>quote:<hr height=1 noshade id=quote>I saw three to six subject matters advance before my eyes," McNulty said <hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana, Arial, Helvetica" size=2 id=quote> Assuming he was there, was it 3,4,5 or 6? Either they advanced, or they didn't.

"Duct tape is like the Force. It has a light side, a dark side, and it holds the universe together...." - Carl Zwanzig

_________________
\"Those who hammer their guns into plows
will plow for those who do not.\"
- Thomas Jefferson

U.S. PROSECUTOR VOWS CRACKDOWN ON DEFENSE-PROCUREMENT FRAUD: A federal prosecutor promised Thursday to crack down on fraud by defense contractors, saying a recent scandal involving Boeing shows the dangers inherent in government contracts involving billions of dollars. U.S. Attorney Paul J. McNulty said investigators have made the issue a top priority because of the enormous sums of money the government has poured into contracting since the 2001 terrorist attacks. "Frankly, more procurement means more opportunity for fraud," McNulty told a SASC subcommittee. McNulty heads a group of investigators working to combat procurement fraud. It was formed in the wake of guilty pleas by two former Boeing executives in a conflict-of-interest case involving a $20B Air Force contract for refueling tankers. The Pentagon subsequently canceled the tanker deal and is reviewing other contracts in which Druyun may have acted illegally - including some involving Boeing's archrival, Lockheed Martin. Four of the eight contracts being reviewed involve Boeing , while two involve Lockheed Martin. The remaining two involve Accenture and Systems & Electronics Inc. <b>Sen. John McCain, chairman of the Airland subcommittee of Armed Services, said he was concerned about the "revolving door" between defense contractors and the military. "Every time you turn around, there's a conflict," McCain said.</b> (Associated Press)



<b>MCCAIN</b> SEEKS REVIEW OF PENTAGON BUYING: Sen. John McCain called for a broad review of the Pentagon procurement system yesterday, citing the Air Force's recent contracting scandals as evidence of larger problems. The Air Force's problems are a "glaring example of a management and oversight failure in our acquisition process," <b>said McCain, chairman of the airland subcommittee of SASC</b>, which held a hearing on the subject. But "clearly, we need to examine the whole procurement process as it works today in the DoD." Sen. Joseph I. Lieberman cited cuts in the Pentagon's acquisition workforce, which is half the size it was 15 years ago. "We have made these cuts in a haphazard way," Lieberman said. "I am concerned that we may have stopped building the kind of strong, experienced senior leaders that we need to take on industry -- and their own leadership, when necessary -- to protect the interests of the DoD and the taxpayers of the U.S." He [Acting SECAF, Michael Dominquez] agreed with criticism by subcommittee members that acquisition reform in the 1990s, which advocated streamlining procurement and adopting commercial practices, loosened the rules too much. "It looks pretty clearly that it did go too far," Dominguez said. McCain's criticism of contracting practices led the Army last week to change its contract with Boeing for a modernization project. This week, the Air Force restructured a contract with Lockheed Martin for C-130J transport planes. (Washington Post)



<b>MCCAIN…DRUYUN NOT ALONE AT AIR FORCE</b>: Sen. John McCain continued his challenge of questionable Pentagon acquisition practices by questioning whether the recent scandal shaking the Air Force really was all Darleen Druyun's fault. "I continue to believe that Druyun must have had the knowledge, if not the cooperation, of other Air Force acquisition officials in the case of the would-be KC-767A tanker aircraft deal," McCain said at a hearing of the SASC airland subcommittee, which he chairs. Witnesses testifying before McCain's subcommittee offered abundant evidence that Druyun had committed numerous wrongs in procurement cases even beyond the aborted tanker deal. The Air Force has been putting its acquisition house in order in the wake of the Druyun case, Michael Dominguez, acting SECAF, told senators. "It is unfortunate that Ms. Druyun, in the waning years her tenure, was corrupted by the power given to her, and put her own interests above those of the Air Force," Dominguez said. But, McCain wanted to know, was Druyun the only guilty party? Did the cause of the scandal come down to an individual, or is it systemic? "We need true acquisition reform" at the Air Force, McCain said. "So far, we are only treating the symptoms" of acquisition problems, he said. (Defense Today)



INSPECTOR GENERAL TO REVIEW 3 BOEING CONTRACTS: Three Boeing contracts will be reviewed by the Pentagon's IGto ensure that they were not tainted from actions by former Air Force acquisition official Darleen A. Druyun, who was convicted of federal conflict-of-interest laws, a military official said yesterday. The decision, along with previous referrals to the IG, means at least nine Boeing contracts have been or are being reviewed because of their connection to Druyun. The referral involves three space program contracts in which Boeing either shares work with Lockheed Martin or is the prime contractor. A spokesman for Boeing was not available. (Bloomberg)



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PLEASE EXPLAIN: Sen. John McCain says he was startled to learn that canceling the Lockheed Martin C-130J could drive up the cost on the F-22. "It seems to me to be bizarre. If we cancel one program it drives up the cost of another? How those two should be connected is beyond me," he says. The Air Force is looking into the cost and penalties of canceling the C-130J and the potential cost increases to the F-22. (Defense Daily)

<i>Senator, you are either a dunce or a liar. If all the overhead for operating Air Force Plant #6 is put on the F-22 program, costs for that program must increase. It is not "beyond you" to understand that. I reiterate, what are you really up to?</i>

