S11776 CONGRESSIONAL RECORD — SENATE November 20, 2004 INDIVIDUALS WITH DISABILITIES children are not punished for behavior eral, DOD–IG, to conduct an independent as- EDUCATION ACT caused by their disability, and con- sessment. However, I believe that the DOD– IG assessment should go further than the re- Mr. KOHL. Mr. President, I express tinuing services if a child is placed in an alternative setting. I know that view described ion your letter of December 1, my support for the Individuals with 2003. The DOD–IG inquiry should pursue the Disabilities Education Act conference some parents are worried about these trail of evidence wherever it leads, in accord- report that passed the Senate yester- revised discipline provisions and would ance with standard IG procedures. This in- day. It is not a perfect bill, but I be- prefer current law. I agree that we quiry should examine the actions of all lieve it represents a fair balance of the must continue to monitor these provi- members of the Department of Defense and concerns of schools and parents of chil- sions carefully to ensure they are im- the Department of the Air Force, both mili- dren with disabilities. Above all, it up- plemented fairly and with the best in- tary and civilian, top to bottom, who partici- terests of disabled children in mind. pated in structuring and negotiating the pro- holds the rights of all children with posed tanker lease contract which was sub- disabilities to a free, appropriate edu- Despite these positive features, I am very disappointed that this bill does mitted to the Congress in July 2003. cation in our public schools. It prom- Your recent actions clearly indicate that ises them access to a high quality edu- not move us any closer to fully funding there are many outstanding questions that cation to help them succeed and live IDEA. When IDEA was first enacted in must be answered before proceeding with productive lives. And it includes strong 1975, Congress made a commitment to this program. I expect that you will consult monitoring and enforcement provisions fund 40 percent of the costs, in recogni- further with the Congress as you receive the to ensure that that promise is kept. tion of the added expenses schools report of the DOD–IG and that no actions The bill includes several improve- would incur in serving disabled stu- will be taken with respect to the lease and dents. Today, the Federal Government purchase of KC–767 tanker aircraft until the ments over current law that will help Congress has had an opportunity to review secure the rights of children with dis- is funding IDEA at the highest levels since it was created—but sadly, that the DOD–IG report. Ultimately, this pro- abilities and uphold the rights of par- gram, as restructured, must be executed in a ents advocating for their children. funding only covers approximately 19 manner that is fully consistent with Section First, it holds schools accountable for percent of the costs. I have cosponsored 135 of the National Defense Authorization educating disabled students by giving and supported legislation that would Act for Fiscal Year 2004 (Public Law 108–136). the Secretary of Education the tools to require mandatory full funding for With kind regards, I am monitor how well States and schools IDEA, and as a member of the Appro- Sincerely, priations Committee, I will continue to JOHN WARNER, are complying with the law and sanc- Chairman. tioning those that fail to serve disabled fight for full funding of IDEA. It is past students. It provides flexibility and re- time for the Federal Government to U.S. SENATE, sources for early intervention and pre- live up to its obligations. COMMITTEE ON ARMED SERVICES, school services for younger children, The conference report is not a perfect Washington, DC, Nov. 19, 2004. and promotes transition services for bill. Clearly, there are provisions that Hon. DONALD H. RUMSFELD, older students in order to prepare for will trouble both sides—both the edu- Secretary of Defense, their post-school years. It preserves cational community and the families Washington, DC. of disabled children. But on balance, I DEAR MR. SECRETARY: On December 2, 2003, the Individualized Education Programs Chairman Warner wrote to Deputy Secretary to ensure that parents have quarterly think the bill represents a real com- Wolfowitz to request that the Department of reports of their child’s progress and promise and has great potential to lead Defense Inspector General (DOD IG) conduct short-term objectives for those with to improved educational services for a thorough investigation of the KC–767A the most severe disabilities. It provides children with disabilities. It attempts tanker aircraft program. According to Chair- for more teacher training and strength- to create a balanced approach that rec- man Warner’s letter ‘‘this inquiry should ex- ens teacher quality requirements so ognizes the challenges faced by teach- amine the actions of all members of the De- that students are taught by highly ers and schools, while still ensuring partment of Defense (DOD) and the Depart- that all children with disabilities have ment of the Air Force, both military and ci- qualified teachers. It also adds options vilian, top to bottom, who participated in for parents and schools to work to- access to the highest quality edu- structuring and negotiating the proposed gether to resolve disputes, but pre- cation. I will continue to work to fully tanker lease contract which was submitted serves the right to due process if a fund its provisions so that the promises to the Congress in July 2003.’’ A copy of that school is out of compliance. it makes will become a reality. This letter is attached. At the same time, this bill also re- bill is worthy of the Senate’s support It was our understanding that the re- sponds to many of the concerns raised and I urge my colleagues to vote for it. quested DOD IG review would assess not only by schools and teachers. It provides re- individual responsibility for any allegations f of criminal violations of law; but, equally lief from unnecessary and burdensome BOEING 767 TANKER LEASE important, individual accountability for paperwork so that teachers can focus management decisions and executive over- Mr. MCCAIN. Mr. President, yesterday their attention on educational services. sight. In essence, the Senate Committee on It provides more opportunities to re- I spoke on the Senate floor regarding Armed Services, in order to conduct its nec- solve conflicts and disagreements other the investigation into the Air Force essary legislative oversight of the Depart- than through costly and acrimonious proposal to acquire Boeing 767 aerial ment of Defense, needs to know what hap- litigation. And it provides more re- refueling tankers. During my 45 minute pened, who was accountable and what ac- sources for professional development so remarks, I had made reference to cer- tions must be taken to prevent this situation from happening again. teachers are equipped to deal with the tain letters, press articles and e-mails I ask unanimous consent that that ma- It is astonishing to us that one individual often complex but critical needs of stu- could have so freely perpetrated, for such an dents with disabilities. terial at a cost of $3,200.00 be printed in extended period, this unprecedented series of This bill also addresses the serious the RECORD of today’s proceedings. fraudulent decisions and other actions that issue of discipline—an issue that has U.S. SENATE, were not in the best interest of the Depart- caused many concerns over the years COMMITTEE ON ARMED SERVICES, ment of Defense. by both education officials and parents Washington, DC, Dec. 2, 2003. We recently found out that no such mana- of children with disabilities. The bill Hon. PAUL WOLFOWITZ, gerial accountability review has been under- Deputy Secretary of Defense, taken by the DOD IG. Rather, the DOD IG includes a bipartisan compromise that Washington, DC. limited his review to determining whether clarifies and strengthens discipline DEAR SECRETARY WOLFOWITZ: I commend there was evidence to press criminal charges. provisions so that schools can remove the Secretary of Defense and yourself for the We are deeply concerned by this develop- children who pose a serious danger to prompt actions you have taken regarding the ment. Given the Chairman’s letter, why was themselves or others to an alternative Air Force’s tanker aircraft program, in light a decision made not to do this work? setting, while ensuring that those chil- of recent extraordinary personnel actions Congressional oversight of the proposed dren continue to receive services. At taken by the Boeing Company. Your decision contract to lease 100 KC–767A tanker air- craft, a contract which is now prohibited by the same time, this compromise pro- to require a ‘‘pause’’ in the execution of any contracts to lease and purchase tanker air- section 133 of the National Defense Author- tects the rights of disabled children in craft is a prudent management step. ization Act for Fiscal Year 2005, uncovered disciplinary action by preserving the Further, I concur in your judgment to task the most significant defense procurement manifestation determination so that the Department of Defense Inspector Gen- scandal since the Ill Wind bribery and fraud

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00112 Fmt 4624 Sfmt 0634 E:\CR\FM\G20NO6.172 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11777 cases of the 1980s. It is imperative that the aerial refueling mission. That a Navy man Lockheed and Boeing officials could not be Department take actions to hold those re- would back an Air Force program is what reached for comment. sponsible accountable. Otherwise, the fallout made it intriguing. Lockheed is pursuing a civil racketeering from this Air Force procurement scandal What we didn’t know at the time was that lawsuit against Boeing in Orlando, Fla., that will have disastrous effects on the integrity Clemins did not write the piece. Nor did he accuses Boeing of using 40,000 pages of stolen of the acquisition system. think on his own to write it. Nor, for that Lockheed documents to gain an unfair ad- In our view, an assessment of account- matter, did he even think to send it to Navy vantage in a multibillion-dollar competition ability should include a review of all mem- Times, a sister publication, without prompt- to provide satellite launches to the Air bers of the Department of Defense and the ing. Force. Department of the Air Force, both military In truth, a Boeing representative came up Druyun was not tied to that case origi- and civilian, who participated in structuring with the idea, asked Clemins to write it, and nally. But after her guilty plea last month, and negotiating the proposed tanker lease provided a writer to help get the job done. Lockheed sought Boeing e-mails and other contract. Most importantly, this should in- Boeing also suggested where he ought to documents showing contacts between Boeing clude Secretary of the Air Force Jim Roche, send it and provided him the e-mail address. and Druyun concerning both the rocket com- and Assistant Secretary of the Air Force Clemins says he was not paid for the arti- petition and several other contracts she Marvin Sambur. We reiterate the Commit- cle and stands by what it says. We believe awarded to Boeing rather than Lockheed. tee’s request that the DOD IG immediately that. In October 1998, the Air Force awarded 19 But he acknowledged that prior to writing initiate such an accountability review. launches to Boeing and seven to Lockheed. the article, he had done some paid consulting Again, we do not understand how one indi- The Air Force cited Boeing’s lower price- work for Boeing, and that he has since devel- vidual could have amassed so much power per-launch as a major reason for giving Boe- oped a more formal consulting arrangement that she was able to perpetuate such fraud ing so many launches. with the company. He said he made no effort against the federal government and other ac- Lockheed said in last week’s court filing to ‘‘pull the wool over anyone’s eyes.’’ tions that were not in the best interest of In publishing the piece, regardless of who that handwritten notes of the September, the Department of Defense. Where was the actually wrote it, we provided a forum for 1998 meeting between Stonecipher, Albaugh, oversight? Where were the checks and bal- the free flow of ideas. That is the purpose of Druyun, McKinney and other Air Force offi- ances? At a minimum, the acquisition chain our Commentary pages. cials suggest Boeing also received unfair of the Air Force, and perhaps DOD, was woe- But we failed to do some things we should treatment in the award of those launches by fully inadequate. The fact that no Depart- have done. We should have asked Clemins if receiving confidential Lockheed pricing mental review of these questions has been he had a financial relationship with the pro- data. conducted raises significant accountability gram or the contractor. We should have ‘‘The fact that high-level Boeing officials and oversight questions that go far beyond asked if he had, in fact, written the article discussed their proposal strategy and Lock- this one case. We trust you will endeavor to himself. And we should have weighed his an- heed Martin’s pricing with Ms. Druyun rectify the situation and hold those who are swers in our thinking, because that informa- shortly before the final (rocket) proposal responsible accountable. tion is essential to the context of his article. submission is damning,’’ Lockheed said. Sincerely, Had we known those things, we might still The meeting notes, taken by David CARL LEVIN, have published his opinion. But we would Schweikle, project manager for Boeing’s Ranking Member. have included the other writer’s name and Delta IV rocket program, were, like the JOHN MCCAIN, noted Clemins’ relationship with Boeing Stonecipher e-mail, placed under seal. U.S. Senator. among his credentials at the end of the arti- U.S. Magistrate Judge Karla Spaulding JOHN WARNER, cle. As it was, we merely noted that he was last week agreed to let Lockheed lawyers Chairman. the former commander of the Pacific Fleet— question a Boeing representative about com- true, but not the whole story. munications with Druyun on six contract DEPUTY SECRETARY OF DEFENSE, Full disclosure is what we’re after. Here, competitions, including the rocket-launch Washington, DC, Nov. 19, 2004. we fell short. We will work hard to ensure contract. Hon. JOHN W. WARNER, this doesn’t happen again. ‘‘It may lead to admissible evidence about Chairman, Committee on Armed Services, whether Boeing had improperly acquired pro- U.S. Senate, Washington, DC. [From the Seattle Times, Nov. 18, 2004] prietary information of Lockheed and others DEAR MR. CHAIRMAN: As you know, the De- LOCKHEED ALLEGATIONS FOCUS ON BOEING’S that it discussed with Druyun,’’ the judge partment soon will complete the analysis of CHIEF EXEC wrote. alternatives (AoA) for recapitalization of the Lockheed Martin has introduced evidence Boeing lawyers objected to the judge’s KC–135 tanker aircraft fleet, and that por- in a civil lawsuit that allegedly dem- order, and a hearing was set for next month tion of a broader mobility capability study onstrates