McCain advisers lobbied in tanker deal

WASHINGTON — Top current advisers to Sen. John McCain's presidential campaign last year lobbied for a European plane maker that beat Boeing to a $40 billion Air Force tanker contract, taking sides in a bidding fight that McCain has tried to referee for more than five years.

Two of the advisers gave up their lobbying work when they joined McCain's campaign. A third, former Texas Rep. Tom Loeffler, lobbied for European Aeronautic Defence & Space while serving as McCain's national finance chairman.

EADS is the parent company of Airbus, which teamed up with U.S.-based Northrop Grumman to win the lucrative aerial refueling contract on Feb. 29. Boeing Chairman and CEO Jim McNerney said in a statement Monday that the Chicago-based aerospace company "found serious flaws in the process that we believe warrant appeal."

McCain, the Republican presidential nominee in waiting, has been a key figure in the Pentagon's yearslong attempt to complete a deal on the tanker. McCain helped block an earlier, scandal-marred tanker contract with Boeing and prodded the Pentagon in 2006 to develop bidding procedures that did not exclude Airbus.

EADS retained Ogilvy Government Relations and The Loeffler Group to lobby for the tanker deal last year, months after McCain sent two letters urging the Defense Department to make sure the bidding proposals guaranteed competition.

"They never lobbied him related to the issues, and the letters went out before they were contracted" by EADS, McCain campaign spokeswoman Jill Hazelbaker said Monday.

According to lobbying records filed with the Senate, Loeffler Group lobbyists on the project included Loeffler; Susan Nelson, who left the firm and is now the campaign's finance director; and former Secretary of the Navy William Ball III, who has campaigned for McCain. Ogilvy lobbyist John Green, who was assigned the EADS work, recently took a leave of absence to volunteer for McCain as the campaign's congressional liaison.

"The aesthetics are not good, especially since he is an advocate of reform and transparency," said Richard Aboulafia, an analyst with the aerospace consulting firm Teal Group. "Boeing advocates are going to use this as ammunition."

McCain today defended his work on the tanker.

"I had nothing to do with the contract, except to insist in writing, on several occasions, as this process went forward, that it be fair and open and transparent," he said at a meeting with voters in St. Louis. "That was my involvement in it."

Later, he told reporters: "I think my record is very clear on this issue, including a paper trail of letters that we wrote to the Department of Defense during this process and saying clearly and unequivocally we just want a fair process and we don't want a repeat of the previous process." He added: "I think my record on this issue is very clear and authenticated by both written and verbal statements on the issue."

McCain, a longtime critic of influence peddling and special interest politics, has come under increased scrutiny as a presidential candidate, particularly because he has surrounded himself with advisers who are veteran Washington lobbyists. He has defended his inner circle and has emphatically denied reports last month in The New York Times and The Washington Post that suggested he helped the client of a lobbyist friend nine years ago.

He has also cast himself as a neutral watchdog in the Air Force tanker contract, one of the largest in decades, and has defended his aggressive oversight.

"Defense procurement is to defend America, and to make sure that our nation is secure, and we don't have unlimited dollars to do so," he said today. "So as long as it was a fair and open process, I think all Americans will support such a thing."

Last week, Air Force Secretary Michael Wynne told the Senate Armed Services Committee that the EADS-Northrop Grumman plane was "clearly a better performer" than the one proposed by Boeing.

It is unclear what EADS hired the lobbyists to do. Loeffler and Airbus officials did not immediately respond to phone and e-mail messages left late Monday.

A Boeing spokesman declined to comment Monday on the links between McCain and lobbying efforts on behalf of EADS.

But Boeing supporters already have begun to accuse McCain of damaging Boeing's chances by inserting himself into the tanker deal.

One of them, Rep. Norm Dicks, D-Bremerton, said the field was "tilted to Airbus" because the Pentagon did not weigh European subsidies for Airbus in its deliberations — a decision he blamed on McCain.

In December 2006, just weeks before the Air Force was set to release its formal request for proposals, McCain wrote a letter to the incoming defense secretary, Robert Gates, warning that he was "troubled" by the Air Force's draft request for bids.

The United States had filed a complaint with the World Trade Organization alleging that Airbus unfairly benefits from European subsidies. Airbus in turn argued that Boeing also receives government support, mostly as tax breaks.

Under the Air Force proposal, bidders would have been required to explain how financial penalties or other sanctions stemming from the subsidy dispute might affect their ability to execute the contract. The request was widely viewed as hurting the EADS-Northrop Grumman bid.

The proposed bid request "may risk eliminating competition before bids are submitted," McCain wrote in a Dec. 1, 2006, letter to Gates. The Air Force changed the criteria four days later.

Dicks said the removal of the subsidy language was a "game-changer" that favored EADS over Boeing.

"The only reason that they could even bid a low price is because they received a subsidy," Dicks said last week. "And Senator McCain jumped into this and said that (the Air Force) could not look at the subsidy issue — which I think is a big mistake, especially when the U.S. trade representative is bringing a case in the (World Trade Organization) on this very issue."

EADS' interest in the tanker deal is evident in the political contributions of its employees. From 2004 to 2006, donations by its employees jumped from $42,500 to $141,931, according to an analysis by the nonpartisan Center for Responsive Politics. So far this election cycle, company employees have donated $120,350. Of that, McCain's presidential campaign has received $14,000, the most of any other member of Congress this election cycle.

McCain prides himself in the role he played blocking an earlier version of the tanker deal that gave the contract to Boeing. As chairman of the Senate Commerce Committee and of an Armed Services subcommittee, McCain led an investigation that eventually helped kill that contract in 2004. A former Air Force official and a top Boeing executive both served time in prison, and the scandal led to the departure of Boeing's chief executive and several top Air Force officials.

"I intervened in a process that was clearly corrupt," McCain said Friday. "That's why people went to jail."

While McCain has praised Boeing for fixing its practices, his campaign said the experience prompted him to demand "a full, fair and open competition." His letters — one to Deputy Defense Secretary Gordon England in September 2006 and the other to Gates — were sent with that spirit in mind, Hazelbaker said Monday.

Once the rules were in place, Hazelbaker said, bidders submitted proposals, the Air Force reviewed them and the contract was awarded.

"That is a process that McCain, appropriately, had absolutely no role in," she said.

Associated Press reporters Glen Johnson in St. Louis and Libby Quaid contributed to this report