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Reducing Influence Peddling in Government Contracting

(Image: Jared Rodriguez / Truthout)

Part of the Series

Today, the Unites States Air Force relies on a fleet of aerial refueling tankers – overwhelmingly comprised of the jet-powered, Eisenhower-era KC-135 Stratotanker – to project power around the world. The Air Force has consistently evaluated the aircraft to be flight-worthy until 2040, in spite of its age.

A decade ago, while suffering through the tumultuous financial upheavals caused by the 9/11 terrorist attacks, defense contractor Boeing Co., with the support of the Air Force, convinced the Pentagon to begin replacing its refueling fleet early. The plan was for the DoD to lease a bundle of Boeing's commercial jets redesigned as tankers, financially aiding the defense contractor along the way.

Then, a contracting scandal involving improper communications between the government and Boeing blew up, throwing the lease into turmoil. In fact, the fallout of the scandal so immensely complicated the Air Force's later competitions to find a tanker replacement that the situation has only just recently ended, with Boeing winning one of the largest defense contracts ever.

The original tanker lease, which, at the time, represented a very lucrative contract, with an initial estimated worth of $20 billion and the potential for tens of billions of dollars in additional sales, generated a bevy of lobbying activity, both legal and illegal. Because of weak, underenforced lobbying transparency rules, however, most of the lobbying activity – along with any relevant understanding of its impact on the government's decision-making process – has been lost to unnoted conversations or hidden in obscure lobbying records.

For these reasons, the Boeing tanker lease presents an apt case study of Washington's broken lobbying disclosure laws and demonstrates the need for transparency reforms to help counter the pernicious power of influence peddling on government actions.

In February 2001, when Boeing approached the Air Force with the idea to lease its 767 airplane refitted as a refueling tanker, the Pentagon was not planning to begin searching for a potential replacement for at least another decade. However, Boeing framed the deal as an opportunity for the military to replace a handful of its oldest and least technologically advanced Stratotankers, the KC-135E. Not coincidentally, if struck, the deal would help the contractor keep an unsuccessful commercial aircraft line alive.

The Air Force seemed receptive, but the question was whether the Pentagon would allow the new spending. Shortly after pitching the idea to the military, Boeing set up an internal unit to push the sale of its refitted tankers and began what turned out to be a three-year, ultimately unsuccessful effort to sell the deal to the government.

Several months after pitching the lease to the Air Force, the terrorist attacks of 9/11 decimated the aviation industry and injected urgency into the aerospace giant's strategy. Reeling financially, Boeing approached then-House Speaker Dennis Hastert (R-Illinois) – whose home state houses Boeing headquarters – for help.

Boeing also began enlisting the help of lobbying powerhouse Akin, Gump, Strauss, Hauer & Feld, L.L.P, perennially one of the top lobbying firms in Washington. Over the course of the next six and a half years, Boeing would pay Akin, Gump a total of $3.62 million for a team of former Capitol Hill staffers and political appointees to bend the ears of officials in Congress, DoD and then-Vice President Dick Cheney's office.

By December 2001, less than a year into the Boeing campaign, the defense contractor began to see results. Hastert, working with then-Senate Appropriations Committee Ranking Member Sen. Ted Stevens (R-Alaska) and Sen. Patty Murray (D-Washington), slipped language into the fiscal year (FY) 2002 defense appropriations bill providing funds for the Air Force to lease 100 Boeing 767s as tankers and four Boeing 737s as VIP transport. As a Republican Congressional aide later admitted to Bloomberg BusinessWeek, “The notion that this would help Boeing at the time when they were facing trouble was not lost on anybody.”

The funding, however, was only step one. Boeing and the Pentagon still had to come to an agreement on overall cost and Congress would have to sign off on it. To help achieve those objectives, Boeing enlisted the voices of its suppliers, additional friends on Capitol Hill – such as Rep. Norm Dicks (D-Washington), whose state houses several Boeing facilities – and a couple extra lobbying shops.

One of those shops was Kerr Consulting, headed up by Gordon Kerr. Before becoming a lobbyist, Kerr had spent over 30 years on Capitol Hill working for several different members of Congress. His last tour of duty was a 17-year stint as chief of staff to Sen. Carl Levin (D-Michigan).

In June 2001, Levin switched from ranking member to chair of the Senate Armed Services Committee – one of four committees that had jurisdiction over approving the tanker lease. Hiring Kerr in April 2002, Boeing paid the former top Congressional aide $880,000 over the next seven and a half years for his access to Levin and other members of Congress.