Boeing Chief Executive Harry to resolve the objections. (MCS) related to aerial refueling. Based upon Stonecipher knew former Air Force acquisi- The Boeing attorneys, in court filings, said the recommendations of the Defense Science tions officer Darleen Druyun gave Boeing Lockheed’s request for information on Board, I accelerated, to November of this preferential treatment in the award of bil- Druyun is too broad, has nothing to do with year, the schedule for completion of these lions of dollars of Defense Department con- the case and is an attempt by Lockheed Mar- initiatives. The AoA and MCS will be critical tracts before she joined the company last tin to concoct new complaints against Boe- to our development of a plan to recapitalize year. ing. the tanker fleet, and to provide adequate Additionally, Lockheed introduced evi- CHIEF WEAPONS BUYER FOR AIR FORCE QUITS dence it says shows Stonecipher and James aerial-refueling capabilities for military air- WASHINGTON—The Air Force’s chief Albaugh, chief executive of Boeing’s Inte- craft over the long term. weapons buyer said yesterday he is resigning In structuring the AoA and MCS, we recog- grated Defense Systems unit, attended a to help clear the way for promotions bottled nized that we should base the recapitaliza- September 1998 meeting with Druyun and Air up in Congress over a stalled $23.5 billion tion of the fleet on a thorough and careful Force Col. Richard McKinney in which Boe- plan to acquire Boeing 767 tanker aircraft. ing allegedly received details of a confiden- assessment of the ways in which we might Marvin Sambur said he had resigned as as- tial Lockheed proposal to provide rocket perform the aerial-refueling mission. To en- sistant Air Force secretary for acquisition launches to the Air Force. sure that we consider all viable solutions, effective Jan. 20, or sooner should President the AoA addresses a wide range of alter- Druyun received a nine-month prison sen- tence last month for holding job talks with Bush’s next choice for the job be confirmed natives, from the retention and re-engineer- before then. ing of KC–135E aircraft to the development of Boeing while still overseeing Boeing business at the Air Force. She further admitted to ‘‘It’s becoming pretty apparent that if I a new military tanker aircraft. stayed it would be very difficult for the Air Let me be clear: After we have selected an awarding more than $5 billion of Defense De- Force to have anybody confirmed,’’ Sambur appropriate alternative, we intend to require partment contracts to Boeing in exchange said in a telephone interview. competition. No matter which alternative we for jobs for her daughter, her son-in-law and On Tuesday, Air Force Secretary James choose, leasing is not an option without new herself. Roche resigned in a move aides said was also congressional authority. Boeing and Stonecipher have been ada- designed to free up nominations of officers Sincerely, mant that if Druyun showed the company whose Senate confirmations were held up by PAUL WOLFOWITZ. any favoritism, Boeing was not aware of it. ‘‘The statements Ms. Druyun made in her Armed Services Committee member John McCain, R-Ariz. [From the Defense News, Nov. 3, 2003] sentencing papers came as a total surprise,’’ Boeing said last month. McCain had blocked a range of promotions FULL DISCLOSURE However, Lockheed said in a court filing over the Air Force proposal to acquire 100 In March, Defense News published a com- last week that it has ‘‘an e-mail written by Boeing 767 aerial tankers, which he slammed mentary by Adm. Archie Clemins, former Mr. Stonecipher admitting that Darleen as a government handout to Boeing. commander in chief of the U.S. Pacific Fleet. Druyun had favored Boeing in the past.’’ Sambur was once the boss of Darleen In it, he advocated a U.S. Air Force plan to It is not clear from the filing when the e- Druyun, who admitted improperly steering lease 100 planes from Boeing Co., which mail was written. The e-mail itself was billions of dollars of Air Force contracts to would modify the 767s for the Air Force’s placed under seal by the court. Boeing before joining the company as a

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$250,000-a-year vice president in January USAF E-MAILS ON BOEING 767 TANKER LEASE USAF E-MAILS ON BOEING 767 TANKER LEASE 2003. PROPOSAL PROPOSAL A former president and chief executive of ORIGINATOR, DATE, SUBJECT From: James Roche ITT Defense, Sambur oversees the Air To: William Bodie Force’s $37 billion procurement budget. Roche, August 07, 2002, FW: Crosby Finds a Date: August 07, 2002 Home at EADS; Bodie, Sept 04, 2002, Re: Fw: Subject: FW: Crosby Finds a Home at EADS [The Wall Street Journal, Sept. 3, 2003] Defense Week Daily Update: EADS: Our Well, well. We will have fun with Airbus! JOHN MCCAIN’S FLYING CIRCUS Tanker Offer Cost Less Than Boeing’s; Jim. No one denies that the U.S. Air Force Druyun, Sept 05, 2002, Our friend; Hodges, needs more refueling tankers. The only ques- June 20, 2003, FW: KC–767 ‘‘Savings’’ for com- From: Miriam Thorin tions are how and when to get them. Senator ment & Courtesy Copy of Memo; Wynne, To: James Roche John McCain calls the Pentagon’s answer, a June 23, 2003, Tankers; Weaver, May 7, 2003, Date: August 07, 2002 leasing arrangement with Boeing, an unsa- 767 Lease; Druyun, Oct 9, 2002, Tanker Leas- Subject: FW: Crosby Finds a Home at EADS vory example of the modern ‘‘military-indus- ing; Calbis, Nov 7, 2001, CBO has questions Paris.—European Aeronautic Defense & trial complex,’’ a mistaken argument he will about your scoring of the tankers; Roche, Space Co. NV (N. EAD) said Wednesday that no doubt pursue today at hearings before his Friday, November 28, 2003, RE: Tankers; it has appointed Ralph Crosby to head its Commerce Committee. It’s hard to overesti- Roche, August 8, 2002, Re: hello? North American operation. Until January, mate the importance of these flying gas sta- Albaugh, Wednesday, September 18, 2002 Crosby was president of Northrop Grum- tions. Long-range bombers make it to their 8:03 PM, RE: Marvin Sambur; Ellis, Tuesday, man’s Integrated Systems division, EADS targets only because they can refuel in the December 17, 2002 9:36 PM, notes from jim said in a statement. ‘‘As our senior official in the U.S., (Crosby) air. It was our tankers that enabled coalition Albaugh’s meetings; Albaugh, Monday, June will oversee our efforts to expand our busi- aircraft to circle high above Iraq’s battle- 23, 2003 3:00 PM, FW: Roche mtg 23 Jun 03; fields for hours, providing ground troops ness, develop industrial partnerships, and en- Wynne, Tuesday, July 08, 2003, Re: 767 and sure strong customer relationships in this with the capability to call in immediate, DepSecDef; Roche, Wednesday, April 16, 2003, precision air strikes on emerging targets. critical market,’’ EADS said. RE: Tankers; Roche, Nov 19, 2002, 767 Lease; Crosby will assume his position on Sept. 1. ‘‘Our tanker force is what makes us a global Roche, Monday, December 17, 2001 7:24pm, Manfred von Nordheim, EADS’s current top power’’ is the way the Air Force chief of Re: 767 Leasing; Jumper, Tuesday, February representative in the U.S., will continue to staff, General John Jumper, puts it. 25, 2003 8:58pm, Re: Offsets for tanker lease; work as a senior adviser, the company said. Yet for all that power, America’s tanker Wynne, Wednesday, June 25, 2003, RE: Cordially, fleet is in sad shape because the tankers are OSD(C) AND 767 LEASE; Lemkin, June 25, Alex. simply too old to keep flying. The Pentagon 2003, OSD(C) and 767 Lease. is hoping to remedy this quickly by leasing From: Bill Bodie Roche, Tuesday, July 08, 2003 9:44 pm, Re: the tankers from Boeing, and three of the To: James Roche Footnote; Roche, Tuesday, July 08, 2003, four relevant committees in Congress have Date: Sept 04, 2002 Lease; Roche, Wednesday, September 03, given their approval to the contract. The Subj: Re: Fw: Defense Week Daily Update: 2003, Re: Ken Kreig ltr; Wynne, Wednesday, fourth—the Senate Armed Services Com- EADS: Our Tanker Offer Cost Less Than July 09, 2003, RE: FW: Footnote; Cleveland, mittee—will hold hearings tomorrow. Sen- Boeing’s 15 May 2003, 1913, Re: Interview at NG; Jump- ator McCain’s Commerce hearings today are We don’t have to turn the other cheek, you er, June 22, 2002, RE: CNBC Interview—Tank- his way of trying to preempt approval by know. I’m ready to tell the truth about er Recapitalization; Sambur, June 17, 2003, running up his own Jolly Roger. Airbus’s boom, footprint, and financial Let’s hope he doesn’t draw the fight out FW: USAF Green Aircraft Pricing; Sambur, shortcoming. But maybe we should sleep on too long. The average tanker is now more October 10, 2002, RE: Tanker Leasing; Essex, it. than 43 years old. During a visit last year to August 03, 2002, FW: Potential OMB Prob- W.C. BODIE, Oklahoma’s Tinker Air Base, then-Air Force lems with 767 Lease; Sambur, October 21, Special Asst. to the Secretary and Director, Secretary James Roche realized the urgency 2002, 767 meeting with OMB. Air Force Communications. of the problem when he peeled back the skin Sambur, September 11, 2002, 767 Tanker From: James Roche of a tanker being refurbished and found the justification; Sambur, July 25, 2003, Re: To: Bill Bodie metal underneath disintegrating. SASC Tanker Lease Hearing; Sambur, No- Date: Sept 04, 2002 Age isn’t the only problem. Not only will vember 19, 2003, FW: Tankers; Zakheim, No- Subj: Re: Fw: Defense Week Daily Update: the new Boeing 767s be able to refuel all vember 25, 2002, RE: KC–767 Lease Delay; EADS: Our Tanker Offer Cost Less Than planes in the military’s inventory—unlike Wynne, July 08, 2003, RE: Footnote; Walker, Boeing’s the existing KC 135E’s—they carry up to 20% August 21, 2003, Re: Revised OMB Circular A– Importance: High more fuel and three times the cargo. And the 11; Sambur, November 21, 2003, FW: 767 Up- leasing arrangement used to get them to the date; Walker, Nov. 26, 2002, More Updates No, Sir, save it and blow him away. He ad- Air Force is similar to the way foreign mili- from GC; Wynne, June 24, 2003, Meeting; mits that they were not technically quali- taries buy planes, selecting off-the-shelf Wynne, July 17, 2003, Good Luck. fied! And, we keep their record of bribes as our trump card! Jim. technology and then signing a contract for Wynne, November 01, 2003, RE: Two DR. JAMES G. ROCHE, rapid delivery. This is how Israel and Singa- Issues—Tankers and Ship Funding; Secretary of the Air Force. pore get the latest F–16s five years before the Burkhardt & Associates, May 3, 2002, WSJ; U.S. Air Force. Roche, May 14, 2002, RE: Call from Boeing; From: Darleen Druyun We’re as opposed to sweetheart deals as Bodie, April 25, 2002, RE: US News; Roche, To: James Roche anyone. But it seems to have escaped Sen- December 13, 2001, Fw: 767 lease; Roche, De- Date: Sept 05, 2002 ator McCain’s notice that Boeing’s main cember 13, 2001, RE: Several items; Roche, Subj: Our friend competitor here, the European consortium March 30, 2002, RE: Tanker story; Custer, I read with disgust the article on Airbus that produces Airbus, virtually defines cor- March 30, 2002, NDAA; Jumper, April 9, 2002, tankers from the new EADS CEO of North porate welfare. And so far as we can tell, the RE: Tanker Article; Roche, April 28, 2003, America. What BS . . . should not have been e-mails between Boeing, the Pentagon and RE:. surprised at the slime . . . his day of reck- the Air Force released by his committee last Bodie, January 2, 2002, RE: Dear Bob; Al- oning will come hopefully. week seem to show only that Boeing was lob- dridge, May 16, 2003, RE: Boeing; Roche, May From: James Roche bying hard for a multibillion-dollar deal 13, 2001, RE: 767 lease; Bodie, Friday, June 21, Date: Sept 05, 2002 (surprise!) and that cost was a big concern. 2002 11:26 AM, RE: CNBC Interview—Tanker Subj: Re: Our friend In short, the real issue the Senate Armed Recapitalization; Druyun, Wednesday, Octo- Oy. I agree. I had hoped you would have Services Committee needs to zero in on here ber 09, 2002 8:17 AM, OSD BRIEF TO LEAS- stayed and tortured him slowly over the next isn’t just overall lifetime cost but value for ING WORK GROUP; Wynne, Tuesday, Jul 08, few years until EADS got rid of him! Jim. money. The Air Force needs tankers now, 2003, Re: FW: Footnote; Sambur, Tuesday, DR. JAMES G. ROCHE, and the leasing arrangement was deemed the July 08, 2003 9:58 PM, Fw: Tanker Leasing Secretary of the Air Force. way to get tankers into its hands most expe- Report to the Congress; Sambur, Tuesday, ditiously, not least because it bypasses pro- From: Williams Hodges August 26, 2003 7:59 AM, $2B Issue with curement procedures that could stretch out To: Marvin Sambur PA&E; Aldridge, Monday, November, 04, 2002 a buying decision for years. CC: John Corley; Mark Murphy; Mark Senator McCain and other critics like to 1:22 PM, Tankers and B–52’s; Spruill, Tues- Beierle; Stephen Gray; James T. Rivard; talk about what he says are the billions day, November 12, 2002 9:22 PM, RE: Tanker Cheryl Allen; Nancy Lively; Allan more that a leasing deal will cost over buy- Leasing. Haenisch ing these birds outright. Leaving aside the Date: 6/20/2003 huge dispute over the price tag, let’s hope Some of the following records are tran- Subj: FW: KC–767 ‘‘Savings’’ for comment & the Armed Services Committee considers the scriptions made by Senate staff of original Courtesy Copy of Memo costs our military might incur by not get- documents provided by the Department of DR. SAMBUR: I received a call from Dave ting these tankers as soon as possible. Defense. Trybula, who works for Rick Burke in

