When Public Advocates Line Up for Corporations
Back Story Over Air Force Deal Isn't Clear Cut

By Robert O'Harrow Jr. and Dana Hedgpeth
Washington Post Staff Writers
Thursday, April 3, 2008

It was billed as a coalition of public interest groups focused on the recent $40 billion contract award for a new Air Force refueling tanker.

Officials at Citizens Against Government Waste, a quarter-century-old group founded as a good-government advocate, wanted other groups to join in speaking out in favor of the "open, fair and transparent" process that gave the award to Northrop Grumman and its partner, European Aeronautic Defence and Space.

But as often happens in this town, the story was not so clear cut. It turns out Citizens Against Government Waste, or CAGW, was playing a more complicated advocacy role on the same side as the Northrop team, in an immense struggle over the deal with surprise loser Boeing.

Welcome to that special place where business and Washington intersect, where things often are not what they seem and keeping track of the players and their motives is as hard as following the aces in hands of a cardsharp.

In the weeks since the Feb. 29 decision, the winners, the loser and their proxies have worked nonstop to tilt the advantage their way. They have bought full-page ads in newspapers and trade magazines across the country. Boeing has spent about $3 million on ads in major papers since its loss, according to sources who spoke on condition of anonymity because they were not authorized to discuss the ad campaign.

The companies have engaged top-shelf public relations specialists, opinion shapers and former military officials who now serve as their consultants. And they have enlisted vocal and sometimes stealthy support from policy and nonprofit groups, endorsements that carry the aura of integrity.

Enter CAGW. In an e-mail recruiting support from the other groups last week, CAGW included a "fact sheet" spelling out why the award to Northrop was in the best interests of the American taxpayer. Parts of it were cribbed almost word for word from a Northrop document.

The same e-mail said that CAGW would hold a meeting last Friday to explain the coalition. The man brought in to explain the effort was William Lauderback, a veteran lobbyist and communications consultant who has told multiple people that he is working on this issue for Northrop. Calls to Lauderback's office were referred to a Northrop official, who said it is company policy not to identify consultants or their activity on behalf of the company.

Further confusing matters, officials at CAGW told a reporter they had no ties to Northrop, financial or otherwise.

CAGW president Thomas A. Schatz declined to discuss whether his group has received contributions from Northrop. He said the fact that his group's interests are aligned with those of the Northrop team means nothing.

"The beneficiaries of our advocacy are the taxpayers," he said.

A Northrop spokesman said CAGW had approached the company with offers to help. And documents show they are working together on the issue.

"This is yet another example of the way Washington, D.C., resolves issues. They don't rely on facts. They rely on lobbyists posing as analysts, and on hired guns," said Winslow Wheeler, director of the Straus Military Reform Project at the Center for Defense Information, and a former longtime Senate staffer. "It's standard behavior."

There's typically no way to determine who is giving money to nonprofit groups, unless the groups decide to say. Danielle Brian, executive director of the Project on Government Oversight, said nonprofit organizations that advocate good government are taking sides on this contract in a way she has not seen before.

"I can't remember a case where public interest groups have become such vocal, aggressive advocates on behalf of corporations," said Brian, adding that CAGW asked her group to join the effort, an offer she declined. "There's so much money flying around on this issue. I suspect it is playing a significant role in some cases."

Much is at stake. The Air Force has called the deal to replace 179 of its refueling planes -- which have been in service for a half-century -- its top acquisition priority. And the $40 billion price tag is just a starting point. Over the next few decades, the deal could be worth up to $100 billion as the Air Force replaces its entire fleet of 500 tankers. It also means allowing a European company to play an unusually large role in U.S. defense.

The reaction to the contract's award to the Northrop-EADS team -- and Boeing's unexpected loss of the contract -- has stimulated fervent, patriotic, even nationalistic rhetoric.

Congressional leaders in Washington state and Kansas, where Boeing has major facilities and close ties to lawmakers, have demanded that the Air Force reconsider its decision. Rep. John P. Murtha (D-Pa.), chairman of the Appropriations defense subcommittee, threatened to cut off funding for the tanker.

"This is not a done deal," Murtha declared, opening the way for the unusual possibility of Congress overturning a contract decision by the government's procurement specialists.

On Monday, officials from four conservative nonprofit groups on Boeing's side used a news conference to attack the contract award and raise dire questions about the deal's national-security implications.

Two of those groups acknowledged receiving contributions from Boeing in recent years.

On Tuesday, 22 former senior Air Force officials weighed in on Northrop's side in a full-page advertisement -- a letter urging Defense Secretary Robert M. Gates to defend America's war fighters against "scurrilous and politically motivated attacks that have no basis in the source selection criteria for our next tanker."

Northrop paid the bill for that ad. All of the 22 retired Air Force generals who signed that letter to Gates "either work for or consult for" Northrop or EADS, according to Northrop spokesman Randy Belote.

All eyes are now focused on mid-June. That's when the Government Accountability Office will rule on a contract protest by Boeing, which claimed there were flaws in how the Air Force selected Northrop's tanker. Last week, the Air Force and Northrop filed counter-motions for the GAO to dismiss Boeing's protest. Yesterday, Northrop and Air Force officials said the counter-motions were denied.

"This is going to be with us at least until the November elections, if not beyond," said Richard Aboulafia, an aviation analyst with Teal Group, which is an aerospace consultant that says it has no stake in the fight.

Some players in these battles play down the significance of their roles, saying this is standard operating procedure in Washington these days.

CAGW officials said their group -- known in part for its Congressional Pig Book, which details pork-barrel projects in the federal budget -- has been interested in the tanker issue for a long time.

Documents, including material prepared with Northrop, show CAGW is working closely with the defense giant on the tanker issue. Last week, a new group called America's New Tanker sent an e-mail imploring recipients to speak out against Boeing's efforts to reverse the tanker decision and call their lawmakers. "The United States Air Force is Under Attack!" the missive is headlined. "Our military men and women need your help!"

A Northrop spokesman said America's New Tanker is a Northrop group. Links in the document take readers to a CAGW Web page.

"Our friends at Citizens Against Government Waste have been actively engaged for six years in making sure that this tanker project is awarded through a fair and open competition," the e-mail said. "They are convinced the process was just that -- open and fair, resulting in the best company winning the contract."

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