The other shop was the small consulting firm of PAW & Associates. Paul Weaver, a former high-ranking Air Force officer and commander of the Air National Guard with over three decades of service, opened the shop almost immediately after retiring in February 2002. Boeing hired Weaver just three months later to lobby former Pentagon colleagues on the tanker issue. Boeing retained Weaver's services for the next four years at a total cost of $620,000.

Combined with its stable of in-house lobbyists, Boeing stepped up its campaign to woo skeptics within Congress and the executive branch. Naysayers from the latter group included then-director of the Office of Management and Budget (OMB) and current Indiana Gov. Mitch Daniels and then-Secretary of Defense Donald Rumsfeld.

At a White House meeting in October 2002 between Representative Dicks and President George W. Bush, the campaign began to pay dividends. With the war in Afghanistan placing a premium on refueling tankers, Dicks pitched the Boeing lease and took pains to speculate, “[I]f there's a failure of these planes and you can't fly them, we're screwed.” Bush listened intently to the proposal, then turned to his chief of staff Andrew Card and told him to get the deal done.

Still, even with the White House on board, Boeing had to convince Rumsfeld's office. Over the next several months, negotiations came to an impasse as the Pentagon kept pushing back on the total cost of the package. Hastert put in a call to Card in May 2003 seeking assistance.

Soon after, Air Force Secretary James Roche, Card, and several OMB officials sat down with Philip Condit, the chief executive officer (CEO) of Boeing, to hammer out a deal. A week later, the OMB released a terse statement announcing an agreement. The arrangement called for a six-year lease at a cost of $15.5 billion, plus a $4.1 billion option for the Air Force to purchase the 100-plus planes at the end of the lease.

Only 12 months later, though, the tanker lease would be lying in a heap on the floor of the Senate, indefinitely suspended by the Pentagon until the Air Force could complete additional studies on the best option for replacing its tanker fleet. A scandal, overflowing with a web of improper contacts among Boeing, the Air Force, the Pentagon, OMB and Congress, had emerged to kill the lease.

Eventually, a Deputy Secretary of the Air Force, Darleen Druyun, would serve nine months in jail for negotiating an executive position with Boeing while overseeing the lease. The Pentagon would also cite Secretary Roche for two ethics violations for misuse of his office by lobbying the OMB to support the Boeing lease proposal and find several senior Air Force officials at fault for evading basic military contracting laws. Additionally, then-Boeing Chief Financial Officer Michael Sears would serve four months in prison on corruption charges and Condit, the CEO, would resign in shame.

How did the scandal emerge? It was largely due to the efforts of a few vocal members of Congress, notably Sen. John McCain (R-Arizona), who, during Congressional approval of the tanker deal, subpoenaed and released some 9,000 Air Force and Boeing records. Spurred on by Congressional efforts, journalists and good government groups showered the issue with attention, revealing much of the information we have today.

Boeing's publicly available lobbying disclosure reports, just as those of the firms Boeing hired to influence government officials on its behalf, are ridiculously sparse on meaningful detail. Moreover, the records on their own would not have provided enough information to raise a red flag on Boeing's practices. Danielle Brian of the Project On Government Oversight (POGO), a government watchdog organization, argues, “The current [disclosure] system is not catching the important contacts made by lobbyists.”

Indeed, Congressional lobbying disclosure filings raise more questions than they answer. Filed with the clerk of the House and the secretary of the Senate, the disclosure form simply requires a lobbying firm to list the amount of money received over a certain period – currently a quarter – the issue covered, the government institutions contacted and the names of the lobbyists handling the issue.

With respect to the tanker lease, one wonders who exactly these cadres of Boeing lobbyists talked to when they visited the “House” or “Senate,” and what, in detail, they discussed. Which offices did they visit? Did they meet with lower- or mid-level staff, or did they speak to chiefs of staff or even members?

One could ask the same questions about the Boeing team that made visits to the “Department of Defense” or the “Office of the Vice President.” Did these people (some officially lobbyists, some not) sit down with high-ranking generals at the Pentagon or possibly even Secretary Rumsfeld? What about visits to the vice president's office? Whom among Vice President Dick Cheney's staff did these people meet with and what exactly did they discuss? The fact is, we do not know.

The meager lobbying disclosure that occurs now primarily targets communications with Congress. There is virtually no disclosure of the dealmaking that occurs within the executive branch, say to propose a contract or speed its approval. There is some required disclosure for existing contractors, but that doesn't provide useful information to the public and is difficult to obtain.

The contractor disclosure occurs through Standard Form (SF) LLL, which requires a lobbyist to provide specifics when attempting to influence the executive branch. SF-LLL was created through a 1989 amendment by former Sen. Robert Byrd (D-West Virginia) to an appropriations bill.