VerDate Aug 04 2004 02:47 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00114 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.132 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11779 PA&E. HE stated he had just delivered a seem to be one of them, now I worry. If the quietly helping us. If you give a nod we will memo to Dr. Roche’s office. I asked him if he SecDef wants to kill this he will, so far not— use the same charts we used to brief Ging- could share what they had sent and he at- your note was not helpful to either one of us. rich which was very positively received by tached the memo in two files, below. I will continue to make decisions that have him. This was a total surprise and not ever men- the potential for successful execution of the From: James Roche tioned in any of our discussions with Dr. lease unless SecDef waves me off. To: Darleen Druyun Spruill or Dr. Schroeder. It appears that Best Regards, Date: Oct 9, 2002 they have simply listed all their positions on Mike. Subject: Re: Tanker leasing the report and none of the accommodations From: Ken Krieg, PA&E Please do. Thanks much. Jim. reach with the leasing working group. Ap- To: Michael Wynne Dr. James G. Roche. parently, they no longer want to be part of Date: June 23, 2003 From: Philip T. Calbis (OMB) the process. Subj: RE: Tankers I propose that we provide you with an To: John McClelland, Rob Goldberg email containing our counterpoints on their MIKE: That’s not what I intended and I Date: Nov 7, 2001 assertions, followed by a proposed response may have used the wrong instrument to Subj: CBO has questions about your scoring from Dr. Roche back to PA&E. communicate my concerns. I just want to of the tankers. get together with you and Jim to make sure VR, John-Joanne Vines from CBO called with you understand what we are worried about. Wayne. questions about your scoring of the tankers. That’s why I asked for us to get together Specifically how did you get to the 18 bil- From: Marvin Sambur this afternoon. lion? Her analysis shows the NPV closer to To: James Roche KJK. Date: June 20, 2003 $20 billion. Subj: FW: KC–767 ‘‘Savings’’ for comment & From: Ken Krieg, PA&E I called her back after talking it over with Courtesy Copy of Memo To: James Roche Rob and found out that she had a copy of Date: June 23, 2003 BOSS: This is getting ridiculous!!!! your spreadsheet from the Senate budget Subj: FW: tankers Marv. committee folks. She was meeting with Boe- JIM: Understand from Doc that you are as ing and the AF this afternoon. I asked her From: James Roche mad as Mike. I am not trying to walk back To: Michael Wynne not to share your table with them (she said anything. I am trying to get the strategy to no problem because she wasn’t ready to CC: Marvin Sambur drive the deal; the deal and contract to set Date: June 22, 2003 share her numbers with them either). the numbers; the numbers to be reopened in She would like for you to call her tomor- Subj: FW: KC–767 ‘‘Savings’’ for comment & the report without a lot of hype. Courtesy copy of memo row at 202–226–5707. Apparently, the Senate Probably should have called you but I will budget committee is pressuring her to see MIKE: Ever since Pete left, the bureaucrats explain later. things the AF way so Conrad can do Stevens who opposed the 767 lease have come out of Want to get together with you and Mike to a favor. So, talk it over with Rob and give the woodwork to try to kill it-yet, once clear air. again. Mike, I won’t sign a letter that makes KJK. her a call right back. the case that we shouldn’t lease the planes. KEN KRIEG, From: Jim Roche Ken Krieg’s memo attached is a cheap shot, Director, Program Analysis & Evaluation and To: Robin Cleveland and I’m sure has already been delivered to Executive Secretary, Senior Executive Sent: 9 May 2003 1712 the enemies of the lease on the Hill. It was Council. Subj: Peter Cleveland Resume & Cover letter a process foul. And Ken needs to be made From: James Roche attached for export aware of that BY YOU! To: Ken Krieg, PA&E Be well. Smile. Give tankers now (Oops, I can’t control the corporate staff on ac- Date: June 23, 2003 did I say that? My new deal is terrific.) :) quisition issues. Mike, this is their way of Subj: RE: Tankers Jim. asserting dominance over you. I know this Kenny, I love you, and you know that. I DR. JAMES G. ROCHE, sounds wild, but animals are animals. Pete think you have been had by some members Secretary of the Air Force. had beaten them down. Now, they are taking of the famous PA&E staff. You never should From: Jim Roche you on. I’m sorry. Expecting professional be- have put what you put in writing. It will now To: Stephen Dyslas Northrup Grumman havior from them is something I gave up on be used against me and Don Rumsfeld. Sent: 9 May 2003 1620 a while back. Among other things, they are Jim. Subj: Peter Cleveland Resume and cover let- about to cause us to embarrass SecDef, who DR. JAMES G. ROCHE, ter attached for export/import compli- having approved the lease, will now have to Secretary of the Air Force. ance attorney (DC) position–021495 explain why his staff is destroying the case for it. I’ll do whatever I can to help you, From: Paul Weaver STEVE: I know this guy. He is good. His sis- Mike, but it’s your job to get the corporate To: James Roche ter (Robin) is in charge of defense and intel staff under control. If not now, then they Date: May 7, 2003 at OMB. We used to work together in Senate will overrun you whenever you ‘‘don’t be- Subj: 767 Lease staff. If Peter Cleveland looks good to you, have’’ according to their desires. This is the MR. SECRETARY: Rudy just called me and PLS add my endorsement. Be well. I’ve let same game they have played for years. They said that Marv Sambur was getting beat up Rummy con me one more time! Army! Best and OMB are trying to set the Air Force up by Mike Wynn again concerning the $125M to Alice. to be destroyed by Sen McCain WITH OSD dollar number per aircraft. Rudy would like Jim. AND OMB ARGUMENTS. As you might to know if he needs to do anything like call- From: Robin Cleveland imagine, I won’t give them the chance, but I ing in the big guns to help out. I told him I To: Jim Roche will make it clear who is responsible to Don. would query you to get your advice. Sent: 9 May 2003 1549 I refuse to wear my flack jacket backwards! GOD BLESS, Subj: Peter Cleveland resume and cover let- Sorry, Shipmate. Jim. Paul. ter/Import compliance attorney (DC) po- DR. JAMES G. ROCHE, From: Jim Roche sition–02 1495 Secretary of the Air Force. To: Paul Weaver JIM: This is my brother’s stuff. I would ap- From: Michael Wynne Date: May 07, 2003 preciate anything you can do to help with To: James Roche Subj: Re: 767 lease NG. He is an incredibly hard working, dis- CC: Marvin Sambur It’s time for the big guns to quash Wynne! ciplined guy—worked full time with two lit- Date: June 23, 2003 Boeing won’t accept such a dumb contract tle kids putting himself through law school Subj: RE: KC–767 ‘‘Savings’’ For comment & form and price, and Wynne needs to ‘‘pay’’ at night. I would be grateful. Thanks very Courtesy Copy of Memo the appropriate price! Jim. much, Robin. JIM: Thanks for your note—I see this as an DR. JAMES G. ROCHE, From: Robin Cleveland OSD discipline problem myself. I will be tak- Secretary of the Air Force. To: Peter Cleveland ing it to the Secretary as well—better he From: Darleen Druyun Sent: 15 May 2003 1913 hear it from two sources. To: James Roche; Marvin Sambur Subj: Re: Interview at NG Mike. Date: Oct 9, 2002 From: Michael Wynne Subject: Tanker Leasing Great hope it works before the tanker leas- ing issue get fouled up. To: Ken Krieg, PA&E I would like to informally brief Bill Date: June 23, 2003 Schneider on tanker leasing when he gets From: James Roche SAF/OS Subj: Tankers back from Germany. I had briefed him dur- To: Peter Teets Civ SAF/US KEN: If the purpose of your note is to run ing the transition about the idea of leasing Date: Friday, November 28, 2003 acquisition from PA&E, we have a problem as a viable acquisition alternative. He has Subj: RE: Tankers that needs immediate resolution. I have apparently had a positive conversation with Thanks, Pete. We can discuss on Monday. plenty of problems, but being ‘fragged’ didn’t Wolfowitz on leasing and is interested in Jim.

VerDate Aug 04 2004 00:58 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00115 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.136 S20PT1 S11780 CONGRESSIONAL RECORD — SENATE November 20, 2004 From: Peter Teets SAF/US From: Roche, James Dr. SAF/OS probe whether there’s sufficient funding to To: James Roche SAF/OS To: Wynne, Michael Mr. OSD–ATL start a multi-year late in FY04 and in ear- Date: 11/27/2003 Date: Wednesday, April 16, 2003 nest in FY05. Not that we are done yet, IDA Subj: Tankers Subj: Re: Tankers may surface changes that make it accept- Sounds good, Mike. Jim. able, but some of the arguments that were JIM: I think it is important for you to DR. JAMES G. ROCHE, tabled make the case for tanker re-cap com- know all I know about the situation sur- Secretary of the Air Force. pelling. rounding the tankers. I sat in for you at the SecDef staff meeting last Tuesday. As we From: Wynne, Michael Mr OSD–ATL If I had some spare change hanging around, I’d give another supplier enough money to went around the table, Joe Schmitz (IG) To: Roche, James Dr. SAF/OS make a proposal for this as well. I’m not say- mentioned the Boeing dismissal of Sears and Date: Wed Apr 16, 2003 ing to buy anything other than a proposal. Druyun. The SecDef then asked if in light of Subj: Re: Tankers But, I think the leverage from that ‘spare that should we take a second look at her in- JIM: Thanks for the input—Ralph was in to change’ would be enormous. For Boeing, the volvement in any tanker lease related mat- see me a few weeks ago, to touch base. I risk of losing the US tanker Franchise, no ters in order to deflect possible criticism think I will keep this in that same vein; about if there is anything EADS can do over matter what our final intent is would be too from the SASC and unfavorable publicity. I embarrassing. I know the opposition would said I thought that was a good idea, and that the near future to keep their long term pros- pects open. Cancelling would not be as soft. be vocal as well, but with the low probability we (the Air Force) would do so. No further of success, I think paying to prepare is fair. discussion on the subject occurred at the Mike. From: Roche, James Dr SAF/OS If chosen we could deduct it from the final staff meeting. After the staff meeting I To: Wynne, Michael Mr. OSD–ATL deal. scheduled short separate meetings with Marv Date: Wednesday, April 16, 2003 While these are idle thoughts for now, the Sambur and Mary Walker for Tuesday after- Subj: Re: Tankers discontent within the administration for noon following my return from a meeting at what they perceive Boeing’s response for as- CIA. When I returned, I learned that Marv MIKE: One more thing that I forgot to pass sistance was is not good, and would support could not meet with me at the scheduled to you on the phone: Don is rarely pissed at the French. Neither you nor I can attend the this contrary approach. time because he was in Mike Wynne’s office Paris Air Show, we are getting into a pos- Best, discussing Darlene’s involvement with tank- sible flap over inviting the Chief of the FAF Mike. ers. I then met with Mary and asked her to to a gathering next September, and you are think through the Darlene situation, plus From: James Roche inviting them in for lunch? Hello? Within another matter regarding proper packaging To: William H Swanson minutes of the invite, Crosby most likely of material on the AFA situation that Date: August 8, 2002 used your call to butter this personal crois- Subject: Re: hello? Schmitz had said was required to be deliv- sant in Paris, and EADS would then inform ered to the SASC. Late Tuesday afternoon I the Que d’Orsay in seconds. Be careful! Oh, really. Mine is probably at ‘‘station 13’’ then talked to Marv Sambur and got his as- Maybe you should consider postponing your while the gang goes on August vacation. surance that a thorough review of the Dar- lunch . . . Jim. When I see it in November, I hope it’s all lene situation had been completed and that DR. JAMES G. ROCHE, there—and no empty wine bottles in the there was no way Darlene had any influence Secretary of the Air Force. doors! Be well. on our current plan for tankers. Further- Jim. From: Wynne, Michael Mr OSD–ATL more, Marv said that a letter had been pre- To: Roche, James Dr SAF/OS; Sambur, From: William H Swanson pared for the DepSecDef to send over to the Marvin Dr SAF/AQ To: James Roche SASC indicating same, and notifying them of CC: Aldridge, Pete Hon. OSD–ATL Date: August 08, 2002 our intent to proceed. At that point, I Date: Wed Apr 16, 2003 Subject: Re: Hello? thought the issue was resolved. On Wednes- Subject: Re: Tankers day morning I read the Wash Post article JIM: Understand. Move explains why you JIM: I have not told Ralph of the meeting’s quoting Sec Rumsfeld as saying he had asked and I had issues in our previous assignments. purpose, as I wanted your feedback. But his staff to do a review of the tanker deal. I Still no red rocket on west coast. It has sat where will the competition come from? sent Marv and e-mail offering any help I in DC for 21⁄2 weeks waiting on transpor- could provide, and he responded with thanks, Mike. tation. I almost called to borrow (pay for) but it was clear that this situation had once From: Roche, James Dr. SAF/OS one of your transporters. It is finally now on again gotten out of control. I am sorry to re- To: Wynne, Michael, Mr. OSD–ATL; Sambur, the road and I will see it next Friday. This port the news to you, but felt you needed the Marvin Dr. SAF/AQ has been torture. Yours will be here before I CC: Aldridge, Pete Hon. OSD–ATL whole story as it unfolded. get to see mine! Date: Wednesday, April 16, 2003 Best Regards, Bill. Subject: Re: Tankers Pete. From: James Roche Mike, you must be out of your mind!!! From: Wynne, Michael Mr. OSD–ATL To: William H Swanson Crosby has lots of baggage, as does Airbus. To: Roche, James Dr. SAF/OS Date: August 08, 2002 We won’t be happy with your doing this! Subject: Re: Hello? Date: Tuesday, July 08, 2003 JGR. Subj: Re: 767 and DepSecDef DR. JAMES G. ROCHE, Right. Privately between us: Go Boeing! The fools in Paris and Berlin never did their JIM: I am hoping this is about unity of Secretary, US Air Force. command. Negotiations with OMB are down From: Wynne, Michael, Mr. OSD–ATL homework. And, Ralphie is the CEO and Chairman of a marketing firm, for that’s all to a footnote. I’ve sent a stand-off note to To: Sambur, Marvin Dr. SAF/AQ; Roche, there is to EADS, North America. The AF Sen McCain and offered a meeting. Every- James Dr. SAF/OS has problems with EADS on a number of lev- one’s nervous as Boss testifies to SASC to- Date: Wednesday, April 16, 2003 els. The widespread feelings about Crosby in morrow. Subject: FW: tankers the Air Staff, Jumper especially, will only Mike. Jim, Marv; I’ve invited Ralph Crosby in for make their life more difficult. Smiles. From: Roche, James Dr. SAF/OS lunch. Ralph is the President EAD’s US. I am JGR. To: Wynne, Michael, Mr. OSD–ATL going to ask him how much a proposal would DR. JAMES G. ROCHE, Date: Tuesday, July 08, 2003 cost. They came in a couple of weeks ago and Secretary of the Air Force. Subj: 767 and DepSecDef offered to build the majority here in Amer- ica. You are welcome to attend, though, it From: William H Swanson Good friend and fellow prisoner of the Cor- may be best to let me in my present position To: James Roche porate Staff, please keep in mind, and do tell do the probing. I will share with you, as I Date: August 08, 2002 Paul, that neither you nor I will sign a stu- have in the other case, any findings. I’d sug- Subject: Re: Hello? pid letter to the Congress regarding the KC– gest that this be held quietly, but I did want JIM: Sent out the action will try and have 767’s. Last time I checked, you have an IQ you to be aware. I am not sure where this late afternoon or first thing Friday morning. greater than room temperature—and, so do I. will lead, but the benefits of competition PA&E and OMB can kill the deal and make may be revealing. Did you see the notice on Ralph and Pete Aldridge and Don Rumsfeld look like Best, EADS? dopes. But, we shouldn’t help them! Mike. Bill. From: James Roche As you can tell, I finally got some time on From: Wynne, Michael Mr. OSD–ATL To: William H Swanson my boat, and am feeling like my hero, Bull To: Sambur, Marvin Dr. SAF/AQ Date: August 08, 2002 Halsey: Strike Fast, Strike Hard, Strike Date: Wednesday, April 16, 2003 Subject: Hello? Often! Jim. Subject: Tankers DR. JAMES G. ROCHE, Marv; Some advance work for FY05 budg- Bill, BAE and ATFLIR? Hello? Secretary of the Air Force. eting is in order. I suggest that you begin to Jim.