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BOEING'S ALBAUGH FACES <b>MCCAIN</b>, INFIGHTING: Jim Albaugh, chief of Boeing's Integrated Defense Systems division, has two things on his wish list. He wants to keep the company's huge FCS contract from being derailed by Congress, the way Boeing's equally vital Air Force tanker deal was killed last year. And, like Boeing Commercial chief Alan Mulally, he would like to become Boeing's next CEO. Albaugh faces two big hurdles, though. One is Sen. <b>John McCain</b>, now taking aim at Air Force and Army procurement. The second is an apparent rift between Boeing's defense division and others at the company, especially the D.C. lobbying operation, which plays a crucial role in the company's government contracts. Albaugh is a rocket scientist, not a politician. In an interview with The Seattle Times, he suggested that fallout from the tanker deal has cleared. "We've shot off all the toes," he said. "There aren't any more toes to shoot." He seemed surprised to hear from a reporter that in fact, the collateral damage continues on Capitol Hill, clouding other Boeing contracts as well as his own prospects for the CEO job. In the interview, he made it clear he will not let the FCS contract become Tanker Two. That, he said, is why the company responded quickly when <b>McCain</b> began raising questions this spring about the FCS contract. But <b>McCain</b>, who single-handedly killed the tanker deal over concerns about cost and conflict-of-interest issues, is going after FCS in similar fashion. <b>As head of the Senate Armed Forces subcommittee that oversees Air Force procurement, he compelled the secretary of the Army earlier this month to initiate a rewriting of the entire FCS contract to conform to strict procurement accountability standards.</b> Until <b>McCain</b> made his demands, the contract had been arranged by the Army and lacked the usual guarantees against price increases and conflict of interest by contractors. He doesn't intend to stop there, say <b>McCain staffers</b> and defense-industry analysts: He will soon launch a more comprehensive review of FCS costs and technical problems, which could hurt Boeing. With these big procurement issues at stake, cooperation between Boeing's defense division and the company's 35-person D.C. lobbying operation would seem vital. But there are plenty of signs that Albaugh's unit and the D.C. office aren't working well together. "There is a serious problem with the breakdown of internal lines of communications at Boeing," said Richard Aboulafia of The Teal Group, who closely follows the company's internal machinations. "Other companies have had Byzantine power struggles," Aboulafia said. "But this infighting is far more serious, at a pivotal moment in terms of contract awards and execution." In one example of communication gaps, Albaugh staffers say he didn't get adequate warning from the D.C. office about <b>McCain's March 16 hearing</b> focusing on Boeing's prized FCS contract. That hearing led to the Army beginning a massive rewrite of the contract, significantly complicating Boeing's work. People close to Albaugh also say Boeing's political operatives in D.C. never briefed him on the extent to which <b>McCain links him to the tanker scandal. McCain has said he doesn't think Boeing should hire as CEO anyone involved in the tanker deal, and in previous interviews, he included Albaugh as one of the officials involved: "They're in the e-mails," he said, naming Albaugh and others, including several D.C. lobbyists.</b> Mulally is lying low, not visibly campaigning for the job. However, he came to D.C. yesterday to meet with the state's delegation as a guest of veteran Rep. Norm Dicks. Dicks told the group Mulally would make a great CEO, according to several people present. Albaugh insists that in the end, the choice of CEO doesn't make that much of a difference on an established company such as Boeing. "We're not a company defined by individuals," Albaugh said. "People come and go. And, boy, obviously they have." (Seattle Times)



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RUMSFELD RESTORES LOCKHEED'S C-130 TO DEFENSE BUDGET: SECDEF Donald Rumsfeld has restored Lockheed Martin's venerable C-130 cargo plane to the defense budget, a tacit acknowledgment that the Pentagon may have cobbled together sweeping budget cuts too hastily. Mr. Rumsfeld's about-face, communicated in a letter to Capitol Hill Tuesday, was as abrupt as the Pentagon's proposal late last year to cancel the program in the FY 2006 budget. That cut was designed to save $5B, but it quickly ignited political opposition led by lawmakers from Georgia, where Lockheed builds the transport plane. In his letter, Mr. Rumsfeld said that while the decision to scrap the C-130J was "based on the information available at the time, new information has become available regarding the contract termination costs." "This reversal reflects the general sloppiness of the budget cuts that the Pentagon proposed," said Loren Thompson of the Lexington Institute. "Rumsfeld still hasn't explained why he wanted to cancel a program that is central to the Army's future war-fighting plans." The C-130 is slated to be a main transport plane for an array of vehicles in the Army's FCS program. It also is unclear why Mr. Rumsfeld reversed his view on the program before a major Pentagon study of troop and cargo airlift needs is completed this year. (Wall Street Journal)



PENTAGON DROPS PLAN TO END LOCKHEED'S C-130J PROGRAM: U.S. SECDEF Donald Rumsfeld, under pressure from lawmakers, has agreed to stick to a $4.1B, five-year contract with Lockheed Martin for its C-130J cargo aircraft, reversing plans to kill the program. Under a belt-tightening budget proposal Rumsfeld had made public in February, the DoD was to have wound up the program at the end of FY 2006 to save as much as $1.9B. "While the decision during the Department's FY 2006 budget process was based on the information available at the time, new information has become available regarding the contract termination costs," Rumsfeld wrote members of Congress on Tuesday. Lockheed welcomed Rumsfeld's decision. The company looked forward to providing "a quality aircraft that has proven itself in two combat theaters," Afghanistan and Iraq, said Jeff Adams, a spokesman. The Project on Government Oversight said the C-130J "proves that pork flies." Rumsfeld, in his letter, said a budget amendment would not be required. Instead, the Pentagon would work with the White House OMB to address FY 2007 and 2008 "offsets necessary to implement this decision." (Reuters)



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