Boeing has a tense past with McCain

Published 11:27 pm Monday, February 4, 2008

OLYMPIA — U.S. Sen. John McCain is no stranger to Washington, and some might argue he’s no ally of The Boeing Co.

The Arizona Republican nearly singlehandedly killed the firm’s multibillion-dollar deal to lease air tankers to the Air Force in 2004, an agreement he called “one of the great rip-offs in the history of the United States of America.”

In pursuing its erasure, he unearthed a corrupted procurement process that brought the resignation of Boeing’s chief executive and sent its financial officer and the Pentagon weapons buyer to prison. It also cost the company millions of dollars in a settlement — and its reputation.

Such history may make Boeing’s current leaders a little wary of how they would fare under a McCain presidency, observers said Monday.

But it’s unlikely the past will cost the GOP presidential candidate votes in party caucuses, the state’s presidential primary, or in the November election, should he qualify.

“The effect will be very small,” said former Republican U.S. Sen. Slade Gorton, a leader of McCain’s campaign operation in Washington. “To the extent people who work for Boeing or used to work for Boeing, their views may be impacted by that.”

More than 20,000 Boeing workers in the Puget Sound region belong to the International Association of Machinists and Aerospace Workers, a politically active labor union with 730,000 members nationwide. It has endorsed Sen. Hillary Clinton, D-N.Y., and Republican Mike Huckabee, former Arkansas governor, in the primaries.

Connie Kelliher, a spokeswoman with the local Machinists’ district, said they will try to work with the next president — even if it is McCain.

“We’ve reached out to him before and got absolutely nowhere,” Kelliher said.

A spokesman for Boeing on Monday said the company does not comment on presidential candidates.

Developing a replacement for the Air Force’s aging fleet of tankers, which refuel fighters and other planes in midair, has become a saga for the defense industry.

In 2001, McCain’s laser-like probe of defense budgets unearthed a $30 billion earmark to pay for leasing 100 KC-767 jets from Boeing — without first following a competitive bid process.

His unrelenting criticism brought down the program three years later and ignited investigations into the inappropriate ties between Boeing and Air Force officials.

In 2006, Boeing paid its fine and its new leaders apologized at a Senate hearing. McCain responded with praise for the firm for “truly reforming and starting fresh.”

The Air Force started the process all over again, and today Boeing and Northrop Grumman Corp. are dueling for a $40 billion contract that could be awarded as soon as Feb. 27.

The Machinists hope the contract with the Air Force will be squared away by the time the next president takes office. If won by Boeing, it would keep Machinists in Everett busy building 767 jets for several years.

While the process is moving forward, McCain’s campaign is keeping the past alive.

McCain raised the air tanker controversy in the Florida primary when he ran a television commercial entitled “Guts.” In it he takes credit for uncovering “corruption” that saved the nation’s taxpayers $30 billion.

Rekindling the dispute in the campaign gives Boeing officials good reason to feel unsure of how McCain might respond when the air tanker contract is awarded this spring.

“I think John McCain as president is a wild card for The Boeing Co.,” said Ben McMakin, who was legislative director for Sen. Patty Murray, D-Wash., during the air tanker controversy.

“Were he not in the midst of a presidential campaign, it’s likely that John McCain would be looking to punish Boeing,” he said.

Gorton disagreed.

“I think I can say with some confidence he isn’t going to be prejudiced against Boeing in any fairly competitive procurement,” he said.

Local aerospace consultant Scott Hamilton of Leeham Co., who believes the contract is Boeing’s to lose, said he doesn’t see the senator standing in Boeing’s way “if McCain is convinced that the process was honest and fair.”

McCain has not argued that Boeing’s KC-767 is inferior to the competitor’s and only pointed out when Boeing and the Air Force haven’t played by the rules, he said.

Still, “it’s safe to say they’re not bosom buddies,” he said.

While Boeing’s political action committee has not contributed specifically to a presidential candidate, several Boeing officials individually donated to political campaigns. For instance, Boeing’s senior vice president of public policy, Tod Hullin, gave $2,300 to McCain in March. Meanwhile, Boeing’s chief financial officer, James Bell, gave the same amount to Sen. Barack Obama, D-Ill.

Aviation analyst Richard Aboulafia said McCain could actually boost his stature among voters with his role in unearthing the problems with the air tanker procurement.

“If they’re smart, the campaign will paint him as the guy who helped clean up Boeing and argue Boeing is a better corporate citizen for it,” he said.

This issue is unlikely to generate the heat it did a few years ago because the dynamics for McCain, Boeing and union workers are much different, he said.

McCain won his point.

And Boeing, which relied heavily on defense contracts for income and jobs then, is now enjoying a surge in both through commercial sales of its 787 Dreamliner.

“This is a changed debate,” Aboulafia said. “Why would they expend the political capital?”

Reporter Jerry Cornfield: 360-352-8623 or jcornfield@heraldnet.com.