VerDate Aug 04 2004 04:11 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00116 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.138 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11781 From: Jumper, John, Gen AF/CC engining won’t solve the inherent catalytic wards the door will crisp up the arguments, To: Roche, James Dr. SAF/OS corrosion problem. More waste of money. and allow the release. Keep the team Date: Tuesday, February 25, 2003 8:58pm (6) Gee, why didn’t we for 50 or 60 or 70 year MOOSHHING forward. Subj: Re: Offsets for tanker lease old Air Force Ones? How many of our bu- Best, Good, thanks. reaucrats fly in such old planes? I’m getting Mike. used to some in their late 40s, but I’m not so John. From: Roche, James Dr. SAF/OS picky! But, why don’t we make the Navy sail To: Wynne, Michael, MR. OSD–ATL From: Roche, James Dr. SAF/OS 60 year old destroyers? Or submarines? Be- Date: Wednesday, June 25, 2003 To: Jumper, John Gen AF/CC cause it’s dumb. Subject: FW: OSD(C) and 767 Lease Date: Tuesday, February 25, 2003 8:57pm (7) If we wait, there may not be a 767 line! Subj: Re: Offsets for Tanker lease Hey, can we covert used ones. Here we go MIKE: And, here I thought Stan and the again. We can waste money with half meas- Boys were under control! Good idea. I’ll be honored to join you. You have more work to do. urers that are penny wise and pound foolish. Jim. Jim. Why not do the same for ships? OK, so we’ll DR. JAMES ROCHE, JAMES G. ROCHE, be forced to buy French airplanes. Secretary of the Air Force. (8) To kill this idea in OSD is proof that Secretary of the Air Force. From: Jumper, John, Gen AF/CC there may be words like ‘‘acquisition re- From: Lemkin, Bruce S, SES, SAF/FM To: Roche, James Dr. SAF/OS form,’’ but they are hollow. The bureaucrats To: Roche, James Dr. SAF/OS; Sambur, Date: Tue. Feb 25, 2003 want to keep doing things the same old way, Marvin Dr. SAF/AQ Subj: Re: Offsets for tanker lease adding little value but lots of costs. CC: Montelongo, Michael, Civ, SAF/FM Boss, there may be a trap in letting the I can only keep my sanity by remembering Date: Wednesday, June 25, 2003 corporate staff diddle us on the margins of Andy’s advice to me years ago: ‘‘there are Subject: OSD(C) and 767 Lease what they will or won’t allow. We should limits to the stupidity any one man can pre- MR. SECRETARY AND MARV: At this morn- consider you and me taking this directly to vent.’’ Off to Okinawa! Jim. ing’s Dov Zakheim meeting with Service Pete and Dov, around the corporate staff. DR. JAMES G. ROCHE, FMs, Dov stated that he will not agree to in- John. Secretary of the Air Force. cluding an AF position in the Report to Con- From: Sambur, Marvin Dr. SAF/AQ From: Bill Bodie gress that is different from the OSD position. To: Roche, James Dr. SAF/OS; Jumper John To: Jim Roche He directed me to ‘‘tell Jim and Marv’’ that Gen AF/CC Date: Nov 20, 2002 he intends to send SECDEF a memo stating Date: Tuesday, February 25, 2003 Subject: Re: 767 Lease this. Szemborski piped up that PA&E has Subj: Offsets for tanker lease Good for you, boss. Aldridge may deny he’s ‘‘formally non-concurred’’ to SECDEF. been weakening, but the smoke signals are After the meeting, I got hold of the Leas- BOSS, CHIEF: We are getting tremendous thick. Aldridge interviewed with Anne Marie ing Panel co-chair, Wayne Schroeder, and pressure to show our offsets for the Tanker yesterday, and although he wouldn’t com- told him that our position is that SECDEF lease. As I explained to you in a previous ment on specifics of any deal and was keep- has approved the lease-how can one or more email, the offset or affordability issue is not ing an open mind, he indicated that in gen- of his staff ‘‘non-concur?’’—so, now, it is our as big a deal as Dov makes it out to be. The eral terms he would have concerns about obligation to work together to submit a Re- Chief has seen the details and the full details leasing when/if buying was cheaper. That port to Congress that uncategorically sup- will be briefed to you on Wednesday at 4pm. doesn’t jibe with his previous support for the ports the lease. The issue is that Aldridge wants a briefings lease from a NPV/cash flow management per- Marv—We in FM are standing by to con- by Dr. Spruill (co chair of the leasing com- spective. In addition, the spores seem to be tinue to assist to break this free. Let me mittee) at 8:30 am tomorrow and Zakheim pushing a ‘‘what’s the rush?’’ line: buying is know how else we can help. wants a briefing at 3:30 pm. Since we have a cheaper (we ‘‘exaggerate’’ the purchase cost VR, good story to tell, I think it would only of a green 767), therefore better; such a large Bruce. cause unnecessary irritation if we refuse to expenditure requires more ‘‘rigorous anal- From: Bruce Lemkin [Principal Deputy As- give them the details until you are fully ysis’’ than the back-of-the-envelope asser- briefed. Is it OK to allow BG Johns with sistant Secretary AF, Financial Manage- tions by the AF, hence an AOA; the AF ment] Spruill to give the briefing to Aldridge and hasn’t POM’ed for the lease, so how serious Zakheim before you see the full details. The To: James Roche; Marvin Sambur can we be? There is no ‘‘urgent’’ need, be- CC: Michael Montelongo Chief had no issues and as I explained to you cause the AF is starting to retire the E’s the OSD hot points are in the 09 time frame Date: June 25, 2003 next year even without an immediate re- Subj: OSD(C) and 767 Lease and involve an unknown bomber and funding placement, so why can’t we be more delibera- MR. SECRETARY AND MARV: At this morn- for LAIRCM. tive? Boeing will still be there, making air- ing’s Dov Zakheim meeting with Service Thanks! planes, so what’s the rush? Anyway, Airbus FMs, Dov stated that he will not agree to in- Marv. could make planes with enough American cluding and AF position in the Report to From: James Roche content if need be. I rebutted all these argu- To: Pete Aldridge ments with Jaymie (as you did with Pete), Congress that is different from the OSD posi- CC: Gen. John Jumper; Marvin Sambur; Bill but we might be in the ‘power’ phase with tion. He directed me to ‘‘tell Jim and Marv’’ Bodie OSD on this issue. If anyone can talk sense that he intends to send SECDEF a memo Date: Nov 19, 2002 to Aldridge, however, it’s you. stating this. Szemborski piped up that PA&E Subject: 767 Lease has ‘‘formally non-concurred’’ to SECDEF. From: James Roche After the meeting, I got hold of the Leas- Pete, old Buddy, you have been our strong- To: Bill Bodie ing Panel co-chair, est supporter on the issue of the lease. I now Date: Nov 20, 2003 Wayne Schroeder, and told him that our hear that your staff is telling us that you are Subj: Re: 767 lease position is that SECDEF has approved the weakening. Please don’t. Here is some food Importance: high lease-how can one or more of his staff ‘‘non- for thought: Right. I’m relaxed on this one. They have concur?’’—so, now it is our obligation to (1) Regardless of OMB, the deal is a good to take the bureaucratic position. Jim. work together to submit a report that one for the taxpayer. DR. JAMES G. ROCHE, uncategorically supports the lease. (2) Every time we come forward with some- Secretary of the Air Force. Marv—We in FM are standing by to con- thing good for the taxpayer, the bureaucrats From: Roche, James Dr. SAF/OS tinue to assist to break this free. Let me (including yours) feel that they have to fight To: Druyun, Darleen, SAF/AQ know how else we can help. it (job security?) Date: Monday, December 17, 2001 7:24pm VR, (3) To delay for two years to do an AOA is Subj: Re: 767 Leasing Bruce. simply silly. It just means two more years of wasted repair costs on the E models; a waste Darleen, thanks much. I’d like for us not From: Marvin Sambur of taxpayers’ money to some beltway bandit; to be embarrassed on the Third Floor. Also, To: Bruce Lemkin; James Roche more bureaucratic delays by PA&E; and an we will have to see what the final language CC: Michael Montelongo end which is predictable. looks like. I’ll be interested in the numbers, Date: June 25, 2003 (4) Since neither ships, trucks, or tiny and whether our resident DeLoitte partner Subj: RE: OSD(C) and 767 Lease (Nelson) agrees. Jim. planes can serve as tankers, we will be look- BRUCE: We have made every compromise ing at big planes. Guess what? DR. JAMES G. ROCHE, possible. I do not understand Szembroski’s We’re already there. We will waste money SECAF. position. I spoke to his boss this morning and have nothing to show for it. From: Wynne, Michael Mr. OSD–ATL and I thought they were rewriting the non- (5) Hey, we can extend the life of the E’s To: Roche, James Dr. SAF/OS concur. In any event, we are submitting the and re-engine them! We’ll that doesn’t pass Date: Wednesday, June 25, 2003 report this afternoon. I added a line the OMB Grant’s lieutenant’s test: it means we will be Subject: RE: OSD(C) AND 767 LEASE wanted (lease decision was predominantly flying 80 year old planes in a few years!!!! Av- Usually opposition is loudest away from made due to schedule). However, I am not erage age is now between 42 and 44 years. Re- the decision maker—I think progress to- moving off the position that the fair market

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00117 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.140 S20PT1 S11782 CONGRESSIONAL RECORD — SENATE November 20, 2004 purchase price is $138.4 (not $131M which re- From: Wynne, Michael, Mr. OSD–ATL From: Roche, James Dr. SAF/OS quires that we give them the money 4 years To: Roche, James Dr. SAF/OS To: Wynne, Michael Mr OSD–ATL ahead of delivery) and that the lease is a Date: Wednesday, July 09, 2003 Date: Tuesday, July 08, 2003 wash art purchasing from a financial point of Subj: RE: FW: Footnote CC: Sambur Marvin Dr. SAF/AQ view. I will not give your enemies the tools I can only repeat that you are actually Subj: Re: FW: Footnote to bury us! winning. To change subjects, the F–22 DAB Mike, I don’t like it. Why? Because we Marv. went reasonably well, and will lead to a sec- don’t agree with the calculation! As impor- From: Roche, James Dr SAF/OS ond IPR and decision DAB in September. I tant, it fails to give an alternative, lease To: Sambur, Marvin DR SAF/AQ complimented Rick Lewis, and Tom Owen, Date: Tuesday, July 08, 2003 9:44pm but told them not to let up. September will supportive case where the NPV is positive! If Subj: Re: Footnote come quickly. the addition to the footnote added: ‘‘... Marv, what about my just adding my lan- Best, Similarly, if blah blah, then the NPV would guage? Why not? It’s my letter. Jim. Mike. favor a lease by $$$.’’ As this stands, it is em- DR. JAMES G. ROCHE, From: Roche, James Dr. SAF/OS barrassing to you, me, and the Sec Def. Sen- Secretary of the Air Force. To: Wynne, Michael Mr. OSD–ATL ator McCain and others who oppose the lease From: Sambur Marvin Dr SAF/AQ Date: Wednesday, July 09, 2003 will leap to this number! Why is this so hard To: Roche James Dr SAF/OS Subject: RE: FW: Footnote for you to see, Mike? Further, the footnote Date: Tue Jul 08 2003 Mike, thanks for your candor. I will only missed Pete Aldridge’s point that this is a Subj: Re: Footnote add to the footnote of the letter I sign that hypothetical since the Air Force doesn’t BOSS: Our introduction makes that point ‘‘the funds to execute such an alternative have the BA to enter into such a multi year that the lease is the fastest way to get tank- could not be made available without harm- contract, even if the Congress bent its rules ers given our funding constraints. What they ing combat capability.’’ Then, no one can ac- to do so without limited production! are forcing us to say is that IF congress gave cuse Don of ‘‘wasting’’ $1.9B of taxpayer Marv, what do you think? Please get to- money. Stan Crock’s article is another in a us permission to PURCHASE under the same gether with Mike to come up with a more long series on varying issues where my MYP terms as the lease, then the lease is palatable and balanced version of the foot- DUMB financially. friend missed the point. Jim. note. Robin wanted it in the text and Mike got DR. JAMES G. ROCHE, her to accept it as a footnote. Wynne is not Secretary of the Air Force. Jim. willing to go further. My point is that Mike From: Wynne, Michael, Mr. OSD–ATL DR. JAMES G. ROCHE, has tossed the bomb back to us in a take it To: Roche, James Dr. SAF/OS Secretary of the Air Force. or leave it terms. He claims that we will still Date: Wednesday, July 09, 2003 From: Wynne, Michael Mr OSD–ATL win and our enemies know about this al- Subj: RE: FW: Footnote To: Roche, James Dr. SAF/OS ready. I spoke to Dicks last week and he told Jim—Good on Pete—he left before the Date: Tue Jul 08, 2003 me to hold firm and not to go along with fight—I believe that this is a fair display. Subject: FW: Footnote Robin. I want to check again. This is a footnote to a lengthy text, and of- JIM: I’ve gotten the 1.9B relegated to a Marv. fers a bone to the critics recently in Business footnote and I’ve made an agreement with From: Roche, James Dr. SAF/OS Week who say that you and we tortured the To: Durnan, Jaymie CIV OSD economic argument to get what we want. I OMB so that we can proceed. You can sign it Date: Tuesday, July 08, 2003 believe that addressing this point in this in the morning if you agree if not I’m not CC: Bodie William C Civ SAF/OS fashion takes the teeth out of their criti- sure what to do. Meeting with DSD went Subj: Lease cism. This will not embarrass at all the Sec- fine. Most are hoping that you refuse to sign. Jaymie, Mike Wynne has fallen for Cleve- retary, as I would not even have considered I told them not so fast. land’s line that our letter must show the it otherwise. This followed one full week of Best, bogus calculation which is NPV negative by negotiation to remove it from the text and Mike. $1.9 billion. get it to only footnote status. From: Spruill, Nancy Dr. OSD–ATL Why bogus? If we had the budget, we My advice to you is to take the deal as To: Wynne, Michael Mr. OSD–ATL wouldn’t need to turn to a lease. But, we written, sign it out of this Building—get the Date: Tuesday, July 08, 2003 don’t. Thus, to assume that it exists (wrong term waiver, and let the House and Senate CC: Spruill, Nancy, Dr. OSD–ATL premise), and then to assume the Congress proponents, do their magic. I think you have Subject: Footnote. passed legislation which it didn’t, and then a major victory, and are letting a minor to condemn ourselves in writing by stating math point get in front of a major policy MIKE: This is what I’ve copied for your con- the calculation based on a fantasy simply is win. venience. crazy. It is a bureaucratic trick to make a Best, Thanks, fool out of Don as well as the Air Force. All Mike. Nancy. this was ‘‘resolved’’ by Pete Aldridge before From: Roche, James Dr. SAF/OS The Footnote is to the sentence that says: he left. To quote him: ‘‘We need to go for- To: Wynne, Michael, Mr. OSD–ATL Applying the A–94 test, it was determined ward with DoD’s position. If OMB wants to Date: Tuesday, July 08, 2003 that the net present value of the multi-year comment, let them.’’ Subject: RE: FW: Footnote Point: we are running aground because lease option and a traditional purchase op- Mike, it’s not that easy for you. Pete re- PA&E and OMB want me to sign a suicide tion results in a NPV favoring a purchase of solved these. You don’t want to be put in a note. BUT I WILL NOT. This whole drill has $150 million, as shown in Table 1[1]. position of embarrassing Don; nor do I. If I gotten out of hand! Jim. refuse to sign, you will have to explain it Footnote: [1] In evaluating the net present DR. JAMES G. ROCHE, anyhow! We should present DoD’s position value of the lease and purchase options as re- Secretary of the Air Force. and let OMB add the bogus point not us. quired by OMB Circular A–94, the Air Force From: Roche, James Dr SAF/OS Bogus because we DON’T HAVE THE $$$ relied on the availability of multi-year lease To: Wynne, Michael Mr. OSD–ATL NOW WITHOUT GIVING UP COMBAT CA- authority granted by Congress in 2002 De- Date: Wednesday, September 03, 2003 PABILITY! This was Pete’s argument. We fense Appropriations Act. Had the Congress Subj: Re: Ken Kreig ltr turned to a lease because of this reality. The chosen instead to provide multi-year pro- Keep the faith, Baby, we’ll need it tomor- footnote to which you agreed? NEVER men- curement authority the NPV could favor row. Please be prepared to tell the SASC tions this point! That’s just not wise. Don’t purchase by up to $1.9 billion. While this in- that we did discuss whether or not to do an you agree? Jim. formation affords a measure of clarity in an AOA, and that one isn’t required. Further, DR. JAMES G. ROCHE, equitable comparison of terms and NPV, it is Sen McCain thinks Schmitz is an authority Secretary of the Air Force. provided with the understanding that on the subject! Jim. From: Wynne, Michael, Mr. OSD–ATL multiyear procurement authority was not DR. JAMES G ROCHE, To: Roche, James, Dr. SAF/OS available and therefore not a viable option Secretary of the Air Force. Date: Wednesday, July 08, 2003 for the Administration’s analytical consider- From: Wynne, Michael Mr. OSD–ATL Subj: RE: FW: Footnote ation. To: Roche, James Dr. SAF/OS JIM: I am out of this now—though I will From: John Jumper AF/CC Date: Wed Sep 03, 2003 front what you want. As a footnote, this Subj: Re: Ken Kreig Ltr To: William Bodie SAF/OS; James Roche could be any number, not one that either SAF/OS James, You are nearing sainthood, inspite you and I must defend. At this juncture, it’s Date: June 22, 2002 of your youth. I think your sidebar with up to you to sign or not. I hope you think it Subj: RE: CNBC Interview—Tanker Recapi- Tony C. Made a difference. over and get it out of the building. talization Best Regards, Best, Mike. Mike. Great themes, thanks. JJ.

