Defense industry braces for McCain’s scrutiny

The biggest defense-industry watchdog in the Senate is expected to take over the helm of the powerful Armed Services Airland Subcommittee later this week, likely prompting greater scrutiny of major military programs and the defense business sector.

As the second most senior Republican on the committee, Sen. John McCain (Ariz.) has his pick of subcommittee chairmanships. While he has not officially decided to take the post, most sources said they believe he will opt for the Airland slot, which would position him to oversee military programs totaling $41 billion.

The position formerly was held by Sen. Jeff Sessions (R-Ala.), a comparatively quiet lawmaker who did not cause much of a stir in the defense industry during his two-year tenure as chairman.

The subcommittee chairmanship seems an ideal fit for McCain, who has battled with the Air Force and defense giant Boeing over a deal to lease aerial refueling tankers valued at at least $23 billion. Over the past three years, McCain has helped uncover the tanker deal as one of the biggest procurement scandals in the Pentagon’s history, sparking a slew of government and industry resignations, including Boeing Chief Executive Phil Condit and Air Force Secretary James Roche.

“I don’t think there’s any question” about whether McCain will take the position, one congressional source said.

At press time, the Armed Services Committee was still gathering members’ preferences for subcommittee assignments and chairmanships, said John Ullyot, spokesman for the committee. Lawmakers do not have a deadline for submitting their preferences but were asked to deliver them “as soon as practical,” he added.

A McCain spokesperson did not return a phone call seeking comment.

Chairman John Warner (R-Va.) will make all subcommittee assignments based on members’ seniority, Ullyot said. McCain served as Commerce Committee chairman during the 108th Congress, which made him ineligible to chair an Armed Services subcommittee.

Defense analysts and congressional sources said a McCain chairmanship would turn the heat up on the defense industry in general, and Boeing in particular. The senator already has expressed interest in reviewing several defense deals, including Boeing’s contract with the Army for the $117 billion Future Combat Systems program.

“There will be continued pressure on Boeing with him in control of that subcommittee,” said Phil Finnegan, an industry analyst with Fairfax, Va.-based Teal Group. “He was really out in front on the tanker, and he’s not going to stop.”

A Boeing spokesman said the company “looks forward to working with Senator McCain and all members of the [committee] on the many national-security challenges facing the nation.” A spokesman for competitor Lockheed Martin likewise said McCain is “very fair and has a lot of respect … within this corporation.”

McCain’s propensity for oversight hearings, both as Commerce chairman and previously as the head of the Armed Services Readiness Subcommittee, could mean more Airland hearings than in the last Congress. He also could delve into broader strategic issues, such as the Pentagon’s clandestine Strategic Support Branch, for which he already has called for hearings.

“There will be some things done differently, and sometimes that’s not bad,” said Les Brownlee, former acting Army secretary who served as the committee’s staff director from 1996 to 2001. “He’s not going to be everybody’s big buddy, putting everything they want in a bill.

“He’s one of those people who has the courage of his convictions, and I’ve always admired him for that,” Brownlee said.
However, the congressional source said there’s some fear McCain may go too far. The source pointed to McCain’s determination to hold up several Pentagon nominations over the tanker deal as one example.

“You can’t go overboard. A certain amount of scrutiny is good, if it’s done the right way and it’s not vindictive,” the source said. “You can’t run DoD [the Department of Defense] from over here.”

The Pentagon is clamping down on its budget for 2006 and beyond as part of an administrationwide effort to tighten purse strings and decrease the burgeoning federal deficit.

McCain is not expected to fight to save many of the projects on the cutting block — including a significant decrease in buys for the Air Force’s F/A-22 Raptor fighter planes and the proposed elimination of the C-130J Hercules medium airlift program. The goal: to save billions through 2011.

“The F/A-22 he’s been somewhat critical of. It will make it more difficult for the F/A 22 at a time when it’s facing problems from the Pentagon,” Finnegan said. And McCain has not “aggressively” worked to save the C-130J, a Lockheed Martin project built in Marietta, Ga.
But McCain may not stop at the laundry list of program cuts proposed by the Pentagon last month.

“I think he’s going to look hard at all programs for continued relevance,” said Jeff Bialos, the deputy undersecretary of defense for industrial affairs in the Clinton administration. “He seems to recognize the need to make these decisions based on national security concerns as opposed to domestic jobs programs.”

The Airland post also could groom McCain for the full-committee chairmanship next year, when Warner must step down after his six-year term limit runs out.

“That has been talked about in [the] industry,” Bialos said. “I think it certainly would be interesting.”

Whether as chairman of the Airland panel or the entire Armed Services Committee, McCain’s challenge will be to strike a balance between maintaining a competition while making “fair and impartial decisions without adding to an already cumbersome regulatory structure,” Bialos said.