The so-called Byrd Amendment restricts federal awardees from lobbying Congressional or executive branch officials with money derived from federal contracts or grants to secure more contracts, grants, cooperative agreements or loans. Additionally, even if the entity pays for this type of lobbying with money not derived from federally appropriated funds, the entity has to file an SF-LLL.

Unfortunately, the SF-LLL is not always completed. Even when it is completed, it is very hard for the public to obtain the information. Several years ago, the Sunlight Foundation sought to obtain SF-LLLs from several federal agencies, such as the Department of Transportation and the Coast Guard, on several well-known contracts that would have had associated SF-LLLs. The agencies, however, gave one excuse after another as to why they could not provide the information, despite being required by law to do so.

According to Bill Allison of the Sunlight Foundation, “[The Department of] Transportation told us that they only collected the forms when soliciting a bid from contractors and would not make [the records] available for public review.” Much of the confusion seems to stem from lobbying reforms of the 1990s that reversed a requirement for federal agencies to send copies of SF-LLLs to the House and Senate, which used to be the only public access points. “The record keeping process just broke down after that,” notes Allison.

In spite of its inaccessibility and limited information, SF-LLL could be a useful vehicle for increasing transparency in the influence peddling culture of Washington. President Barack Obama has acknowledged the need for reform and has called for steps to improve “executive branch procurement lobbying disclosure.”

Buried in his executive order on ethics was a requirement to take immediate action to improve disclosure and, if necessary, develop legislative recommendations. Even without Congressional action, though, the Obama administration can turn things around by instituting four key reforms, all justifiable within the current framework of the Byrd Amendment.

First, the administration must make SF-LLL records publicly available online in a machine-readable and searchable format. This is not an impossible task. Currently, federal agencies collect forms from lobbyists and hold them for their own records. Converting this private collection of records – that display no proprietary information, mind you – would be no more difficult than what the agencies have had to achieve recently through the president's emphasis on open and transparent government.

To help make future online presentation easier, the government could require federal employees to complete a short online form within 24 hours of a communication to serve as a record of the event. Completion of the federal form would then trigger a requirement for the lobbyist to fill out a similar, albeit more detailed, online form within 72 hours of the communication. These online reports would be available immediately on a searchable web site, creating a near-contemporaneous flow of updated information to the public.

Second, the administration should expand the data collected on the SF-LLL disclosure form. For starters, it would be valuable to know the date and time of a meeting between a lobbyist and a government official. It would also be important to have a meeting number assigned to the discussion. That way, the public could more easily track associated meetings.

Similarly, it would be important to have a summary of the nature of the contact, along with a copy of any materials that the government official and lobbyist exchanged at the meeting. With basic information such as this, the citizenry can more easily follow along as the government makes decisions about how to spend tax dollars.

Third, the administration must expand who is required to file SF-LLL. Anyone who tries to influence how the government is spending taxpayer dollars should be required to disclose, not just those who are registered “lobbyists” and not just those who already have federal awards. Reasonable exclusions could be developed so that the disclosure is capturing only high-powered influence peddlers.

Fourth, the administration should enforce existing civil penalties for noncompliance that already exist within the Byrd Amendment. The federal government has rarely, if ever, enforced these penalties. Without a credible noncompliance penalty regime, lobbyists, even well-meaning ones, will continue to flaunt the rules.

How feasible are these reforms? According to Tom Susman, legal counsel for the American Bar Association (ABA) and an expert on lobbying law, “There are no legal obstacles to the administration implementing these recommendations.” Susman concedes, “[The administration] is going to get resistance from the business and lobbying sectors and there are going to be costs associated with the initiative,” but even if resistance results in “watered down reform standards,” he would accept them because “it would still be quite an improvement over the status quo.”

Brian of POGO concurs, arguing in relation to the Boeing tanker lease that had these reforms been in place at the time, “we could have seen what Boeing was doing more clearly up front,” and it would not have taken the actions of a member of Congress to unearth this corruption. Brian also points out, “Knowing that their conversations were not going to see the light of day gave Boeing the incentive to make these contacts and have these conversations.”

Allison of the Sunlight Foundation adds that the information provided by SF-LLLs, even though it is currently limited in scope, is vitally important to the public's understanding of lobbying because “the forms are only filled out when a lobbyist goes over the heads of the regular procurement officials to try and steer cash to their client.”

“This is the kind of the thing the public would want to know about,” Allison concluded.

Implementation of these reforms will provide citizens with much more lobbying disclosure information and with a quick cross-reference of other publicly available information, taxpayers could create as full a picture of influence peddling as possible under current limitations. If successfully implemented, maybe one day we will have enough transparency to stop fraud like the Boeing tanker lease before it even begins, and in the process, rebuild trust in our government.

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