VerDate Aug 04 2004 00:58 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00118 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.142 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11783 From: William Bodie SAF/OS From: Bodie, William C., Mr, SAF/OS me to repeat some core themes. She seems To: James Roche SAF/OS; John Jumper AF/ Sent: Friday, June 21, 2002 11:26 AM thoughtful and open-minded, with no axe to CC To: Roche, James, Dr., SAF/OS grind. Incidentally, I told her the lease was Date: June 21, 2002 Subject : RE: CNBC Interview—Tanker Re- the exact opposite of a Boeing ‘‘bailout’’— Subj: FW: CNBC Interview—Tanker Recapi- capitalization it’s a government attempt to get good terms talization We’ll track it to see if CNBC gives us a fair from the company by taking advantage of a downturn in demand for commercial trans- We’ve got Loren doing the Lord’s work shot. Glad we’re doing 737 stuff Monday. ports. again. ‘‘3rd Party’’ support at its best. From: James Roche 2004 Defense Planning Guidance directs a From: T124C41 To: William Bodie review of tanker replacement options, indi- Sent: Friday, June 21, 2002 10:55 AM Date: June 21, 2002 cating the issue is now on the OSD’s screen. To: carey Subj: RE: CNBC Interview—Tanker Recapi- From: Marvin Sambur SAF/AQ Cc: william.bodie talization To: Jim Albaugh Subject: CNBC Interview—Tanker Recapital- Good work! Date: June 17, 2003 ization Jim. Subj: FW: USAF Green Aircraft Pricing To: Mac Carey JAMES G. ROCHE, JIM: I have been working with Bob to an- From: Loren Thompson Secretary of the Air Force. swer a question from MCCAIN concerning his Date: June 21, 2002 From: Bodie, William C., Mr, SAF/OS claim that Continental received a better deal Subj: CNBC Interview—Tanker Recapitaliza- Sent: Friday, June 21, 2002 11:08 AM than the USAF. I asked Bob for a simple tion To: Roche, James, Dr., SAF/OS; Jumper, statement that, accounting for inflation and John, Gen, AF/CO airworthiness directives, we received a bet- Last Monday I was interviewed by CNBC Subject: FW: CNBC Interview—Tanker Re- ter deal than anyone else. Given the assault for an upcoming segment on the Air Force capitalization that MCCAIN is mounting on this deal (see tanker leasing controversy. I talked to CNBC attached) and our claims that we received anchor Marsha McCallum yesterday, and she We’ve got Loren doing the Lord’s work again. ‘‘3rd Party’’ support at its best. the best deal, we need such a statement. said the segment is due to air at 3:15 pm on Thanks! From: T124C41 Monday. Senator MCCAIN will also be on the Marv. segment. Sent: Friday, June 21, 2002 10:55 AM To: carey From: Bob Gower CNBC will only use a small portion of what To: Marvin Sambur SAF/AQ I said. For the record, though, here are the Cc: william.bodie Subject: CNBC Interview—Tanker Recapital- Date: June 16, 2003 ten themes I told her, in some cases several Subj: RE: USAF Green Aircraft Pricing times: ization TO: Mac Carey We have the MCCAIN request. I am trav- (1) Tankers are essential enablers of Amer- eling to DC in the morning for Hill visits the ican military power, and will become more FROM: Loren, Thompson DATE: June 21, 2002 next few days. I will take your response up so as our network of overseas bases con- the chain. tinues to shrink. RE: CNBC Interview—Tanker Replacement From: Marvin Sambur SAF/AQ (2) Every bullet and bean America deliv- Last Monday I was interviewed by CNBC for an upcoming segment on the Air Force To: Bob Gower ered to Afghanistan, not to mention every CC: Arlene Marvin soldier and fighting system, got there on an tanker leasing controversy. I talked to CNBC anchor Marsha McCallum yesterday, and she Date: June 16, 2003 airplane that had to be refueled in flight by Subj: Re: USAF Green Aircraft Pricing a tanker. said the segment is due to air at 3:15 PM on Monday. Senator MCCAIN will also be in the BOB: This is unacceptable. McCain will eat (3) This month marks the 45th anniversary same segment. us for lunch. See attached. of the first delivery of a KC–135 tanker to the CNBC will only use a small portion of what From: Bob Gower Air Force, reflecting the fact that 90% of the I said. For the record, though, here are the To: Sambur SAF/AQ tanker fleet has grown quite aged. ten themes I told her, in some cases several Date: 6/16/2003 (4) The fleet is so old that a third of air- times: Subj: USAF Green Aircraft Pricing frames are in repair shops or waiting to go (1) Tankers are essential enablers of Amer- MARV: We looked at providing some type of there on any given day. ican military power, and will become more certification for the ‘‘green’’ aircraft pricing (5) The planes must be replaced, and the so as our network of overseas bases con- and would prefer not to do this for two pri- Air Force has determined that the Boeing 767 tinues to shrink. mary reasons. is the best aircraft to use. (2) Every bullet and bean America deliv- First, we have hurt our commercial airline (6) Replacement of over 500 tankers may ered to Afghanistan, not to mention every market enough through the concessions, prove to be the biggest defense procurement solider and fighting system, got there on an profit cap, and most favored customer program of this generation. airplane that had to be refueled in flight by clause. To provide an additional measure of a tanker. (7) But even if we begin buying planes at certainty would set a new standard for the (3) This month marks the 45th anniversary Boeing company that we prefer not to set. the rate of two dozen per year, it will take of the delivery of a KC–135 tanker to the Air the Air Force 20 years to replace the fleet— All elements of this deal are very visible and Force, reflecting the fact that 90% of the this would not be good for our other mar- by which time some of the KC–135s will be at tanker fleet has grown quite aged. twice their design lives. kets. Our best customers have understood (4) The fleet is so old that a third of air- the Most Favored Customer clause because (8) Flight hours is a useful indicator of air- frames are in repair shops or waiting to go some of them have seen these in the past but frame fatigue, but it tells you very little there on any given day. these have been forward looking with no about the toll corrosion may be taking on (5) The planes must be replaced, and the commitment to historical pricing. the planes. Air Force has determined that the Boeing 767 Second, we believe Boeing providing addi- (9) Leasing is a common practice among is the best aircraft to use. tional commitments has little or no addi- commercial airlines to mitigate the cost im- (6) Replacement of over 500 tankers may tional political benefit. I believe that if the pact of acquiring large aircraft. prove to be the biggest defense procurement USAF attempted to stand behind a Boeing program of this generation. (10) Senator MCCAIN—the only critic of statement that our enemies would unjustly leasing in Congress—will not succeed in (7) But even if we begin buying planes at attack Boeing’s credibility. blocking a 767 lease because tanker replace- the rate of two dozen per year, it will take Therefore, my proposed solution is for the ment is critical and he has offered no alter- the Air Force 20 years to replace the fleet— USAF to stand behind the facts which I see native to leasing. by which time some of the KC–135s will be at as: twice their design lives. The USAF is confident we have received a Martha and I have actually had a number (8) Flight hours is a useful indicator of air- most competitive price on the basic 767 air- of conversations outside the taping, allowing frame fatigue, but it tells you very little craft. The USAF has ensured this through me to repeat some core themes. She seems about the toll corrosion may be taking on multiple means: thoughtful and open-minded, with no axe to the plane. (1) We obtained confidential information grind. Incidentally, I told her the lease was (9) Leasing is a common practice among directly from a major airline that validates the exact opposite of a Boeing ‘‘bailout’’— commercial airlines to mitigate the cost of we obtained a very competitive price from a it’s a government attempt to get good terms acquiring large aircraft. historical position, from the company by taking advantage of a (10) Senator McCain—the only critic of (2) We obtained a Most Favored Customer downturn in demand for commercial trans- leasing in Congress—will not succeed in clause that protects the USAF on a going ports. blocking a 767 lease because tanker replace- forward basis since it requires Boeing to re- 2004 Defense Planning Guidance directs a ment is critical and he has offered no alter- fund the USAF should they ever sell a 767 for review of tanker replacement options, indi- native to leasing. less than what the USAF paid, and cating the issue is now on OSD’s radar Martha and I have actually had a number (3) The USAF has capped Boeing’s earnings screen. of conversations outside the taping, allowing to ensure the maximum profits they could

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00119 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.145 S20PT1 S11784 CONGRESSIONAL RECORD — SENATE November 20, 2004 make are in line with DoD profit guidelines, et look like per FY to purchase the same Debra Henderson; Warren Henderson; insuring the USAF would benefit in the fu- number of aircraft being built and delivered Judy Fedder; David Rue; Robert Pavelko; ture should cost come in lower than pre- under the lease? (The insurance argument of Bob Edmonds; Skip Daly; Christopher dicted. Should cost be higher, Boeing bares getting the lease tankers 5 years earlier with Bowman; Gregory Christ; John Handy; the risk. about the same net present value resonated Paul Essex; William Hodges; Michael With this firm, fixed price contract and with her. In addition, the point that Boeing Zettler; Michael Montelongo; Stephen Boeing responsible for all development costs, will stop producing the 767 and if we delay, Lorenz; Duncan McNabb; Gary Heckman; we believe this agreement is unprecedented the price will rise considerable was also a Kevin Chilton; Raymond Johns; Ronald in its protection for the taxpayer, and insure strong argument to her.) However, they be- Rand not only have we received the best pricing lieve our price for the green a/c is too high Date: July 25, 2003 possible, but we will continue to obtain the and have asked for other large airline pur- Subj: RE: SASC Tanker Lease Hearing best pricing from Boeing in the future. chases, config and what the discount was Yes, but for whom? I always wondered Regards, from the list price. Apparently her staff what it would feel like to be the football! Bob. made a bunch of phone calls and claim their Jim. From: Marvin Sambur SAF/AQ number is lower than ours but she is the first DR. JAMES G. ROCHE, To: Darleen Druyun SAF/AQ; James Roche to admit that she does not know the real va- Secretary of the Air Force. SAF/OS lidity behind them. We need to give them the From: Marvin Sambur Date: October 10, 2002 maintenance costs of the 135s vs. The pro- To: James Roche Subj: RE: Tanker Leasing posed 767 tankers. She will want a separate CC: Peter Teets; John Jumper; Robert Jamie Durnan stopped me this morning to session on tanker termination liability Foglesong; Joseph Wehrle, William tell me that OMB ‘‘will fight us to the death issues. I believe we probably talked passed Bodie; John Corley; Janet Therlanos; on the lease.’’ I asked why and he told me each other on this and I have directed my Debra Henderson; Warren Henderson; that they do not believe our numbers and staff to prepare very clear charts on this to Judy Fedder; David Rue; Robert Pavelko; their analysis shows that it is better to pur- set the record straight. He also wants a copy Bob Edmonds; Skip Daly; Christopher chase. (At the leasing meeting the OMB of the draft contract T’s and C’s. In addition, Bowman; Gregory Christ; John Handy; she directed we rerun the numbers using a 6 Paul Essex; William Hodges; Michael number was about $50M favorable to pur- years OMB discount rate in addition to the Zettler; Michael Montelongo; Stephen chase out of about $18B fly away cost.) I told 15 year period. We have this and will give to Lorenz; Duncan McNabb; Gary Heckman; him that we admit that the deal is probably them to OMB. Kevin Chilton; Raymond Johns; Ronald a push but if we buy according to the same I expect she will call you. We firmly be- Rand funding stream as leasing, we only get 6 lieve the contractors attendance at the Date: July 25, 2003 tankers by 2009 versus 67 by leasing. The meeting was very helpful but she will prob- Subj: RE: SASC Tanker Lease Hearing quicker delivery acts as an insurance policy ably blast us for it. We will keep you posted And they are playing the Jets. This is a against the unknown effects of aging and ac- on our progress. good omen. celerating usage. He thought that was a compelling argument. From: Marvin Sambur From: James Roche Marv. To: James Roche To: Scott Custer Date: September 11, 2002 CC: Peter Teets; John Jumper; Robert From: Bill Essex SAF/AQQ Subj: 767 Tanker justification Foglesong; Joseph Wehrle, William To: Marvin Sambur SAF/AQ Bodie; John Corley; Janet Therlanos; Date: August 03, 2002 BOSS: I kicked off the effort to establish a Debra Henderson; Warren Henderson; Subj: FW: Potential OMB Problems with 767 ‘‘need’’ justification for the tankers. Hope to Judy Fedder; David Rue; Robert Pavelko; Lease have a conceptual framework ready by the end of the week. Bob Edmonds; Skip Daly; Christopher SIR: Our take on the OMB letter to Sen. Spoke to Robin after the meeting to tell Bowman; Gregory Christ; John Handy; MCCAIN is below. Mr. Daniels went out of his her that the economic justification is not a Paul Essex; William Hodges; Michael way to slam 767 lease even though he does slam dunk for either position (purchase or Zettler; Michael Montelongo; Stephen not really know much about it yet. Looks Lorenz; Duncan McNabb; Gary Heckman; lease.) It is more a push and a slight change like an interesting fight shaping up. Kevin Chilton; Raymond Johns; Ronald in the interest rates can flip the analysis. At VR, Rand Bill. the end of the day, we have to prove that Date: July 25, 2003 there is a TRUE need and that there are From: Marvin Sambur Subj: Re: SASC Tanker Leasing Hearing other advantages to leasing (earlier delivery, To: James Roche affordability, etc) that make it a good busi- Goodie! The same day as the opening day Date: October 21, 2002 ness deal. It is going to be a tough sell given of Redskins football! JGR. Subj: 767 meeting with OMB the other factors such as liability and indem- DR. JAMES G. ROCHE, Secretary of the Air Force. BOSS: We spent three hours with Robin this nification. AM going over the issues they highlighted Marv. From: Scott Custer for discussion and additional data. These To: James Roche From: Marvin Sambur topics were: Requirements justification, CC: Peter Teets; John Jumper; Robert To: James Roche; Scott Custer Foglesong; Joseph Wehrle, William price of the green a/c, why our proposal CC: Peter Teets; John Jumper; Robert Bodie; John Corley; Janet Therlanos; meets the requirements of an operating lease Foglesong; Joseph Wehrle, William Debra Henderson; Warren Henderson; and a better understanding of the legal rami- Bodie; John Corley; Janet Therlanos; Judy Fedder; David Rue; Robert Pavelko; fications of a Special Purpose Entity that Debra Henderson; Warren Henderson; Bob Edmonds; Skip Daly; Christopher would hold title to the tanker a/c. She was Judy Fedder; David Rue; Robert Pavelko; Bowman; Gregory Christ; John Handy; quite upset when she learned from the intro- Bob Edmonds; Skip Daly; Christopher Paul Essex; William Hodges; Michael ductions that Boeing was present to answer Bowman; Gregory Christ; John Handy; Zettler; Michael Montelongo; Stephen any questions. When we saw her ‘‘angst’’ we Paul Essex; William Hodges; Michael Lorenz; Duncan McNabb; Gary Heckman; told her they would leave or we could have Zettler; Michael Montelongo; Stephen Kevin Chilton; Raymond Johns; Ronald an executive session with government only Lorenz; Duncan McNabb; Gary Heckman; Rand participants. She told us the damage was Kevin Chilton; Raymond Johns; Ronald Date: July 25, 2003 Rand done and did not take up the options we out- Subj: SASC Tanker Lease Hearing lined to her. We invited Boeing in to respond Date: July 25, 2003 to questions she and her staff had and frank- Subj: Re: SASC Tanker Lease Hearing Sir, looks like 4 Sep for the SASC tanker ly they were very helpful in filling in some But remember, they can not play the game hearing . . . with you as the AF witness. details and adding credibility. This was not a without the football and where the football V/R Scott. negotiation meeting and Boeing was only to goes determines the end result! From: Robert Pavelko provide answers on the pricing. I expect she Marv. Date: July 24, 2003 will express to you her anger over Boeings From: James Roche Subj: SASC Tanker Lease Hearing presence. To: Marvin Sambur Just received a telephone call from Mr. Robin and her staff asked for additional CC: Peter Teets; John Jumper; Robert Tom McKenzie, SASC [202–224–9347]. He data which we are preparing to send over in Foglesong; Joseph Wehrle, William wanted to give us a heads up the SASC will the following read: What would the AF budg- Bodie; John Corley; Janet Therlanos; be calling a hearing on the AF Tanker Lease.

