Boeing leases prove costly

By Juliet Eilperin

The Washington Post

WASHINGTON — Shortly before leaving town last week, lawmakers approved the lease of four new Boeing 737 airplanes to transport congressional and administration officials, a move that will cost taxpayers hundreds of millions of dollars more than if the government had bought the planes.

Supporters of the measure, which was inserted without debate into the annual defense spending bill, said the planes will fill a critical need. The four aircraft that the military makes available for domestic and international trips by the vice president, Cabinet members and lawmakers, they said, are old and in need of repair. Top officials are often unable to use them at key moments, they said.

The move was part of a broader push by lawmakers this fall to aid Boeing, whose commercial orders have fallen precipitously since the Sept. 11 terrorist attacks. Supporters of the aircraft manufacturer also inserted language calling for the lease of 100 converted Boeing 767s to serve as military tankers.

These backers said the project was the result of an unusual behind-the-scenes lobbying push by the White House and congressional leaders, who suggested lawmakers approved the deal in the final hours of negotiations. One lawmaker who asked not to be identified described it as "an immaculate conception."

Both Boeing leases will cost the government much more than if the military had bought the planes. However, because there was no money left in the Pentagon’s procurement budget, which typically pays for new equipment, lawmakers dipped into the separate operating budget, which allows leases. This maneuver also allows the government to spread out the cost over time, reducing the immediate impact on the budget.

"I don’t know how we got into this mess, but I hope we can get out of it," said Rep. Norm Dicks, D-Wash., an Appropriations Committee member who backs both projects. "This was artful crafting of this agreement, believe me."

Dicks said lawmakers, who had unsuccessfully asked the administration for an additional $20 billion in procurement this year, had no choice but to rely on budgetary gimmicks in the short term.

"This is the number one problem over the next five years in defense — the lack of money in procurement," Dicks said.

He added that while Congress has entered into lease arrangements in the past, it had never been "on this scale."

Lawmakers and congressional aides from both sides said this is a costly way to do business, because the government pays as much as 30 percent more than in a straight purchase and ends up without the planes at the end of the lease.

According to the Office of Management and Budget, the government will pay $26 billion over the next decade to lease the 100 tankers, which are used to refuel combat aircraft during military missions. The four planes for congressional and administration official travel each will cost about $85 million a year during that same period, according to congressional aides.

Both Democratic and Republican appropriators defended the decision to lease the 737s, contending that lawmakers and Cabinet members alike need additional military planes for security reasons. There are four planes designated for such use, according to House Appropriations Committee spokesman John Scofield, but one is reserved as a backup for the president and another is constantly rotated into maintenance because the planes are old.

Key negotiators and congressional aides said they are confident the administration will secure the new planes, because the administration actively pushed for the leasing arrangement. Both House Speaker Dennis Hastert, R-Ill., and officials in the White House congressional liaison office urged appropriators to request the 737s, they said.

"The Hill wanted them, and we wanted them both," said a White House official who asked not to be identified. "It was a cooperative effort.

A Boeing representative, who also asked not to be identified, said the company’s lobbyists had not solicited the 737 order. "I think many people were surprised by that," the representative said.

But Boeing has aggressively sought legislative relief from Capitol Hill in recent months, saying that the company needs as much assistance as possible since the nation’s commercial airline market is reeling.

Now that the company has moved its headquarters to Chicago, close to Hastert’s district, the speaker has become an even more valuable ally in the appropriations process.

Dicks said the speaker "was very enthusiastic" about the plan to lease more Boeing planes. "We were very pleased to have him on our team," he said. "It made a difference."

Frank Clemente, director of Public Citizen’s Congress Watch, said the decision to lease both sets of Boeing planes undermined the democratic process by committing the government to massive spending programs without holding a public hearing.

"Looking at it, it looks like a special-interest sweetheart deal for an aircraft manufacturer that is in economic trouble," Clemente said. "The U.S. Treasury should not be used to bail out individual companies, especially through closed-door dealmaking."

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