U.S.-Boeing Tanker Deal in Jeopardy, Senator Says

Boeing Co.’s $17-billion proposal to lease and sell the Pentagon as many as 100 aerial refueling tankers is in jeopardy, the Senate’s leading supporter of the program said Monday.

“I think that there’s no question that that’s the case -- it is in jeopardy now, but I have no answer to it,” said Sen. Ted Stevens (R-Alaska), who chairs the Senate Appropriations Committee, after a hearing on the fiscal 2005 defense budget.

Chicago-based Boeing, the second-largest U.S. defense contractor, is under investigation into whether negotiations for the tanker contract were tainted. The proposal is on hold pending four Pentagon reviews.

Stevens was the lawmaker who first proposed in October 2001 that the Pentagon lease tankers instead of buying them because it would be a quicker way to replace the Air Force’s aging fleet. He said there had been no wavering of support from most lawmakers but that “there’s no question there are serious people committed to just destroying the program.”

The defense panel’s ranking Democrat, Daniel K. Inouye of Hawaii, who also supported the lease proposal in 2001, had the same reaction: “I’m not too optimistic that the original plan we had will be carried out; however, I hope the Pentagon will see the light because [the existing] tankers are old. I just pray we won’t have an accident.”

Boeing’s Integrated Defense Systems unit spent $270 million on the tanker program through the end of 2003 on what is becoming its largest military program. Boeing, which had been spending about $30 million a month in anticipation of the contract’s being approved, said Feb. 20 that it would cut jobs and slash monthly expenses on the program to about $5 million.

Boeing shares closed up 40 cents at $43.77 on the New York Stock Exchange.