VerDate Aug 04 2004 04:11 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00120 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.147 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11785 Projected date is 4 September in the morn- expected to continue for another two years. transactions approved by OMB after July 25, ing. Witness invites: SECAF, Director of As the facts show, our negotiating team got 2003. At our request, OMB will then issue a OMB, and Sec Wynne. His POC is Bill a better deal on these 767s than a major air- letter addressed to you stating that OMB ap- Greenwalt. 202–224–6778. line did with theirs with a 20-yr exclusive proved the Air Force KC–767 transaction V/R, contract—we likely won’t do as well when prior to July 25, 2003, and therefore the re- Robert J. Pavelko. the industry recovers. How, then, would we vised A–11 does not apply. OMB plans to From: Marvin Sambur explain this two-year delay to Congress? issue the clarification early next week and To: James Roche Marv. the letter to the Air Force by the end of next Date: November 19, 2003 From: Michael Wynne week. If there is any change to this plan, we Subj: FW: Tankers To: Marvin Sambur will let you know. FYI. Date: July 08, 2003 From: Marvin Sambur From: Scott Custer Subj: RE: Footnote To: James Roche To: Marvin Sambur MARV: At long last, this is the best that I Date: November 21, 2003 Date: November 19, 2003 could get—relegating the non-available com- Subj: FW:767 Update Subj: Tankers parison to a footnote. I have been to the FYI. speakers office, and they don’t care how it SIR: Mr. Wynne is quoted as saying we From: Ty Hughes would pay up front not purchase on delivery, reads, just get it over to congress and let TO: Marvin Sambur that it will probably be 2 contracts, and that them get it done. CC: Scott Custer, Mary Walker, Daniel the price would likely need to be renegoti- At this point, it is up to Jim to sign or not. Ramos, Ted Bowlds ated . . . not helpful. I don’t know how this Best, Date: Nov 21, 2003 got so messed up but I think we still need to Mike. Subj: 767 Update proceed with the deal we want . . . and take From: Marvin Sambur Dr. SAMBUR: OMB General Counsel called it to the SASC for their views. And, we must To: James Roche; Michael Wynne DoD GC this afternoon and asked for a legis- do it quickly as the pending omnibus may be Date: July 08, 2003 lative proposal to address the obligation of the only vehicle left to get any language Subj: Re: Footnote funds for the tanker. OMB also asked what changes we’ll need to make it work. The primary reason for the lease is because the Air Force can with respect to obligation V/R, it affords us the ability to recapitalize fast- of funds if there is no new legislation. Scott. er. By putting in the footnote, we allow our DoD has prepared language that would From: Dov Zakheim enemies to stall with the excuse that the AF allow obligation of funds upon delivery of To: Marvin Sambur should go to Congress and ask for a MYP. the aircraft. The draft language would solve Date: November 25, 2002 The OSD position is that the financials are a the problem. It should go over this evening. Subj: RE: KC–767 Lease Delay. wash, so way cloud the issue and cause prob- OMB is considering offering the language for I have a simple question? Where is the lems. Submit without the footnote and we inclusion in the Omnibus Appropriations USAF money to fund this lease? will prevail. Submit with the footnote and Act. we have a battle on the wrong issue that will Without legislation, the DoD fiscal lawyer From: Marvin Sambur cause big time delays. is still of the view that the Air Force must To: Pete Aldridge; Dov Zakheim Marv. obligate all of the funds for purchase when Date: November 22, 2003 the aircraft are ordered. We have scheduled Subj: KC–767 Lease Delay From: Mary Walker To: James Roche meeting for 0900 on Monday with the DoD ETE AND DOV: I understand the suggestion P Date: August 21, 2003 lawyers to discuss this. we delay the KC–767 lease two years has Subj: Re: Revised OMB Circular A–11 Ty Hughes. come up again at high levels within OSD From: Mary Walker (though this time without necessarily paying BOSS: I had the same question. It would be nice to say we comply either way. Will see. To: James Roche to re-engine KC–135Es) in order to do a for- CC: John Jumper, Peter Teets, William mat AoA. As a follow-up to my recent e-mail Moreover in my opinion, now in preparation, I could speak to this. You may be asked. Bodie, Janet Therlanos on this subject: Date: Nov. 26, 2002 A formal AoA will cost money, delay the Mary. Subj: More Updates from GC program two years, and still come up with From: James Roche the same answer we have today. There are TO: Daniel Ramos BOSS: Welcome back! (With the thought only a few aircraft that can serve as tankers, CC: Marvin Sambur, William Hodges, Ty you are reading this after Thanksgiving . . .) they are already in production, and so ana- Hughes, Mary Walker, Janet Therianos, Since I won’t be here when you get in on lyzing their respective capabilities and costs John Jumper Monday the 2nd (I’ll be on my way to give a won’t take long—in fact, it’s already been Date: Aug 21, 2003 speech at the USAFE JAG conference . . .), I done and the results passed to OSD. What’s Subj: Re: Revised OMB Circular A–11 wanted you to have my long list of accumu- lated updates so you can be current with the left to study? Dan, thanks much. Good work. How does issues we are working that are of known or For the last 45 days, OSD has had enough our lease fare under the new circular? If it suspected importance to you. Don Fox will data to support a decision analysis—all they fails, then OMB may be in for an attack from be covering for me until I get back on Dec. really need is the A–11/A–94 model we pro- Sen McCain. What dumb time to change the 6th. This will fill you in. vided to determine that the deal is a good rules!!! 767 Tanker Lease (legal issues): one. JGR. While most of the lease terms have been A complete contract is not required for DR. JAMES G. ROCHE, agreed upon, a number of terms have been OSD to analyze the lease; contracts are writ- Secretary of the Air Force. ten to match the programs approved and jus- elevated to SAF. The most important ones From: Daniel Ramos tified through analysis; our A–11/A–94 model include the following: To: James Roche is the primary analytical tool upon which we (1) A very significant issue just surfaced CC: Marvin Sambur, William Hodges, Ty are building our contract; if OSD analyzes and may require us to obtain additional leg- Hughes, Mary Walker, Janet Therianos the model (which we believe they have not islation. Boeing representatives told us the Date: Aug 21, 2003 done), they will be analyzing the proposed investors need assurance that the Air Force Subj: Revised OMB Circular A–11 program. will not terminate the lease agreement while If restarted negotiations in 2005 resulted in SIR: Earlier this week Ms. Walker provided the aircraft are under the 3-year construc- a real price increase of just 5%, we will have you with a copy of a revised version of OMB tion. We are concerned about the fiscal con- to drop one aircraft per year to live within Circular A–11 issued on July 25, 2003. Among sequences of such an assurance since 40+ air- our budget. This will add further cost and other things, the revised A–11 adds new craft may be in various stages of construc- stretch-out the KC–135 recapitalization effort guidelines for distinguishing between oper- tion at any one time. We are analyzing this two more years in addition to the two-year ating leases, capital lease the KC–767s re- issue under the limited statutory guidance late start. quires that it be an operating lease based on for this program and past precedent, which is A 5% price increase due to loss of negotia- the definition provided by OMB ‘‘at the time also limited because leasing of major sys- tion leverage will add more than $700M to of the lease.’’ The statute does not state tems has been so rare. FI we are unable to the cost of the first 100 KC–767s. whether ‘‘at the time of the lease’’ means resolve this issue with the staff in DoD GC, Bottom line: the penalty for delaying the when the lease is signed or when it was first we may need to seek another provision in lease we’ve negotiated today could be sub- submitted to OMB for review, so it is pos- law to provide adequate authority to meet stantial even without the added burden of sible that the revised A–11 could apply to the our needs. paying for maintaining KC–135Es. Please KC–767 transaction. We immediately engaged (2) Boeing wants a clause advising the gov- keep in mind that the low-cost deal we have with OMB on this issue, and as of this after- ernment of the tax treatment it wants re- today is the result of negotiating with a noon OMB has verbally agreed to the fol- flected in the transaction. We have told manufacturer suffering the impacts of an in- lowing: OMB will issue a clarifying letter them that the tax treatment is a matter be- dustry-wide downturn. That downturn is not stating that the revised A–11 applies only to tween Boeing and the IRS, not the Air Force.

