Leader of Panel That Endorsed Jet Program Has Ties to Contractor
Tuesday, July 25, 2006
A think tank that endorsed a three-year contract for a troubled jet fighter program is run by a former military officer with extensive ties to one of the program's subcontractors, according to internal Pentagon documents and corporate statements.
The endorsement came from the Institute for Defense Analyses (IDA), a federally financed research center whose president, Dennis C. Blair, is a member of the board of a subcontractor for the F-22 Raptor fighter program, EDO Corp. EDO developed a missile launcher for the F-22 and has held contracts worth at least $38 million that are part of the program, according to its news releases.
After receiving the IDA's endorsement, the Air Force decided to lock itself into a new three-year contract for the jet.
Blair holds options to buy tens of thousands of shares of EDO stock, although he has exercised only a small portion, according to Securities and Exchange Commission filings. In an interview, Blair said he was heavily involved in the preparation of the report endorsing the multi-year procurement as the chairman of an internal review committee that approved its final form.
"I am at the top of that process," Blair said. But he chose not to recuse himself because his link to EDO was not of sufficient "scale" to require it, he said.
IDA has no policy on conflicts of interest by its officers, Blair added. "We evaluate each one as it comes," he explained, saying he makes any recusal decisions himself.
Critics of the multi-year procurement say the Air Force's decision to proceed with it was based on a flawed IDA analysis contradicted by other auditors, such as the Government Accountability Office and the Congressional Research Service, which concluded that the plane was unqualified for such a contract.
Danielle Brian, executive director of the independent Project on Government Oversight, which has been critical of the F-22 project, said that "institutions like IDA carry tremendous weight in advising the government on how to spend taxpayer dollars," adding, "But in the end, the government is not getting the independent analysis it is paying for" because of the absence of any rules barring conflicts of interest at such centers.
Blair, a retired Navy admiral who formerly commanded the U.S. Pacific Command, responded: "My review was not affected at all by my association with EDO, and the report was a good one. I had never, at EDO, worried about the F-22 contract."
The $65 billion F-22 program, one of the most expensive fighter programs ever undertaken by the Pentagon, has been plagued by cost overruns and technical problems, including a cockpit door that got stuck, trapping a pilot, and front landing gear that retracted when it was not supposed to, crashing a plane on its nose.
The plane was originally conceived in the mid-1980s for use in dogfights with Soviet fighters but has been extensively modified since then.
Largely on the strength of the IDA's conclusions about future cost savings from a multi-year procurement, the Air Force decided to buy 60 more planes than a previous contract demanded. The extra procurement will cost around $10.8 billion, even as the Air Force is spending more than $100 million on improvements to existing planes.
A spokesman for the F-22's lead contractor, Lockheed Martin Corp., said the multi-year contract "provides more stability to the F-22 program suppliers, which allows them to offer lower prices."
"The government has made a significant investment in the F-22 development, and taxpayers should have the opportunity to take advantage of the benefits."
The IDA has a staff of 800 that mostly works for the Pentagon. In its report, labeled "For Official Use Only" and titled "F-22A Multiyear Procurement Business Case Analysis," its analysts concluded that the Air Force could "achieve substantial cost savings" with a new, multiyear contract, but not as much as the Air Force had claimed.
Lockheed Martin cited that conclusion in arguing on Capitol Hill for legislation giving the Pentagon authority to sign such a contract. The legislation was introduced in the Senate by Saxby Chambliss (R-Ga.), whose state includes a major manufacturing plant for the F-22, and it passed in a 70-28 vote.
Sen. John McCain (R-Ariz.), who will chair a Senate Armed Services subcommittee hearing this morning on the F-22, opposed the multi-year procurement and plans to question a series of witnesses about IDA's conclusions.
Air Force Secretary Michael W. Wynne, in testimony prepared for the hearing, said the IDA study provided an "independently verified savings estimate" of $225 million, or $3.75 million per aircraft, over three years.
Blair said that during the IDA review he chaired, the initial savings estimate was changed, but he said he could not recall whether it was raised or lowered.