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00121 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.149 S20PT1 S11786 CONGRESSIONAL RECORD — SENATE November 20, 2004 Boeing is considering whether to seek a Rev- other players—HASC and appropriators—so that x is y dollars less than the cost of a new enue Ruling or informal advice form the IRS. we should let the process work its way out. tanker. If they decide to go that route, we may want Dr. Wolfowitz raised the issue of a com- From: James Roche to ask the IRS to expedite consideration of promise and asked for an additional 28 hours To: Dr. Marvin Sambur their request. to get a Department position to Joel Kaplan. Sent: May 14, 2002 (3) The bond rating agency wants the gov- Dave Patterson will have the lead and Ron Subject: RE: Call from Boeing ernment to agree not to initiate a bank- Sega and I will work w/him. ruptcy petition against the lessor until one They are aware of your recommendation I love Ya, Big Guy. Give it to the Blue year and a day after the final lease payment. about where to get offsets, if we went with Eyed Arabs of the North (the expression we While we understand this is a standard provi- 20/80. used for Boeing). sion in commercial aircraft lease, DOJ, not From: James Roche Jim. the Air Force, decides when to file docu- From: Dr. Marvin Sambur ments (such as bankruptcy petitions). We To: Paul Weaver To: James Roche will ask Boeing to discuss this matter with Sent: May 21, 2002 the bond rating agency to see if they can Subject: (No subject) Sent: April 9, 2002 make an exception for a government lessee Thanks, Paul. You are correct re KC–767’s. Subject: RE: Call from Boeing Let’s wait until we have a deal. We just com- or lese tailor the clause in a way that would BOSS: Gerry Daniels called to discuss the not bind DOJ. If not, we will work the issue pleted negotiations on the four 737’s for Con- tankers. He started the conversation by re- with Justice. gressional travel. Re F–22’s, the ANG is wel- minding me that McCain was a minority (4) Boeing also wants indemnification come to make the following points: view and if the AF brought the deal forward under Public Law 85–804 for ‘‘unusually haz- (1) The F–22 is needed, and will be a formi- it would easily pass. I stated that the AF ardous risks.’’ You approved such indem- dable weapon system. would not bring this forward unless it was a nification in the case of the 737 lease. How- (2) It will be important for the ANG to be good deal. Apparently, he never took this ever, Boeing’s request is now broader and the part of this program. message seriously as he was surprised at this company seeks indemnification for the lend- (3) If the program is cut, the chance to put response. I explained our business model and er and officers of the various entities in- F–22’s in the Guard effectively will evapo- indicated that if Boeing could not fir into volved. The Air Force has not provided such rate. this model we would shake hands and dis- broad indemnification in the past. We are Be well. engage. I arranged to have him and his team currently reviewing whether we have the Jim. legal authority to do this and then there is share our model. I ended the conversation by From: Paul Weaver the policy issue of whether this is something telling him that the AF’s reputation was at To: James Roche we want to consider. We also are working on stake and we are committed to getting a Sent: May 21, 2002 the definition of unusually hazardous risk in good deal or else there would be no deal. Boe- Subject: (No subject) this case. ing must take some risks given the future MR. SECRETARY: I just returned on Monday value of this initial contract. We are pointed From: Michael Wynne from the Adjutants General’s conference in towards an end of May conclusion as to To: James Roche Boise. Great turnout and great support for whether to disengage. Date: June 24, 2003 our Air Force. Gen Kane and Killey briefed Marv. Subj: Meeting them on their meeting with you and all From: William Bodie JIM: Thanks for hosting on Tankers—fla- voiced overwhelming approval to help out in To: James Roche vor just right, but I may need to borrow that AF modernization where ever they can. Led reverse flak jacket yet. Sent: April 25, 2002 by the TAG from Arizona, who’s Phoenix Subject: RE: US News Best, unit flies the oldest KC–135E’s, want to start Mike. working the Hill for support for the KC–767. Don’t worry, I was never ‘‘good’’ enough to From: Michael Wynne They do not want Sen. MCCAIN to hurt the be an altar boy. I liked girls too much. To: James Roche proposal. They want to get out the straight From: James Roche Date: July 17, 2003 facts on the old E’s. I advised them to hold To: William Brodie Subj: Good Luck off until a deal is finally cut between the AF Sent: April 25, 2002 JIM: I wanted to say again congrats to get and Boeing. I want to make sure that that is Subject: RE: US News to the next phase fight on Tankers, likely still your position. They will all respect your less than the fight so far. Good Luck as well wishes and will move out when you give the God love you, my Son. Oops. I sound like on the nom and confirm process. I’ll be some- signal to do so. one of those dangerous clerics!! where behind you. President willing. They also want to do whatever it takes to Jim. Best, keep the F–22’s in production and have the From: William Brodie Mike. ANG as part of it. To: James Roche From: Michael Wynne Danny did a great job and I’m sure he will Sent: April 25, 2002 TO: Nancy Spruill, Ronald Sega, William do well in the future as the Director. Subject: RE: US News Porter God Bless, Yes, Camelot is always a ‘brief, shining CC: Richard Wiersema; Raymond Jones; Rob- Paul. moment.’ Iorizzo is no King Arthur, or even ert Nemetz From: Burkhardt & Associates a Lancelot. If we can get through this Date: November 01, 2003 To: James Roche goddam fight about tankers, we’ll have an- Subj: RE: Two Issues—Tankers and Ship Sent: May 3, 2002 other Camelot in the AF. Funding Subject: WSJ From: James Roche I think I responded but if not—I thought Not very helpful article this morning. To: William Brodie we could support two R&D ships if in dif- Here’s the short outside the beltway reac- Sent: April 25, 2002 ferent yards, and so stretch R&D a little. In- tion. (If you want the long version, give me Subject: RE: US News cremental for production would be a stretch. a call)— Tankers—aaaaarrrrgggghhh!!! enough said. (1) Why the secrecy of your Wall street ad- I hope I didn’t spoil the opera for you. I Best, visors? I think you got lousy legal advice on think Wally is still talking. We left. It was Mike. that memo. (If the article is accurate and very much of a Westinghouse affair. From: Nancy Spruill you’re using Wall Street advisors). You’re Jim. To: Michael Wynne; Ronald Sega; William the client. I can’t envision a circumstance From: William Brodie Porter under which whoever is structuring this deal To: James Roche CC: Richard Wiersema; Raymond Jones; Rob- for you wants the fact that their doing so is Sent: April 25, 2002 ert Nemetz kept quiet. It’s red meat to Congress to tell Subject: RE: US News Date: November 1, 2003 them they can’t know something. Subj: RE: Two Issues—Tankers and Ship (2) Claiming confidentiality is like claim- Okay, I’ve gone to battle stations. Leroy Funding ing executive privilege. Even if it’s correct knows and will call friendly staffers like MIKE: This evening Deputy Secretary in a narrow technical sense (and I’m not at Cortese to give them a heads up, and perhaps Wolfowitz, Dr. Sega, Marv Sambur, Dave all convinced it is) it only hurts you—larger to do something. I saw Rudy DeLeon at the Patterson, Dan Stanley and I met with Joel public case. You can’t defeat the claims that Kennedy Ctr and politely asked the Great Kaplan and others from OMB/WH/VP’s office. you’re not disclosing something (by implica- White Arab Tribe of the North to unleash The issue was a legislative strategy for the tion—something bad) (esp from someone as their falcons on out behalf for once. And, I way ahead on the tanker lease, in light of visible as MCCAIN) without real information. talked to Loren, who is standing by to com- the proposed Warner amendment/press arti- I’d distribute a one page memo saying the ment to this reporter about the national se- cles/interactions with Congress/etc. per plane cost of the lease will not be greater curity imperatives of tanker modernization. There was a lot of support to go with the than x and have x be less than the last lease Vago is also standing by. I will get with amendment but AF argued that there were Boeing did for some commercial entity—or Sambur first thing to rehearse talking

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00122 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.151 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11787 points. Will get with you before we talk to worry that folks internally will get the im- From: James Roche the reporter. pression that we’re tinkering at the edges, To: John Jumper Say hi to Wally. not transforming. One battle at a time, I Sent: April 9, 2002 Subject: RE: Tanker Article From: James Roche guess. To: William Brodie Oh, I’m polishing up a draft article for John, even Dick would want us to begin to Sent: April 25, 2002 your signature on ‘‘AF transformation’’ that retire 43 plus year tankers which will be Subject: RE: US News is set to appear in the next issue of Joint about 47 to 50 years by the time we actually replace them. At least, I think he would! The call was from a very senior guy at the Force Quarterly (I got them to commit to Jim. rag. I’ve talked to Marv and told him to putting the F22 on the cover). Will send you hook me in sometime between 10:00 and 10:30 electrons and also have hard copy for you From: John Jumper tomorrow. Thanks much. when you return. To: James Roche Jim. Sent: April 9, 2002 Rand working on a response for Novak on Subject: RE: Tanker Article From: William Brodie 767—we still might want to think about a 5 BOSS: you’ll see this morning’s EB has a To: James Roche minute conversation between you and Novak statement from Dick Myers that says the Sent: April 25, 2002 on it. Subject: RE: US News tanker fleet we have can fully meet require- Had dinner with Chip last night. He wanted ments now and out into the future, sug- I think your original guidance was right. me to pass on his best to you, and is proud gesting we don’t have the problem with Secaf takes first Q on when did we know, and you’re doing Bob Anthony’s event. He seems tankers we claim to have. We are bound to you both take the second. We can do by to have made peace with the idea of doing be asked this and I have our people working phone tomorrow. We shouldn’t get too ex- strategic planning, NCTA, etc., ceding mar- on a response. cited, there is no expose. Just certain scare keting to Carpenter. I would put in him John. mongers. charge of the DC Office if I were Sugar, or at From: James Roche From: James Roche least a major supporting role in govt. rela- To: Robin Cleveland To: William Bodie tions. Maybe he should fo PA&E! Sent: April 28, 2003 Sent: December 13, 2001 Bill. Subject: RE: Subject Fw: 767 lease From: James Roche Ok, I’ll speak with Paul on Wednesday (I’m Damn it! JGR. To: William Bodie off to speak yet again with my Little Dar- From: Marvin Sambur Sent: March 30, 2002 lings at the Academy). Let’s see if we can To: James Roche Subject: RE: Tanker story put together a Gov’t Team for Best and Sent: December 13, 2001 Final. Re IDA, I’d never go to them for in- Subject Fw: 767 lease Fine story. EADS is quoted. And Loren’s vestment banking advice! And Larry has comment basically is fine. Yesterday, I was asked to prepare an en- been altogether too detached. When all is Jim. hanced point paper on the 767 lease for the said and done, it’s still a negotiation be- Vice. The number that was given to me from From: William Bodie tween the Monopsonist (the USG) and the AQ on this enhanced paper were different To: James Roche Monopoly (add the French, and it’s the Du- from those developed for the point paper pre- Sent: March 30, 2002 opoly). pared for you. I questioned these numbers Subject: RE: Tanker story Jim. and received fuzzy answers in return. I de- Vernon Loeb’s piece is in the back of the From: William Bodie cided to do the calculation myself using an sports section in today’s WP. The ‘‘state- To: James Roche excel spreadsheet. I found to my dismay that ment’’ he refers to is the RTQ which the LL Sent: January 2, 2002 the numbers were correct according to the guys made available to staffers on request. Subject: RE: Dear Bob OMB definitions but very misleading in a Not a bad story, no errors, but not as good as BOSS: here’s a cut at a letter to Novak (re- true financial sense. The deal was not good Vago’s. Loren apologizes for saying you told member, this is not for him to publish, but from a true financial basis and I briefed the him that all KC135s need to be replaced on a hopefully to shut him up). Still waiting for Vice at 7:30PM of the misleading nature of Rand to give details on name of Novak’s per- the numbers and advised my people that we 1 for 1 basis. He didn’t think it would be in the piece. son who called PA and when. needed to get a better deal from Boeing to Bill. make this financially attractive. From: Custer Scott MajGen Nelson Gibbs reached the same conclu- To: James Roche From: Pete Aldridge sions. Sent: March 30, 2002 To: James Roche I need to make sure that in the future our CC: Jumper John Gen AF/CC; Moseley Mi- Sent: May 16, 2003 financial calculations are both accurate and chael Gen AF/CV Subject: RE: Boeing business based. I am sorry for not catching Subject: NDAA I agree. this sooner! Sir, it looks like the Auth bill will go to From: James Roche Marv. To: Pete Aldridge the floor today. As suspected, the bill lan- Sent: May 16, 2003 From: James Roche guage may not be what the lawyers and ac- Subject: RE: Boeing To: William Bodie quisition folks think we need to sign the Sent: December 13, 2001 lease. However, the early conference report Thanks, Pete. I cannot bring myself to Subject: RE: Several items language looked to me like it contains all we speak to That Person, so I’ll only forward a Bill, thanks much. I like the ROE charts a need to proceed. We are just going to have to copy of whatever Boeing sends us on Mon- lot. Well done. I want to brief the one with wait until later today to see how this turns day. XI, and I’ve sent John a msg asking whether out. My gut feel is that each document was It’s time DoD made a decision as to what is right for our Combat Air Forces. or not we should refer specifically to the written for precise reasons (to pacify certain Jim. C2ISR Center being double-hatted. Re 767, I factions) and that ultimately we will be able From: Pete Aldridge am hearing of some weakness in our num- to execute the lease/buy as we want it done. To: James Roche bers, damn it. I’ll forward Marv’s msg to It also looks like we are only going to be CC: Dr. Marvin Sambur you. We may want to have Rand be ‘‘more able to retire 12 vs 44 135E’s in FY)$... even circumspect’’ in a reply. Re Chip, he is won- Sent: May 16, 2003 after all of our attempts to engage the Hill Subject: RE: Boeing derful, but would have the same problem on this I’m not surprised as this is really a with the PA&E spores that Barry has. BRAC optics issue. As we get more visibility Great. According to Paul’s schedule he will Jim. into the NDAA, we will provide you with a not be back until Tuesday. I will set it up for then. From: William Bodie summary of other major issues affecting the To: James Roche AF. From: James Roche Sent: December 13, 2001 To: Pete Aldridge From: John Jumper Subject: RE: Several items Sent: May 16, 2003 To: James Roche Subject: RE: Boeing BOSS: Hope the trip is going well, and we’ll Sent: April 9, 2002 save some eggnog for you. Bill Davidson’s Subject: RE: Tanker Article Pete/Marv. Boeing will provide us a 15% gang is faxing you a couple of charts and max profit certification with audit on the ‘‘ROE’’ on headquarters reorg that we are set Agree, I don’t think there was malice, but green plane. Phil is fighting off attempts by to announce along with the Army next week. the wording of his statement could be used his commercial guys to add economic clauses Reason for the fax is to get your input prior as evidence against out efforts. As you said (with our help). We should have something to briefing Hill folks in time to make the an- this morning, we just have to articulate the on Monday morning. Pete, do you want to nouncement. The charts are fine for the Hill problem we are trying to fix. make the appointment with DepSecDef? We and they satisfy all Title 10 concerns. I John. now have a fixed price deal with taxpayer

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00123 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.153 S20PT1 S11788 CONGRESSIONAL RECORD — SENATE November 20, 2004 protection against overruns or windfall prof- Marv, what do you think? Pls get together From: Hodges William Maj Gen (S) SAF/AQ its from the plane and/or the mods. Enough with Mike to come up with a more palatable Sent: Tuesday, July 08, 2003 4:51 PM already. and balanced version of the footnote. Jim. To: Sambur Marvin Dr SAF/AQ Jim. DR. JAMES R. ROCHE, Cc: Spruill, Nancy, Dr , OSD–ATL; Buhrkuhl, From: James Roche Secretary of The Air Force. Robert, Dr, OSD–ATL; Schroder, Wayne, OUSDC: Schoonover, Joanne, Col. OSD– To: Marvin Sambur From: Wynne, Michael, Mr, OSD–ATL ATL; Jones, Raymond, LTC, OSD–ATL; Sent: May 13, 2001 To: Roche, James Dr SAF/OS Nemetz, Robert, Mr, OSD–ATL; Custer Subject: RE: 767 lease Sent: Tue Jul 08 17:04:31 2003 Scott MajGen SAF/LL; Christ Gregory M Oh shit! PLS fix ASAP. How did Darleen Subject: FW: Footnote miss this? Lt. Col SAF/LLW; Bunce Pete Col SAF/ Jim. JIM, I’ve gotten the 1.9B relegated to a FML; Ryan Jim Lt. Col SAF/FML; footnote and I’ve made an agreement with Barefield James Lt. Col SAF/AQ; Beierle From: Marvin Sambur Mark T Lt. Col SAF/AQ; Corley John Lt. To: James Roche OMB so that we can proceed. You can sign it in the morning if you agree if not I’m not Gen SAF/AQ; Gray Stephen Col SAF/AQ; Sent: May 13, 2003 John Lt Col SAF/AQ Fisher (Email); sure what to do. Meeting with DSD went Subject: RE: 767 lease Murphy Mark Lt. Col SAF/AQ; Canavan Yesterday, I was asked to prepare an en- fine. Most are hoping that you refuse to sign. Michael F Maj AFPEO/AT; Ted Bowlds hanced point paper on the 767 lease for the I told them not so fast. (Email); Allen Cheryl Lt. Col SAF/ Vice. The number that were given to me Best Mike. AQQM; Cloud Patricia Lt. Col SAF/AQ; from AQ on this enhanced paper were dif- From: Spruill, Nancy, Dr, OSD–ATL Haenisch Allan Civ SAF/AQQM; Leister ferent from those developed for the point Sent: Tuesday, July 08, 2003 4:19 PM William Maj SAF/AQQM; Lively Nancy paper prepared for you. I questioned these Cc: Spruill, Nancy, Dr, OSD–ATL LtCol. SAF/AQQ; Rivard James T Col numbers and received fuzzy answers in re- Subject: Footnote SAF/AQQM; Stipe Paul Col SAF/AQQ turn. I decided to do the calculation myself Subject: FW: Waiver of Termination Liabil- using an excel spreadsheet. I found to my MIKE. This is what I have copied for your ity dismay that the numbers were correct ac- convenience. DR. SAMBUR: As you will see below, OMB cording to the OMB definitions but very mis- Thanks. will support the language OSD proposed if we leading in a true financial sense. The deal Nancy. support adding the OMB text as a footnote. was not good from a true financial basis and I clipped it from previous emails so you can I briefed the Vice at 7:30PM of the mis- The footnote is to the sentence that says: see it all together here. Mr. Wynne approved. leading nature of the numbers and advised Applying the A–94 test, it was determined Request your approval. (We’re ready to go my people that we needed to get a better that the net present value of the multiyear final and send the package to SAF/LL for Dr. deal from Boeing to make this financially lease option and a traditional purchase op- Roche’s signature.) attractive. tion results in a NPV favoring a purchase of Nelson Gibbs reached the same conclu- From: Spurill, Nancy, Dr , OSD–ATL sions. $150 million, as shown in Table 1(1). Sent: Tuesday, July 08 , 2003 4:05 PM I need to make sure that in the future our FOOTNOTE: [1] In evaluating the net To: Hodges William Maj Gen (S) SAF/AQQ; financial calculations are both accurate and present value of the lease and purchase op- Sambur Marvin DR SAF/AQ business based. I am sorry for not catching tions as required by OMB Circular A–94, the Cc: Leister William Maj SAF/AQQM; Buhrkuhl, Robert, Dr, OSD–ATL; Schroe- this sooner! Air Force relied on the availability of Marv. der, Wayne, , OUSDC; Schoonover, Jo- mulityear lease authority granted by Con- anne, Col, OSD–ATL; Spurill, Nancy, Dr, From: Druyun, Darleen., SAF/AQ gress in 2002 Defense Appropriations Act. Sent: Wednesday, October 09, 2002 8:17 AM OSD–ATL; Jones, Raymond LTC, OSD– Had the Congress chosen instead to provide To: Roche, James, Dr., SAF/OS; Jumper, ATL; Nemetz, Robert, Mr, OSD–ATL mulityear procurement authority the NPV John, Gen, AF/CC; Sambur, Marvin, Dr., Subject: FW: Waiver of Termination Liabil- SAF/AQ; Foglesong, Robert, Gen, AF/CV; could favor purchase by up to $1.9 billion. ity Wehrle, Joseph H. Jr., Lt Gen, AF/CVA; While this information affords a measure of Marv/ Wayne Plummer, Stephen B., LtGen, SAF/AQ; clarity in an equitable comparison of terms Over to you. Gibbs, Nelson, Mr, SAF/IE and NPV, it is provided with the under- I’m sure Mr. Wynne is willing to talk w/ Subject: OSD BRIEF TO LEASING WORK standing that multiyear procurement au- you. I hope you come onboard. GROUP thority was not available and therefore not a If you do, I need a clean copy of the report, We were asked if we thought the Congress viable option for the Administration’s ana- OMB has asked for one—for their internal would give us; language on the termination lytical consideration. use only. liability coverage. We told them we did not From: Sambur Marvin Dr SAF/AQ Thanks. know and would have wait for the FY 03 ap- Sent: Tuesday, July 08, 2003 9:58 PM Nancy. propriations to be passed by the Congress. To: Roche James Dr SAF/AQ From: Wynne, Michael, Mr, OSD–ATL Privately I would tell you that the language Subject: Fw: Tanker Leasing Report to the Sent: Tuesday, July 08, 2003 3:55 PM we asked for is supposed to be in the bill per Congress To: Spurill, Nancy, Dr, OSD–ATL several telecons from the hill. This is still Subject: Re: Waiver of Termination Liability fairly ‘‘close hold’’. Once they digest this BOSS. Just received this from Nancy. It is material they will reconvene a follow on worth a shot speaking to Robin or are you From: Robin-Cleveland Sent: Tuesday, July 08, 2003 3:33 PM meeting. Meanwhile we will continue to like me in that you would rather take poi- work this subject with OSD and try to win To: Michael, Wynne son. Subject: Re: Waiver of Termination Liability them over, including OMB. Col DeWillis from Marv. SAF/AQQ has an excellent working relation- Yes make it a footnote and we got a deal. From: Spruill, Nancy, Dr, OSD–ATL ship with the OMB and continues to work From: Sambur Marvin Dr SAF/AQ closely with them. Will keep you posted. To: Hodges William Maj Gen (S) SAF/AQQ CC: Spruill, Nancy, Dr, OSD–ATL; Schroe- Sent: Tuesday, August 26, 2003 7:59 AM To: Wynne, Michael, Mr, OSD–ATL der, Wayne, OUSDC To: Szemborski, Stanley R., VADM, OSD– Cc: Sambur Marvin Dr SAF/AQ Sent: Tue Jul 08 21:49;50 2003 PA&E Sent: Tuesday, Jul 08, 2003 Subject: Tanker Leasing Report to the Con- Cc: Krieg, Ken, CIV, OSD–PA&E; Zakheim, Subject: Re: FW: Footnote gress Dov Hon, OSD–COMPT: Roche James Dr Mike I don’t like it. Why? Because we Marv/ Wayne H. SAF/OS; Wynne Michael, Mr, OSD–ATL, don’t agree with the calculation! As impor- McNabb Duncan Lt. Gen AF/XP tant, it fails to give an alternative, lease I believe Dr. Roche is not happy with the Subject: $2B Issue with PA&E supportive case where the NPV is positive! If compromise. So I believe it is now between STAN: At my staff meeting this morning, the addition to the footnote added: ‘‘... Dr. Roche and Ms. Cleveland. As far as I my folks again (see email below) reported Similarly, if blah blah, then the NPV would know. we’re in limbo. I’m sure something that PA&E was pushing our folks for sources favor a lease by $$$.’’ As this stands, it is em- will change tomorrow. But I’m optimist. for the $2B upfront payment for the lease. As barrassing to you, me, and the SecDef. Sen Thanks. I mentioned at our previous meeting on this McCain and others who oppose the lease will Nancy. subject, the AF was told by Mr. Aldridge leap to this number! Why is this so hard for that this payment would come from DOD you to see, Mike? Further, the footnote ‘‘reserves’’ and Aldridge still reiterates that misses Pete Aldridge’s point that this is a position. In an event it is too early to start hypothetical since the Air Force doesn’t the process. In addition, Mr Zakhiem stated have the BA to enter into such a multiyear at the earlier meeting that he has no ‘‘re- contact, even if the Congress bent its rules serves’’ but will seek sources for the $2B to do so without limited production! from ALL the Services. We can call another

VerDate Aug 04 2004 03:52 Nov 22, 2004 Jkt 039060 PO 00000 Frm 00124 Fmt 4624 Sfmt 0634 E:\CR\FM\A20NO6.155 S20PT1 November 20, 2004 CONGRESSIONAL RECORD — SENATE S11789 meeting (with Aldridge) to addresses the From: Spurill, Nancy, Dr, OSD–ATL ers. It also requires each State to pro- issue if that is not your understanding Sent: Tuesday, November 12, 2002 9:22 PM vide timely notice to the State’s attor- Marv. To: Aldridge, Pete, Hon, OSD–ATL; Link, ney general of the impending release of From: Stipe Paul Col SAF/AQ Jon, Col, OSD–ATL; Wilson, Charles, a high-risk sex offender; and upon such Sent: Monday, August 11, 2003 3:54 PM CAPT, OSD–ATL; Lamartin, Glenn, Dr, OSD–ATL; Buhrkuhl, Robert, Dr, OSD– notification, the State’s attorney gen- To: Sambur Marvin Dr SAF/AQ eral is required to consider whether to Cc: Corley John Lt. Gen SAF/AQ; Gray Ste- ATL; Aucoin, Cassandra, Ms, OSD–ATL phen Col SAF/AQ; Barfield James Lt. Col Subject: RE: Tanker Leasing institute a civil commitment pro- SAF/AQ; Fisher John Lt. Col SAF/AQ; SIR: Re: tanker leasing, in addition to ceeding. States must intensively mon- Rivard James T Col SAF/AQQM; Hodges PA&E, CAIG, OMB, and Comptroller are try- itor for at least 1 year any high-risk William Maj Gen SAF/AQQ; Marzo David ing to decide whether to support leasing or sex offender who has not been civilly Maj SAF/FMCE; Louden Philip LtCol not but have not gotten all the information committed and has been uncondition- with PA&E they need yet from AF. AF is suppose to give ally released from incarceration. Subject: Head’s Up on Tanker 42B Issue with it to the leasing review panel working group I want to thank my colleague Sen- PA&E this week. ator DORGAN for his dedication to this Once we get the information from AF it SIR: Just to keep you in the loop, PA&E is will take several more weeks-the CAIG is the legislation. still trying strong-arm tactics with our pro- long pole in the tent. f grammers concerning the $2B funding excur- If we go with the reengining of KC–135Es/ sion mentioned in the 767 Congressional Re- converting them to Rs, as you suggest, the SENATE FAILS NATIVE AMERICAN port as an out year option for shaping the purchase vs. lease issue could be addressed ENTREPRENEURS budget bow-wave. As you may recall Mr. much more deliberately in POM 05. Wynne told us that the AF should consider Mr. JOHNSON. Mr. President, I am You can give us further guidance when we pleased that Congress will soon com- this new money. That aside, it is premature see you at 0800 Wednesday am. (in FY03) to be working a program budgetary plete it’s work on the remaining fiscal V/R, year 2005 Appropriations measures. change on a program that has not yet been Nancy. approved. Further, decisions on FY08 actions While this bill is not perfect, it rep- can be addressed in 2006. Finally, as an oper- From: Glenn Lamartin OSD–ATL resents an important and sincere effort To: Pete Aldridge OSD–ATL ating lease, we would need some indication to work in a bipartisan effort to fund from Congress that they intend for us to buy CC: Nancy Spruill; Diane Wright; Jon Link; Charles Wilson the nations goals and priorities. these aircraft for a buy-down scenario to be- I am, nonetheless, sincerely dis- come a reality. The report did not commit us Date: November 12, 2002 to the path, but rather, committed the De- Subj: B–52 Re-engining appointed that extensive authorization partment of Defense to exploring options We are preparing the paper you requested language regarding the Small Business like these in the future if it becomes nec- and the short briefing that will make the Administration was inappropriately in- essary, The $2B excursion was one such op- case. We just got a copy of the DSB task serted into this important bill. The in- tion. We expect AF/XP to bring this issue to force’s executive summary and will work clusion of this language is a deliberate your attention. We have already been work- with them to make sure that we get the de- and deceptive effort to circumvent the ing with their actions to provide back- tails right. legislative process. It prevents honest Glenn. ground, and to indicate that this appears to and important debate about important be an initiative from PA&E, not from OSD as From: Pete Aldridge issues that face this Nation, and ulti- a whole, or from AT&L. To: Michael Wynne, Glenn Lamartin, Diane V/R, Wright mately it characterizes an enormous PAUL M. STIPE, COL, USAF, Date: November 04, 2002 failure on behalf of the bill’s authors. Deputy Director, Global Reach Programs. Subj: Tankers and B–52s A quality SBA reauthorization bill From: Aldridge, Pete, Hon, OSD–ATL Steve Cambone tells me that PA&E is com- could stand on it’s merits. The bill’s Sent: Monday, November, 04, 2002 1:22 PM ing out against the tanker lease. Their prob- authors would come to the floor and To: Wynne, Michael, Mr, OSD–ATL: lem seems to be the infrastructure cost of deliberate these matters openly. We Lamartin, Glenn, Dr, OSD–ATL: Diane, modifying hangers and maintenance facili- would have an honest discussion about Ms, OSD–ATL ties to bed-down the 767, vice 135s. I do not how to best serve the entrepreneurial Subject: Tankers and B–52’s recall that the KC–10s caused that much interests of our country. We would pur- Steve Cambone tells me that PA&E is com- problem. Also, I need a short paper on the B–52 re- sue a full and complete review of these ing out against the tanker lease. Their prob- matters by all Members, and we would lem seems to be the infrastructure costs engining study done by the DSB. Apparently they are coming out in favor of doing this seek to enhance and improve the bill in modifying and maintenance facilities to bed- every way we could. down the 767, vice 135s. I do not recall that primarily because of the positive impact on the KC–10s caused that much problem. the tanker fleet. I understand that the study Unfortunately, this bill is terribly is in a draft form now. lacking. So the sponsors have chosen Also, I need a short paper on the B–52 re- engining study done by the DSB. Apparently, f to hide it in this Omnibus Appropria- tions bill and walk away from their re- they are coming out in favor of doing this DRU SJODIN NATIONAL SEX OF- primarily because of the positive impact on sponsibility to the entrepreneurs of the tanker fleet. I understand that the study FENDER PUBLIC DATABASE ACT America. is in a draft form now. OF 2004 This is a shameful perversion of the From: Aldridge, Pete, Hon, OSD–ATL Mr. HATCH. Mr. President, I rise legislative process. However, these Sent: Tuesday, November 12, 2002 5:11 PM today to commend my colleagues on matters will become law, not because To: Cambone, Stephen, CIV, OSD–PA&E; passage of S. 2154, Dru’s Law. After last Congress has debated and passed this Szemborski, Stanley R., RADM, OSD– year’s abduction of Dru Sjodin in bill on behalf of the American people, PA&E North Dakota, Senator DORGAN intro- but because it was attached to a bill Cc: Spurill, Nancy, Dr, OSD–ATL; Lamartin, Glenn, Dr, OSD–ATL duced this bill to address a problem funding nearly every spending program Subject: KC–135 Recap Issue Paper with our sex offender registry. The that exists in the country. Steve/Stan; I just reviewed the KC–135 problem is simple, yet great: There is The plight of the first-Americans and Recap paper. It is a very good and con- no public national sex offender reg- reservation communities is among the vincing. Based on the analysis I would sup- istry. Each State maintains its own most glaring and disappointing omis- port Option 3—Convert the E’s to R’s, and registry of sex offenders, but there is sions to this SBA reauthorization leg- defer new tanker procurement (or lease). no national database for the public to islation. These communities remain In a related issue, the DSB just completed search. among the most disadvantaged and a study on the re-engineering the B–52. Un- I was pleased to support this legisla- disenfranchised in the nation. They like past studies, which showed that this was tion when it was referred to the Judici- face significant barriers to investment not cost-effective, this new study took into ary Committee and was happy to work capital, technical assistance, and re- account the impact on tankers. The result is with Senator DORGAN to improve the lated entrepreneurial opportunities. a much more favorable analysis supporting such a plan. This would further increase language of the final bill. Dru’s law di- The concerns of Native Americans tanker availability for other uses. I am to re- rects the Attorney General to make are not addressed in this legislation. ceive a paper and briefing and may have a available to the public, via the Inter- Their opportunities will not be en- more definite position soon. net, a national registry of sex offend- hanced in this legislation. There will

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